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Local Authority Grants: Impact of Cuts

Volume 723: debated on Thursday 9 December 2010


Moved by

To call attention to the impact of cuts in grants to local authorities on the provision of social care and other public services; and to move for papers.

My Lords, the reason why my noble friend Lord Beecham and I were keen to have this debate in your Lordships’ House was to underline the importance of considering social care and local government together in the context of what is happening and what is proposed in the NHS. That is why I am opening this debate and why my noble friend, with his reputation, knowledge and experience of local government, will close it.

We believe that joined-up thinking about social care for adults, the disabled and children is vital in the coming period, and I invite the Government to follow our example and ensure that that is what they do. I would like, for example, to see the Minister joined on these Benches by her noble friend Lord Howe in the next year or so as we debate these issues together.

Apart from anything else, it is quite clear from the way in which the rest of the world views these matters—be they individual citizens or the many organisations that support people—that it does not see social care, welfare benefits and the National Health Service as separate matters. The only way to look at what is happening on the ground is through the experience of individual citizens, and that is what I will do today. I have recruited an elderly gentleman with COPD—chronic obstructive pulmonary disease—to help me with this. It is a condition with which I am familiar, but I could as easily have chosen a younger person or someone with an illness such as stroke, a rheumatic condition or a variety of disabilities and conditions.

In the case of chronic obstructive pulmonary disease, the relationship with the GP is crucial, providing, as they do, attention and monitoring, to say nothing of ensuring the supply of oxygen and the drugs that are needed. Indeed, the GP is responsible—he is the gatekeeper—for recommending rehabilitation and exercise classes that are provided at present by the PCT and will help to keep our gentleman fit. This will help him to manage his condition and thus not be admitted to the local hospital unnecessarily. He may need adaptations to his home—for example, a walk-in shower—provided by social services, and needs-assessed benefits to enable him to stay in his own home for as long as possible. He might have a personal budget at some point, to be managed as part of his care package; and he may benefit from that personalisation and choice in his services. This is a complex but perfectly manageable condition. The successful outcomes achieved, and indeed the cost-effectiveness if this person can be kept both from emergency admissions to hospital and from admittance into a care home for as many years as possible, benefit the whole of his community.

The agencies involved are the NHS, the local authority social services and the DWP, among others. I know that we need to take account of his carers, his family, his friends, his community, his church, his voluntary organisations. Indeed, we know that millions of carers are vital to these people’s well-being and health. This person may well have family to provide support, succour and comfort for him. He may have friends and neighbours who look out for him, and he may have help from organisations such as Breathe Easy and Age UK, which know what challenges he may face and what information he may need; or he may not have any of those things.

We know that there are more and more of these kinds of people living in our community with these kinds of conditions. They are living longer because of improved healthcare, and they will need more support to continue living in the community. We know that demography and improved healthcare are the drivers of the size of this issue. The figures are as follows. By 2026, the number of over-65s will have risen from 8 million to 12.5 million; and it is projected that 1.4 million more older people will have potential care needs in the next 20 years. Unless we tackle the needs of our ageing population adequately, escalating care costs will cripple our economy. In a way, they will finish off the job that the banks started.

This is an issue of which we are all too aware. We were particularly all too aware of it towards the end of the last Labour Administration. That is why we worked hard to try to get cross-party, and indeed national, discussion and agreement on how as a nation we should tackle the huge demographic challenge that we face. We did not succeed, and I am not going to try to score points today about why that happened, and about who walked from the table and why. However, the current situation makes the results and the outputs of the current Dilnot commission very important indeed, and there is an onus on the Government to try to succeed and to build a consensus on the way forward. There is a need to involve all the stakeholders—I am sorry about that word, but I could not think of another one. All the interested parties, including the opposition parties, need to be involved in this national debate as we move forward.

Returning to my example, right now we need to consider which of the different elements that will keep our elderly gentleman at home and safe are at risk in the climate of perpetual revolution in almost every one of the areas that I have mentioned. Furthermore, we need to consider what might be done about that. I shall summarise the White Papers, Bills and other measures that are being put forward by the Government at the moment, and then consider how they might impact on our fictional elderly man. We know that the NHS White Paper will abolish the PCT that takes the strategic view of the care of pulmonary conditions in his town and that the local foundation trust has been working with it because of the need to keep people out of hospital. We know that the strategic health authority employs the pulmonary specialist, and that the PCT employs the pulmonary nurse. These bodies provide the funding for the rehabilitation and exercise classes. Although these classes do not cost much money, we do not know where it will come from in two or three years’ time.

It has taken several years to get to this point of co-ordination in this local area and to get the pooled funding in place, and we know that the PCT is now addressing the preventive health implications of this work. By the way, the rehabilitation and exercise classes take place in the community centre built and supported by the local authority; this centre might also be at risk.

We know that public health will go to the local authorities in the next year or so, and we on these Benches broadly support that initiative and the ring-fenced budget. We also know that a localism Bill is about to be launched in another place very soon. As I have said, we know that the Dilnot commission is to report and will result in a White Paper next year. We know that the health Bill will be with us in the new year when it emerges from Oliver Letwin's clutches, and will be introduced in another place.

Then we have the CSR and the funding cuts for local authorities. The spending review set out real-terms reductions of 28 per cent in local authority budgets over the next four years. This compares with the overall cuts of 8.3 per cent across all government departments. Local authority core funding from the DCLG reduces from £28.5 billion in 2010 to £26.1 billion in 2011, £24.4 billion in 2012, £24.2 billion in 2013, and £22.9 billion in 2014-15.

The impact on social care is already happening. From anecdote and report, we know that some local authority social services departments are already making support available only to those who score “critical” on the social care assessments. This is rationing through eligibility criteria. Returning to our elderly man, this could mean that, because he is mobile and independent, he will not receive the funding for the shower unit in his home. The attendant risks of falls and poor hygiene go with this. He may not receive the help that he needs to keep his home clean.

This is the reality of the problems facing the provision of social care for the foreseeable future. There are those who already believe that social care is in crisis. I recommend that noble Lords look at the blogs on the Age UK website. They are most instructive if one has any doubts about the level of anxiety that there is at large. In the case of my new-found elderly friend, as good as the GP supporting him might be, it is very unlikely that his commissioning contract will allow for the level of strategic planning necessary for many long-term conditions. I would therefore be very concerned about the transition of his care pathway for the next year or so. Even if it takes a year, at best, to sort out the necessary co-ordination of support for our COPD sufferer, he may well have deteriorated in that time. I would like to think that some thought has gone into precisely this kind of care pathway issue and the risks that the proposed changes pose.

Can the Minister confirm that she and her noble friends are undertaking this kind of exercise? If they are—and I really hope they are—would she care to inform the House how the Government will help to mitigate this transition to GP fundholding, the abolition of PCTs and SHAs, the cuts in social care, the changes to welfare, housing benefit regulations, which may place extra burdens on the local authority budget, and the introduction of the public health agenda? Does she acknowledge that slowing down a bit might actually help to mitigate the transition issues and might make a huge difference to citizens of all kinds?

In the middle of these changes it is entirely possible that our friend with COPD will deteriorate significantly and require hospitalisation with the attendant costs. We know that that happens to people with long-term conditions if there is a break in their support, their exercise or the information they receive and if their housing is disrupted. Where is the mantra, “No decision about me without me”, in this paradigm?

In many ways the Government have already—if inadequately—acknowledged these pressures by setting aside £2 billion to help local councils pay for social care. Of the £2 billion, £1 billion has come from the NHS budget, and the other £1 billion will be spread over four years of the spending review. The Local Government Association estimates that the extra resources are nowhere near enough to meet the rising demand for social care. The rise in costs could be as much as £6 billion by 2014-15. How will the Government help to meet this funding gap?

In a settled state of health and social care, such additional funding would be welcome. The fact that it comes from the NHS and local government budgets would be absolutely the right way forward. However, an extra £2 billion seen in the context of a wider 28 per cent reduction in local government funding can only lead us to the conclusion that adult social care will still face a serious challenge in funding because of increased demand.

However, cash alone is not the answer. Adult care and support goes way beyond the Department of Health and is bigger than council social services. We know that it must be linked to other council services, public sector partners, voluntary and community organisations and individuals. There needs to be an increasing emphasis on offering personalised solutions, giving individuals control of their funding and how it is spent. Councils have been striving to do that, and that approach is even more important.

However, and I looked at this with interest, I read on the ConservativeHome website a contribution from a member of the Conservatives’ flagship authority, Hammersmith and Fulham Council, urging 100 cuts in council services and demanding that there be cuts in care to looked-after children, that staff spending on older people and the disabled be reduced, and that youth services be slashed. I am sure that my noble friend Lord Beecham will have something to say about that. Hammersmith and Fulham is a case in point; not content to wait and see whether the big society can step in and look after the disabled or the young or the under-fives, it is in fact already closing down these facilities willy-nilly. I would like the Minister’s view on that website and on those 100 proposed cuts.

These cuts are too deep and too quick, and they are putting front-line services at risk. Combined with the proposals for the NHS, this is a time of great risk for those in the greatest need and with the greatest vulnerability in our communities. We have interesting times ahead, in the Chinese sense.

I apologise for not having gone into some detail about children’s services or indeed services for the disabled. I also regret that the noble Baroness, Lady Campbell, is not with us today and that we did not talk about portability. These are all serious issues, and I am sure they will be covered in this debate by other noble Lords. I close by thanking my imaginary elderly friend for his help in trying to explain what I think may lie ahead, and I look forward to the contributions from noble Lords who will speak today and from the Minister in answering this debate. I beg to move.

My Lords, it is a privilege to speak in this debate and to follow the noble Baroness, who has presented a reasoned case and some interesting ways of looking at the issues that we face on personal care.

The noble Baroness mentioned the sums and the budgets being cut too quickly and too deeply. There are many Members of this House who are extremely well placed to speak on the important matters of personal care, but it may be helpful if I place this debate in some kind of context. It is not the case that the Government somehow arrive at the Dispatch Box and dream up that the budgets ought to be cut by 28 per cent in real terms over four years. There is a context to it. We inherited the worst budget deficit in the G20, while overall government borrowing had increased by £400 billion over the past few years and continues to rise. The total debt that needed to be serviced is costing £120 million per day. There was significant unease on the international financial markets about the state of the public finances and we were on the verge of being downgraded by the rating agencies, which would have sent interest rates soaring, as we have seen in Ireland, and would have hit millions of homeowners and businesses. That is why we have proposed to get the deficit under control over the next four years.

In fairness to the party opposite, it too had recognised that this was a major problem. That is why, before the election, while it was still in government, it proposed £52 billion of cuts, but it kept us guessing as to where those would fall. Interestingly, though, the Pre-Budget Report showed that the cuts would be front-end-loaded, with £14 billion of cuts falling in 2011-12.

There is a second point of context that flows out of that, and it needs to be made. Once you decide that you need to reduce overall spending and the case is made—I think that that is generally agreed—you then need to ask: where are you going to apply the cuts? The answer for this Government, which I totally support, was that they wanted to protect spending on health, welfare and school budgets, as well as, importantly, to increase the overseas aid budget. Again in fairness to the party opposite, it too had said that it wanted to protect health and schools budgets and maintain overseas aid spending.

My point is that if you agree that there is a problem at a macro level, which both sides agreed on, and you agree that there is a need to make substantial cuts—whether that is £52 billion, £65 billion or £72 billion is a matter for debate—then you need to decide that the axe has to fall somewhere. Someone needs to feel the pain. There is no painless alternative to this. So the Government are proposing to reduce resources spending to local government by 28 per cent in real terms. As someone who is proud to be a vice-president of the Local Government Association, I do not underestimate for one second the pain that that will cause in town halls up and down the country, but again that needs to be set in context. Indeed, if you were to take even the most generous estimates of what the effect would have been of a cut in the overall budget of £52 billion while ring-fencing those important areas that we have talked about, had the Opposition been in power, then the figure probably would have been not 28 per cent but between 20 per cent and 25 per cent. It is worth placing on record that that is the context in which we are having this debate.

Because of those realities, it is also not true that the reality of the spending settlement and the expected reductions in local government grants by 28 per cent somehow came as a shock. It has been forecast over the past two years at least, and many local authorities have already been preparing for that and making adjustments in their spending.

What the Government are proposing is not so much an exercise in arithmetic, of trying to make the budget balance. Rather, they are trying to reinvent the whole way in which we deliver services at a local government level, and that involves a massive devolution of power to local communities and to individuals. Some of the examples that were given there about personal care fit very much into the whole area of Total Place, of place-based spending. Rather than having multiple bodies all spending money, organising and operating in the same places, it is right to bring them together, introducing efficiencies and improving the service at the same time. The previous Government started that process, albeit 12 years into their 13 years, and this Government are saying, “Listen, we want to build upon that”.

We have also said that there are too many silos of funds from which people have to draw. The Government have proposed that in 2011-12 they free up some £7 billion of currently ring-fenced funding. Seeing the number of grants that need to be applied for reduced from 90 to 10 will mean a massive increase in power for local authorities and local communities. It will also mean a massive reduction in bureaucracy.

The same applies to other targets that were there—for example, the comprehensive performance assessment regime and the corporate governance inspection regime, which would issue hundreds of targets that local government had to follow and track down. My favourite target was the one that required local authorities to count how many park benches had arms on them. For some reason, that was important to Whitehall. We are saying, “Listen, this is ridiculous”. We want local government to concentrate on what it does best, which is delivering high quality local services. What has been proposed by this Government, while we recognise that it is tough, is an opportunity to reinvent the way that local services are delivered in our communities so that all will benefit.

My Lords, I am hugely tempted to take on the noble Lord, Lord Bates, and discuss the role of the global economy in the position in which we now find ourselves. I will resist that temptation. Perhaps we may do so over a drink at some point; I shall look forward to that.

Instead, disappointingly, I shall restrict my comments to the impact of cuts in local government funding on social care. My noble friend Lady Thornton has set out the context very clearly. I will focus specifically on the effect of the decision to front-load these cuts. The Government have made a choice to do that, and they must take responsibility for the consequences.

Within children’s services, the effect is that councils are increasingly going to focus only on delivering those services which statutorily they must. What will that mean in practice? In children’s services, it will mean focusing on child protection and meeting their obligations to looked-after children. That will be tough enough, but what about other services? Councils may wish to invest in family support services for children at risk but they have to make cuts fast. The risks of not investing in those services are obvious, but when cuts must be made now it is very difficult to choose to do that.

The risks of not investing in things like that are fairly obvious. There must be a danger that children will end up in care in future years who could have been diverted from that pathway had funds been made available for preventive services at an early stage. As well as it being a false economy, many Members of this House will be aware of the outcomes for children in care. The price that will be paid is considerable for some vulnerable young people.

Those noble Lords who attended the last meeting of the All-Party Parliamentary Group on Children, as I did, will have heard a moving story from a charity called Family Action about a Building Bridges project, which supports families whose parents are using mental health services and where the children are at risk or on the register, and maybe there are school attendance problems. One of the independent evaluations of this service showed that it works, and that the small cost of £3,500 saves local authorities more than £100,000 over two years. A similar story comes from Action for Children, another big children’s charity, whose East Dunbartonshire Family Service was evaluated as saving the state £2.64 for every £1 spent on preventing children going into care. However, these and many other services are at risk.

I am sure that many noble Lords have heard, as I have, repeated accounts of non-statutory services under threat, and that play provision is under threat all over the country, even though those kinds of services are mostly used by the most vulnerable families. I hear that most councils are now saying that they will not fund any mainstream youth work anymore. That is really significant. While I am grateful that the voluntary sector and the church, which provides much of the youth work in this country, will carry on doing that, it does not seem right that the state should be withdrawing from mainstream youth work. I hear from charities of cuts in provision for disabled children and of eye-watering cuts being considered in fostering and adoption. The potential damage is serious.

The noble Lord, Lord Bates, makes a serious point. Is it inevitable, or is it just special pleading? It is not inevitable. What these stories highlight is the need to give local authorities the breathing space to evaluate their cost drivers and to consider the impact of cuts, not just cut the things in front of them when they can do so immediately. I have talked recently to the senior officer of one authority, who had begun planning well ahead, as the noble Lord, Lord Bates, urged. In fact, the authority would not have cut things fast enough, even though it would have reshaped services, been more efficient and cut real costs and not simply spending. It now has to abandon all of that and move to immediate cuts to meet this timetable.

Briefly, on the impact on adult social care, I have always been concerned that when we talk about the importance of the freedom of councils to choose how to spend their money, we do not delude ourselves as to what choice they have in practice. Adult social care is, I understand, the single biggest discretionary area of spending by councils on services they deliver. If they have to cut back so quickly on the scale that we are discussing, they have no choice but to cut back on adult social care.

My noble friend Lady Thornton mentioned the raising of thresholds. That is an obvious thing to do. I read in Community Care magazine last week that Birmingham Council is becoming the first in the country to restrict formal council-funded care to people with critical personal needs. That is a very high threshold, as anyone who has worked in this field will understand. There is a real danger that the only people who will get any adult social care provided by their council are those with severe, multiple, complex conditions. Everybody else will be left to find it and fund it themselves. That is not a space we want to be in.

Finally, I will say a word about carers. My noble friend Lady Pitkeathley, who, as noble Lords will know, has been a long-time champion of carers, regrets that she cannot be here for the debate today. In her absence, however, I want to flag up the important contribution made by 6 million carers who save our country some £87 billion a year. Any future approach to social care needs to ensure that carers carry on being supported. I hope that the Commission for Social Care Inspection will make the contribution of carers an important part of its recommendations. I also urge the Government to look quickly at reviewing financial support for carers, including how future funding for respite care can be provided in the absence of ring-fencing.

What is to be done? Since spending on social care is such a big slice of local government spending, we are now seeing a disproportionate amount of the cuts in spending generally being carried by local government. Inevitably, a disproportionate chunk of that will be borne by social care. That means that vulnerable people who use social care services are picking up an unfair and disproportionate degree of the pain of the Government’s deficit reduction strategy. We need to look carefully at which individuals will actually be paying the price for those. They are those who use children’s services, those who use adult social services, children who are in need and children who live in care. These are some of the most vulnerable people in our society.

I am not simply asking for special pleading. I ask the Minister to do two things. First, will she please urge her colleagues to rethink the timescales and consider giving local authorities the space to be able to plan these steps more carefully? Secondly, will she please tell the House today what steps the Government can take to protect the investment in early intervention services of the kind I have described, much of it delivered by voluntary organisations, much of it successful, much of it saving the state money and much of it protecting lives? I urge her not simply to talk about spending on early intervention, since that will not be ring-fenced and will simply come out of the same pot. How does the Government’s strategy for ensuring that local services are delivered enable us to be confident that early intervention services for some of the most vulnerable people can be protected?

My Lords, I declare an interest as both a councillor and a member of the executive in the London Borough of Sutton, which is now celebrating its 25th year of continuous Liberal Democrat administration.

The following is more a confession than a declaration. When I was first elected as a councillor, back in 1974, the then Conservative leader in local government, who happened also to be a Sutton councillor, said to me, “There are really only two parties. One is the local government party; the other is the central government party”. For the past 36 years, I have clearly been firmly in the local government party. Then, slightly to my surprise, I now find myself closely associated with the central government party as well. Some might say that that is a challenge, but I intend to regard it as an opportunity.

I thank the noble Baroness, Lady Thornton, for this debate, and for the way in which she introduced it. Normally, we should congratulate her at this stage. I feel more inclined to commiserate with her. I am sure she understandably expected, when she tabled this debate, that by now we would know what the provisional grant settlement was going to be, and probably have before us the long-awaited, much heralded decentralisation and localism Bill. Instead, the Bill is at the printers and we will have it tomorrow, not today. The settlement is clearly settled but, for reasons in another place, we will not actually know how it is settled until next Monday. That is a little unfortunate.

In the few minutes I have, I will concentrate not on speculating about what we might find out on Monday, or what we might discover in the Bill that we have not already heard about, but, rather, on the things that we do know. Those of us in local government and, I am sure, elsewhere, have known for a long time that the coming years were going to be very difficult regardless of who had won the general election. Sometimes that is forgotten. Many local authorities, certainly my own, were planning well before the general election for hard times to come, even if we were not able to quantify them. Before the election, my own authority set up what we are calling the smarter services Sutton review, to review all our services with a view not simply to slashing budgets but to transforming services and looking at what we do, how we do it, with whom we do it, and what we need no longer do because it is neither possible nor appropriate. All of that was known. Sensible local authorities of all political persuasions will have been planning for it. What was not expected was the extent to which the CSR would be front-loaded, with by far the heaviest cuts coming in the first two years.

I know that there is no way that that will now change. It is well beyond the powers not just of the Minister but of the department that she represents. That is a given, whether we like it or not. However, I plead that the Government look at the effects of that in trying to achieve what I hope we all want to achieve— not simply a slashing of budgets but radical reform, coupled with the new freedoms that local government will get but will not have in the years when the greatest cuts are before us.

It is always difficult. Some local authorities may be in the now fortunate position of having sufficient reserves to enable them to ease the burden and produce both the savings and reformation over a period of time. However, local authorities in that position are few and far between and, frankly, until now, have been subject to much criticism for having overly large reserves. Most local authorities, including my own, have long since lost what anyone would consider superfluous reserves and are not in the position to be able to use such funding to ease the burden of the cuts. My plea to Government, and to the DCLG in particular, is to continue to explore ways of working with local government so that we can phase the introduction of these cuts over two or perhaps three years to achieve the same result in the end that the Government want to achieve but being able to do so by truly transforming services and not simply slashing budgets, which I fear is what might happen.

The particular focus of this debate is social care and that has been very well described. My noble friends on this Bench will concentrate on it. The additional funding for social care is very welcome. I am pleased to see it not least because it is being introduced by a Minister who was once my deputy leader on Sutton council. There is a real danger that that additional funding—welcome though it is—will be more than overtaken by the cuts that local government have to make. Now that local authorities are no longer directly responsible for schools funding, for those authorities with this responsibility, adult social services make up by far the largest part of the budget. It is inconceivable that local authorities will be able to make the savings that they will have to make and reform the services in the way that they have to without being able to avoid adversely affecting adult social services. We want to avoid losing all the very welcome benefits that come from the additional social care funding because of the actions that are taken.

More immediate is the very real threat to voluntary sector funding. It is a great temptation—which I very much hope that all local authorities will resist—to make quick and, to some, apparently easy savings by cutting grants to the voluntary sector. Some would suggest that, in the past, central government have sometimes done that to local government. However, in my new role I would not dream of suggesting any such thing.

I hope that the Government will now look at how they can work with local government to try to ease the passage of this so that what lies before us is not simply seen as a threat to local government services. It would be idle to pretend that there are no threats to local government services—of course there are. However, there is a very real opportunity for the local government party and the central government party to work together to use this opportunity to transform the services that we provide.

My Lords, in his letter to local authorities, following the comprehensive spending review, the director-general of social care at the Department of Health wrote that local authorities had,

“enough funding available both to protect people's access to services and deliver new approaches to improve quality and outcomes”.

The additional £2 billion that the Government were putting into social care by 2014-15 would, he said,

“make it possible to protect people’s access to care, without tightening eligibility”.

He even went so far as to say that this is a highly positive settlement for social care, providing sufficient resources to protect people’s access to care and avoiding further restrictions to services. But at other points, he had the grace to admit that the settlement would be challenging. Perhaps one can be forgiven for thinking that this was nearer the mark.

There are some things to welcome. The £1 billion of extra funding coming from the health service should help to speed up the integration of health and social services at the local level, which seems to have taken for ever. Up to £300 million of this can be spent each year on reablement to help avoid the need for social care. The disabled facilities grant is to be protected, though it will no longer be ring-fenced, so what will happen to it is anybody’s guess. The challenging settlement should stimulate innovation in the delivery of services.

The negative side of the ledger is even more compelling. The CSR has treated local government particularly harshly. Central government funding of local authorities, as we have heard, is to decrease by 28 per cent in real terms over the next four years, down from £28.5 billion in 2010-11 to £22.9 billion in 2014-15, a reduction of £5.6 billion. This compares with cuts of 8.3 per cent across departmental budgets generally. This helps to put the extra £2 billion for social care into context. Cuts to housing, family support, transport and leisure will all have a wider impact on the care and support environment. The settlement presupposes efficiency savings of 3 per cent a year, but in adult social care alone, savings totalling nearly a billion pounds have been made over the past three years already, while eligibility thresholds have remained relatively unchanged.

In these circumstances the Local Government Association puts it mildly when it says that the front-loading of the funding reduction, coupled with the fact that adult social care has important links to other council services such as housing, leisure and transport means care and support faces a period of real challenge. This is all against a background in which social care is pretty much in crisis already. While expenditure on adult social care has increased over the past decade, it has not seen anything like the increase seen in health and education. This has led to a situation in which social services are falling further and further behind. An ageing population means that pressure on services can only get worse. A survey in community care recently showed that two-thirds of councils were already only providing social care to people in either critical or substantial need. It found that this figure would be 80 per cent by next year and that people are already predicting that future cuts would lead to many councils raising their thresholds to critical only.

As for the additional £2 billion, there are concerns about whether all of this will find its way to social care. The sums to be channelled via the NHS should get through as long as they are clearly identifiable locally and are the subject of specific local agreement. The other £1 billion is another matter. This half of the new social care funding is not ring-fenced. It is not difficult to imagine hard-pressed councillors and chief executives diverting it to help plug the gap in other equally cash-strapped areas.

Your Lordships would not expect me to close without saying something about the situation of blind and partially sighted people, who graphically illustrate the condition of social care provision today. Unless they have other disabilities, people living with sight loss are unlikely to receive much—if anything at all—in the way of help because their needs are likely to be assessed as only moderate or low. I invite your Lordships to pause and think about that for a moment because it has always struck me as absolutely extraordinary. It means that many people simply lose their independence for want of the appropriate rehabilitation and support.

The Department of Health stresses the importance of personalised support. Almost everybody agrees about that but personalised support which you cannot access because you do not meet the criteria of eligibility for help is no support at all. A fully personalised social care system can perfectly well continue to exclude from eligibility most blind and partially sighted people. In the context of personalisation, I should also like to say a word about the question of choice. There is evidence from the individual budget evaluation research that elderly people in particular were often worried that direct payments would impose unwanted burdens on them where their right to choose had not been properly explained. The Department of Health’s policy, as reflected in its vision statement, now seems to have changed to saying that personal budgets should preferably be delivered as direct payments. These positions are not necessarily incompatible. It would be possible for local authorities to express a preference for direct payments while still offering personal budget recipients a genuine choice, but it is easy to see how inappropriate pressure might develop, especially if it transpires that local authorities can make significant staff savings via direct payments.

The Government believe their social care settlement to be adequate. We shall see. However, it is absolutely essential to monitor what happens closely. I strongly urge the Government to be prepared to take corrective action if familiar problems of adequacy and access persist or, indeed, get worse.

My Lords, I, too, am very grateful to the noble Baroness, Lady Thornton, for enabling us to discuss this major concern about the direction that spending cuts will take within the policies of our local authorities. I want to concentrate on the effect that they have on partnership between those authorities and the voluntary sector, to which the noble Lord, Lord Tope, referred. As a former resident of the borough of Sutton, I was grateful to hear the insights into the policies of that borough. I hope that the St Helier estate, on which I used to work, will not be disadvantaged by any of those policies.

The partnership between local authorities and the voluntary sector has been set up with much patience over many years. I should like the Minister to address ways in which that can be preserved and defended in a culture where ring-fencing is removed but cuts are compulsory. That double whammy is what is causing such a sense of threat to those in the voluntary sector who are concerned with social care. The removal of ring-fencing advocated by the noble Lord, Lord Bates, would often be very much welcomed as placing responsibility for local activity locally, which is where it belongs. The difficulties arise where that occurs in the context of substantial cuts. The unintended threat to social care provided through the voluntary sector then becomes substantial.

St Luke’s CARES is a church-sponsored community provider in south Leeds that has worked with the local authority over the years to provide caring services, including—but not only—services for young people. There is a real need to build up community relationships in the areas where the charity works, including in multi-ethnic areas such as Holbeck and Beeston, where there has been a determination to rebuild trust—not least following the links of that area with the 7/7 bombings, of which we have been so painfully reminded over the past few weeks. Those who use the services of St Luke’s CARES fear for the future of its work, not because of ill will on the part of the local authority but because painful choices need to be made.

Noble Lords have spoken of the danger that those organisations that contribute to the whole of the working of society, or of a particular area within society, tend to be ignored because of a right emphasis on the most critical cases. Leeds is among the local authorities with the largest percentage cut in grant, according to the Department for Communities and Local Government figures—more than 7 per cent in year one. My fear is that, because of the attempt rightly to maintain direct services to the community, the partnerships that in Leeds form so vibrant a potential part of our society will be squeezed, with the result that, almost inevitably, those who are most deprived will suffer most. I think of the Belle Isle estate in Leeds, which has a flourishing family centre that provides a one-stop shop for social care for many local people in the area. The danger is that not only will such resources for people be withdrawn but the building into which both voluntary and local authority funding has gone will be underused and wasted.

In the context of partnership, I highlight the threat to services for children and young people. Local authorities have an impressive record in working with the voluntary sector to provide for the needs of many in disadvantaged areas who might not otherwise receive the encouragement that they need. I have read with interest the report of the debate in your Lordships' House last week on philanthropy, initiated by the noble Lord, Lord Janvrin, in which a warning was given—not least in the speech of the right reverend Prelate the Bishop of Newcastle—that philanthropy cannot replace the work of local authorities. Although philanthropy is extremely welcome, and often extremely generous, its effect on the issues that we face can often be erratic. National organisations such as Barnardo’s or the Children’s Society are fearful simply because much of their work is crucial to the lives of young people but does not hit the headlines or always attract public sympathy. The noble Baroness, Lady Sherlock, spoke powerfully of the ways in which so much of that work with deprived young people who are not at school or are in contact with the criminal justice system will tend to be ignored in that situation. Many who work for the national voluntary organisations fear not just for their jobs but for that careful, painstaking work that has been built up over the years.

I welcome the aim of greater collaboration between voluntary and statutory organisations, which is an important part of the coalition Government’s proposals. We will the ends; we must also will the means. Local authority services, many of which are delivered by such partnerships, are among the most precious contributions to society. I hope that the Minister will affirm the continuing need for cuts to be borne by those most able to bear them, and not by those who already suffer in our society.

My Lords, I shall confine my remarks to what I might regard as my special subject, which is social care of the elderly. As a society, we have walked into a black hole. The black hole was originally caused essentially by demographics—the increasing number of elderly people—and by the fact that older people are not living in good health for longer, as the period of ill health at the end of life is at best constant and is perhaps getting worse.

The symptoms of the black hole into which we have walked—the black hole being the gap between service provision and need—are legion. The symptoms include, for example, the virtual elimination of local authority help for those with moderate or medium care needs simply in order that local authorities can keep those with the greatest care needs going. The symptoms are also to be found in the patchy and often very low standards of residential care at home. I hear tales of carers turning up hours late, with breakfast being served at lunchtime or lunch being served at breakfast time—a very fine “Panorama” programme exposed some of that—often because flexible services that meet people’s needs cannot be provided as cheaply as a service in which people rush around doing what they can when they can fit it in.

Another symptom can be found in the appallingly low wages paid to people who work in the social care sector, which unfortunately means that people do not have the right incentives to improve their skills. Another can be found in the state of residential homes that have a large number of local authority clients because of the continual downward pressure on the fees that local authorities will pay for people in those homes—often made up, incidentally, by charging more for people who have to pay for themselves.

In one part of the kingdom—in Scotland—the Scottish Government have decided to dig that hole very much deeper by providing free care to everybody. The result is that the real cost of care has doubled in real terms in five years. The governing party in Scotland has decided not to say what it will to do about that until after the next Scottish elections, because the policy will have to be abandoned.

One consequence of that black hole is that our old people are suffering—I use that word advisedly—at a time of their life when their suffering should be minimised. Another consequence—I know that the Treasury is the only department that matters in many of these things—is that we will incur far greater costs in future. The long-term result of not providing low-level care to people to enable to them to stay in their homes will be that they will stagger on until the moment at which, at much greater cost, they have to be admitted to residential care, where they will need to remain at huge public expense for the remainder of their lives. That is not only a bad policy for older people but a short-sighted policy on the part of Government.

Faced with that black hole, the Government produced an extra £2 billion for social care in the comprehensive spending review. Anything extra is not unwelcome in the present situation, but I have the gravest reservations about whether that extra money will mean much, given that £1 billion of it is to come from the National Health Service. I hope that that will come about, but I have noticed, for example, that consultant surgeons are terribly good at explaining why they need the money to do operations tomorrow and why money cannot be made available for social care that might stretch months into the future. Money does not always end up where it is intended, particularly given that we will have a frozen NHS budget in the years ahead. The scramble for cash and the use of the power of individuals and institutions within the health service to get cash will be most intense. Who will ensure that social services get their £1 billion share?

As for the extra money for local authorities, that is smoke and mirrors. The Government say that they will slash local government expenditure to a degree unimaginable in previous experience. They aim to do that because they can see easily that they cannot cut their expenditure, so they look to somebody else to make the cuts. Their chosen victims are local authorities, which to my mind have been amazingly calm in the circumstances. Given this great slashing, although the Government say that there will be an extra £1 billion, there will not be an extra £1 billion at all. Instead, the social services budget will be slashed by £1 billion less than would have been the case. That really is, I would almost say, Gordon Brown arithmetic at its worst—although I would not like to offend my own side in any way. None of us can tell whether an extra £1 billion is being given to local government for social care, because none of us knows what would have been given to local government without the apparent extra £1 billion. That is smoke and mirrors.

My third point, which has already been raised by the noble Lord, Lord Low, concerns the letter from David Behan, who is the director-general of social care. David Behan is a very good man who cares deeply about these things—so I do not know whether he drafted the letter—but, honestly, to describe the settlement as highly positive is really to bend words. What should we regard as slightly negative? Would spending need to be eliminated altogether and our old people thrown onto the streets to fare as best they could? I think that a little more honesty would have been genuinely welcome. Another feature of his letter that I want to highlight is the suggestion that significant efficiency savings would be needed. It is not easy to make efficiency savings in social services, because you cannot bathe people more quickly, hoist them more quickly or force food into their mouths more quickly without spoiling those services. To a very large extent, significant efficiency savings cannot be made in social care services, so the effect—unless the Government have a change of heart—on our services over the years to come will be quite frightful.

I thank the noble Baroness, Lady Thornton, for the elegant way in which she introduced this debate on a subject that, as she and the noble Lord, Lord Lipsey, know, is one that I care about quite a lot. I also declare an interest as the owner of a consultancy that works with voluntary organisations called Third Sector Business.

Let us not forget that the system of social care was unsustainable and in need of radical reform back in the 1980s, when Mrs Thatcher appointed Sir Roy Griffiths to produce Community Care: Agenda for Action. It was unsustainable and in need of radical reform when, in 1997, Tony Blair appointed, among others, the noble Lord, Lord Lipsey, to produce their report on long-term care, which was then studiously ignored by the Labour Government for the 13 years that they were in office. Here we are now, at the point where our system of social care is unsustainable, not working and unaffordable. We are having to address those questions not, as the Labour Government were, with a significant amount of cash to throw at it, but in the most difficult of economic circumstances. That is the backdrop of events as discussions are going on. That is why the noble Lord, Lord Lipsey, is again wrong—against that backdrop, an extra £1 billion is actually something to be very pleased about.

I want to explain the perfect storm that is enveloping local organisations. At the moment they are dealing with the imposition of the 2010 tendering regulations, which means that there is a huge change in the way in which their services are bought and commissioned by local authorities. The personalisation agenda, which the noble Lord, Lord Low, spoke about, is being rolled out. It is a model of commissioning services that was developed largely for adults with disabilities, people who for the most part have conditions that do not change. It is being rolled out to a far greater number of older people, most of whom need care at a point of crisis, and whose needs change quite a lot and substantially. It is being carried out at a time when the three big clients that those organisations have had are either disappearing or are changing completely. Most of those organisations were funded either by their local authorities or by PCTs, and they are having, in a very short space of time, to completely change what they do and how they do it. Most of them are not big administrative organisations that can suddenly summon in an awful lot of help from major international companies and get them to come in and sort out their systems. They are very small organisations that are having to change very, very quickly.

The NHS is changing too. It is not uncommon for local organisations to carry out their business with partners in the NHS and local authorities where there have been no permanent senior managers making decisions for the past three years. It is extraordinarily difficult to come to any conclusion about what you should do strategically in that situation.

It is also not that simple to bring about change as quickly in voluntary organisations as it is in others. In a commercial company, if your economic outlook is bleak, you simply get out your accounts and forecasts and you study them to determine what you will do. In a voluntary organisation, you have to start from the point of saying to people who you have never charged for services that their services are going to have to be charged for. You have to go through a period of angst with people before you can get them to the point where they can begin to look at what will be a sustainable future. Behind that, local authorities are also beginning to get to grips with new ways of accounting, some of which are very good. The Total Neighbourhood and Total Place accounting systems are extremely good, but are very new.

In the midst of all that, there are organisations that are seeking to continue what they do now, much of which is unfunded but immensely valuable, and trying to make sense of a system in which they can, on a sustainable basis, meet the needs of a growing population—a population which has needs that we are all aware of. The number of people with dementia is set to increase exponentially.

It is against that backdrop that I want to ask the Government, who are right to have a radical approach to social care, whether they will do three things. First, will they give us more detail about the transformation fund? It is way too small. I am not clear on whether the fund will be available for only a year, but I suggest to the Minister that it needs to be available for two years, if it is to be effective. Will the Government specify what the fund is intended to do? Secondly, will the Government look at the capacity and willingness of GPs to commission social care? That will be an extremely important point for the future. I have not yet seen evidence of GPs being familiar with how one commissions social care services and refers people to services which have to be paid for. Many GPs refer people to services, but those services are usually free, and I doubt that that will happen.

Thirdly, will the Government look in particular at the one service—hospital discharge—in which there ought by now to be sound joint working? There is none. We have never had a model of hospital discharge which works properly for the NHS, properly for social services departments which want to do well by people, and, above all, properly for people who are coming out of acute care and who may need longer-term care. If we can do that at a time when the NHS will be judged by a new quality-and-outcomes framework, which does not just reward acute hospitals for the number of high-tech operations they perform but rewards them for the health outcomes that they achieve for a population, we will then be in a position to start to build a system of social care which is sustainable and meets long-term needs.

My Lords, perhaps I may first say how much I welcome this debate, and I have listened with great interest to the contributions.

In June, the Government stated their commitment to creating fairness in society, and dignity and respect for disabled people. It is against this backdrop that we are participating in today’s debate. We have already heard about the extent of the savings required by the comprehensive spending review, and I will not repeat them. However, there is no doubt that even with efficiency gains and other savings, cuts of this magnitude and over this timescale will pose a significant challenge to many of the services used by disabled people.

For too long, social care services have been the Cinderella of local government—underfunded, under-resourced and under-valued; and the important role that social care can play in helping to transform peoples’ lives is too often misunderstood. Many people who are disabled rely on social care services to live their lives and gain some independence. It might be a few hours’ help for them to go shopping, assistance in the home to help with domestic tasks such as cleaning, or even support in going to the cinema. All these examples and more demonstrate the importance of delivering effective social care and the huge difference that it can make to the quality of individual lives. Crucially, this support often allows disabled people to access other services such as education, health and transport.

I must disclose an interest here, because two of my adult children are disabled people who are in receipt of social care.

The pressures on social care services have not suddenly developed as a direct consequence of the CSR; if only that were the case. For many years now, local authorities have wrestled with increasing demands on their services, partly, as we have heard, as a consequence of demographic change and an increasingly elderly population. Local authorities have already rationed resources in an attempt to manage a range of competing demands.

There are 1.5 million people in the United Kingdom with a learning disability and I will focus my remaining remarks on their needs, to illustrate how one group of disabled people and their families may be put at risk by the proposed spending cuts. With respect to demographic change, we know that there are about 170,000 people with a learning disability who live with parents or carers who are over 70. As time goes on, both they and their carers will need support from social services in order to live their lives with dignity and respect. In addition to a high number of older carers, the number of people with complex needs is also increasing; and this combined with longer life expectancy means that demand for social care services is increasing and will be needed for longer. The number of people with a learning disability who need services has also been increasing by between 3.5 per cent and 5 per cent per year—much faster than anticipated.

These challenges and others have led councils to tighten their eligibility criteria to make a greater use of charging, and to reduce services. In recent years, most local authorities of all political persuasions and none have decided to reduce the services they provide to only those with “critical” or “substantial” needs, in an attempt to balance the books. Following the latest pressures on resources, those few local authorities which still provide social care services to those regarded as having only “moderate” needs are in the process of consultation about removing the remaining services.

It is in response to long-standing pressures on the social care system that the Learning Disability Coalition, or LDC, was established in 2007 in an attempt to address these concerns and to lobby the Government for change. My noble friend Lord Rix, who cannot be here today, would want to speak about the LDC as president of Mencap, because the LDC is a coalition of 14 member organisations such as Mencap, People First and Turning Point, and was set up to make the case for better social care services. The LDC argues that people with a learning disability are entitled to have the same choices and life chances as everyone else, as indeed is laid out in the UN Convention on the Rights of Persons with Disabilities. However, in order to make these choices, we need a social care system that is fit for purpose and helps to empower people.

It is for this reason that I welcomed the announcement in the CSR that an additional £2 billion would be allocated for social care over the next four years, some being to support joint work between health and social care. However, as part of the coalition Government’s commitment to localism, we know that the additional funds to local authorities will not be ring-fenced. What guarantees will we have that GP consortia will spend the additional NHS funds as intended? There are no guarantees that the extra money will end up being spent as the Government intend it should be. What sanctions will the Government have if GP consortia do not do so?

Recent evidence from the King’s Fund shows that an increase in spending on social care for a person actually decreases the amount which needs to be spent on their healthcare. Short-term cuts in social care today can lead to long-term consequences tomorrow.

Failure to provide support to people with a learning disability can increase the risk of social exclusion and offending behaviour, and can lead to health problems, particularly mental illness. This can lead to expensive acute intervention when a person reaches crisis point. Sadly, some specialist psychological help that is available to other citizens, for example through the improving access to psychological therapy programme, is not being made routinely available to people with learning disabilities, and thus the stitch in time that might be expected to ameliorate relationship and lifestyle difficulties is not provided for them.

The personalisation approach is to be welcomed, but there are more challenges inherent in implementing it for this group. People with a learning disability are some of the most vulnerable in society, and are less able to advocate for themselves to ensure the fairness that this Government are committed to achieving. Does the Minister agree that whatever reductions in social care budgets are made in the future, people with learning disabilities must not be made to bear an unfair share of the cuts?

My Lords, I thank my noble friend Lady Thornton for securing the debate, and with it the opportunity to highlight the consequences of cuts in local authority funding for disabled people's essential support services. As other noble Lords have mentioned, there was a glimmer of light amid the cuts announced in the comprehensive spending review; namely, the extra funding for social care. However, as we have heard, we soon realised that the amount would be barely enough to sustain the current levels of spending, let alone to keep up with the increasing numbers of older people who require care and support to keep them going. It was even more worrying when it was made plain that the money would not be ring-fenced.

As we have heard, the Local Government Association has warned of a multimillion-pound shortfall in its adult social care budget. What safeguards will the coalition Government put in place to ensure that the money goes to the people for whom it is intended and does not disappear into the local authority budget? The fear is not unfounded, as local authorities can take their resources into account when determining the needs of a disabled person. As a result, in many places only the most profoundly disabled people qualify for help, which is means-tested.

There are other perverse consequences of the Government's measures. One of the most glaring is the removal of the DLA mobility component from people who live in state-funded residential care. It will cost local authorities money once their mobility needs are assessed. The money must come from the social care budget, so the council will have to further tighten the eligibility criteria, leaving more disabled and older people to fend for themselves, draining their means and exhausting their family members. Did the Government take this into account when they decided to remove the DLA mobility component? The decision was based on wrong assumptions, and it is telling that disabled people were not involved in making it.

Another measure is the closure of the ILF to new applicants, with the resulting expectation that local authorities will take up the slack. In practice, local authorities are prepared to fund their part of a care package, which would have been matched with ILF funding, but they are not prepared to increase it to take account of the closure of the ILF to new applicants. For example, a disabled man in his 30s living in Buckinghamshire would have received a care package of around £600 a week had the ILF still been open to new applications. Buckinghamshire County Council has decided that it is unable to increase its funding beyond £340 a week—a long way short of what the man would have received with ILF as well. As a result, he now has to manage without night-time care.

Disabled people are facing cuts of 20 to 30 per cent. This was covered by the BBC in its excellent “You and Yours” programme last week. People are being reassessed for personal budgets and finding that the amount they will receive is much less than they have been getting. For example, a disabled couple in Lambeth had their care package cut by 20 per cent from £6,025 per month to £4,900.

No doubt there is money to be saved by reducing the bureaucracy and duplication that comes with state interference, and with creative ways to help people become active citizens who will take responsibility for their own lives and communities. That is where the value lies in giving local people more control. They can identify where money is wasted—for example, on the many assessments that people have to go through because different departments in a council are involved and cannot work together on a single assessment. We hope that the right to control will change that practice. The bureaucracy that some councils have built around direct payments and personal budgets is mind-blowing. However, money that is invested in an accessible infrastructure—in lifetime homes and neighbourhoods, for instance—will earn itself back as councils have to make less separate provision for disabled people. Will this happen when local councils are looking for cuts in the short term?

In my own borough, the so-called Conservative flagship council of Hammersmith and Fulham states that it has “listened” to its residents in delivering year-on-year council tax cuts of 3 per cent through “efficiencies”. However, it did not spell out the consequences of the cuts. As we have heard, Hammersmith and Fulham embarked on its own comprehensive spending review long before the coalition Government did, and no doubt will set about implementing a further 26 per cent of cuts with gusto, and all in the name of efficiency.

Who is feeling the impact of this enthusiasm for efficiency? It is isolated old people, people with learning difficulties and disabled people generally—in other words, the poorest residents of Hammersmith and Fulham. The borough has redefined eligibility for homecare and has reduced shopping services, telling 89 year-olds that if they can phone the council, they can order their shopping themselves by phone. The council has nearly halved the take-up of the meals on wheels service. Because of cuts to borough funding, the local Age Concern has had to close down services, including a lunch club and its vital toenail-cutting service—a simple but essential key to continued mobility for older people. The local user-led disabled people's organisation, HAFAD—I declare an interest as its vice-chair—has lost funding for its welfare benefits service at a time when it is essential that disabled people, who are terrified about the benefits that they might lose and who are the poorest and most vulnerable people in our society, should be helped by the benefits that they need. All this is also happening before the rollout of the implications of the CSR.

Giving local councils more autonomy and local people more control should mean money flowing to services that meet the needs of local people, but we must ensure that it is not only those with money and clout whose needs are met. What about those people who are isolated by poverty and struggle unseen? In most areas their interests are voiced by the small, voluntary organisations and, as we have heard from the noble Baroness, Lady Barker, they are the first to go to the wall when cuts are made. I ask the Minister what steps the Government will take to support these vulnerable local user-led organisations whose existence is vital in providing a voice to older and disabled people in their locality so that they can continue to provide essential information, advice and advocacy for people who need care and support.

Finally, I want to touch briefly on a matter which my noble friend Lady Thornton has helpfully trailed, and that is portability. Sadly, the noble Baroness, Lady Campbell of Surbiton, who has raised the matter so eloquently in the House, is not able to be here today. Portability is being able to choose the locality where you live. Currently many disabled and older people are prevented from moving to another postcode because they cannot be sure that they will keep the care and support that they have qualified for. It means that they cannot move to get further education or to have a better chance of a job, nor can they move nearer their families, move away from an abusive relationship, or move out of residential care into the community. What an unbelievable waste of human and economic capital that is.

My time is running out but I wonder if, in all this gloom, the Minister would be willing to provide a small glimmer of hope by agreeing to meet the noble Baroness, Lady Campbell, and other interested Peers to discuss the issue of portability. The fear is that once the localism Bill gets to us, it may be too late. I hope she can give that commitment.

My Lords, I declare an interest as a member of Newcastle City Council and a vice-president of the Local Government Association.

At the beginning of November, in a debate on the comprehensive spending review, I raised a number of issues relating to the part of the announcement that affects local government. None of those has yet been answered, and I hope that some of the representations that have been made in recent weeks may have an effect when the announcement is made, as I understand it will be on Monday.

The issues related, first, to the scale of the cuts, and we have heard more about that this afternoon. Secondly, they related to the front-loading of those cuts, which is a cause of quite a number of serious problems particularly for the redundancy costs of local authorities. Thirdly, I raised the issue of the abolition of the working neighbourhoods fund, at £0.5 billion—of our local authorities, Birmingham was much the highest, losing some £37 million. That budget enabled money to be paid to voluntary organisations across some 65 council areas where deprivation rates are highest. In particular, the working neighbourhoods fund was used, and is still used, for welfare to work initiatives, one of the core agenda items of this coalition Government. Fourthly, I raised the issue of place-based budgeting because the Local Government Association has estimated savings from £20 billion a year if we can bring the public sector more closely together—sharing services, overheads and so on. In that debate, I urged us to have a much faster delivery of place-based budgeting simply because, if you delay two more years before rollout from the pilot that is taking place, the impact will be delivery that is too slow.

Since the beginning of November, two matters have become starkly clearer. First, the £200 million capitalisation powers that have been set out in the CSR were identified as being completely inadequate. The LGA now estimates costs of some £1.5 billion over the next 18 months, caused by the front-loading impact of the revenue cut. Secondly, it became clear that the working neighbourhoods funds simply could not be abolished if the Government are to fulfil, first, their fairness agenda and, secondly, their welfare to work agenda. Allowance for that has to be built into the overall grant baseline of the councils that receive it, otherwise there would be a massive shift of government grant from poorer to richer areas of England. We await the grant settlement announcement; we do not know the outcome. The other place debated the issues around the CSR and the grant announcement earlier this week, and I noted the comments of the Secretary of State, who said that:

“I and my ministerial team are doing everything possible to ensure that local government has a fair and sustainable settlement”.—[Official Report, Commons, 6/12/10; col. 50.]

That is one that protects the most vulnerable communities and spreads the impact in a manageable way.

I look forward to seeing the detail at the beginning of next week. It sounds as though there is some movement and some understanding of the problems that the CSR has created. If there is no shift, there will be many more announcements of the kind made by Birmingham recently, which announced a few days ago that, over the next four years, it will have to cut some £200,000 from its budget every day of the week in order to deliver the Government’s spending clampdown.

The pressures faced by councils and public services are very grim. We have heard many individual examples of those. The noble Lord, Lord Lipsey, talked about the £1 billion extra on social care for adults. That extra £1 billion for local government and the extra £1 billion for the NHS are very important. However, the LGA estimates that local authorities currently spend £14.4 billion a year on adult social care, and that could rise by 2015 to some £20 billion. The issue is pretty stark.

Secondly, we welcome the transfer of public health responsibilities to local government, but the proposed ring-fencing of that budget could perpetuate patterns of spending that currently see 96 per cent of spending on treating illness, and less than 4 per cent spent on keeping people well. We have to address that prevention agenda much more keenly than we currently do.

Thirdly, I am looking for much greater collaborative working now between local authorities and the National Health Service. In terms of joint planning, budgeting, prevention and reablement, particularly for people leaving hospital who need to regain their independence quickly, these things matter very much. It is essential that the NHS reforms—when they take place—reduce management and administration costs but eliminate in particular financial incentives to keep people in hospital, and increase the financial support for prevention and reablement. The Local Government Association has put forward a five-point plan to deal with the current problems. It covers reducing the impact of front-loading, increasing capitalisation limits and accounting for missing grants. I hope that some of those will be announced more clearly at the beginning of next week.

Fourthly, there is the power to raise more income from local sources, particularly from things such as licensing fees; and, fifthly, there is a need to avoid unfair grant distribution.

We have to reduce the impact of front-loading, because sharing services, the big society approach to service delivery, will take time and money, as we have heard. Indeed, fire authorities have not had front-loaded cuts because they have convinced government that they need more time and money. It is also very important that capitalisation limits can be raised, with perhaps 140,000 jobs likely to be lost in local government.

I hope that in the consultation period after Monday, a number of things will happen. First, I hope that there will be an impact assessment on the voluntary sector and the delivery of the big society vision. Secondly, I hope that there will be an impact assessment on poverty, particularly child poverty. Thirdly, I hope that there will be a clear statement on individual councils’ revenue budget to ensure that we are not redistributing from poorer to richer areas, and that no council suffers a disproportionate drop in income, thereby requiring a higher rate of redundancy funded out of their revenues.

We need to know more about the role of business rates, because I understand from the debate in the other place on Monday night that the Government are heading for a surplus on business rates, and that needs to be addressed. There may well be a problem for some councils in setting a legal budget this year unless capitalisation limits are raised, otherwise councils are going to be forced to fund them from revenue, not from capital, and that is a very serious problem that must be addressed.

My Lords, I thank the noble Baroness, Lady Thornton, for her debate. It is timely, and, sadly, it is a subject that we will return to often in the next five years. Even without knowing the local government settlement and the contents of the localism Bill, it is important for us to understand what is happening on the ground and the impact that this is having on individuals who are not in this House.

While listening to the noble Lord, Lord Bates, I was a little alarmed. While I understand his explanation for the cuts, my concern is that the challenge for government is not just to make cuts. If we wanted to get the Budget back into balance, there are much faster and more brutal ways of doing it than what is currently happening. The real challenge for government is to make the cuts—if we have to make them—in a way that retains public services and fairness. I did not hear enough about that. I wanted to invite him to sit down with many of us in the not-for-profit sector to look at how we might transform and deliver services. That is the critical issue. To talk about pain to others, when we ourselves are not in pain, is simply not good enough.

The noble Lord, Lord Shipley, and others mentioned Total Place and community budgeting, and I should note that from Turning Point’s perspective—I declare my interest as chief executive of that organisation—I have yet to find Total Place budgeting having an impact on service redesign or delivery. It is important that we understand the difference between theory and practice.

I want to talk about an individual, because only by understanding what happens to individuals can we understand the impact of some of the things that we debate so eloquently in this House. I want to talk about George. That is not his real name, and I have been asked not to identify the local authority that provides the services to him—which in itself tells you something. George is severely autistic. He lives in a residential centre. He attends a day centre for a few hours a day and has done so for several years. He has a good relationship with the people at the day centre, and attending it is vital to his routine and well-being. He and his residential service were recently told that the day centre that he attends is reducing its staff numbers and will no longer be able to provide the support that he needs. The local authority suggested that his residential service provide the staff to accompany him, but it does not have sufficient funding to do so.

George was given three weeks’ notice that he would no longer be able to attend the centre, and the effect on him has been, frankly, devastating. As a direct result of that disruption, his behaviour has become problematic—so problematic that his support staff have been forced to administer medication. The money saved by cutting staff at the day centre will be negligible, particularly when the same local authority will almost certainly need to provide additional funding to support him in other ways, including the costs incurred by providing expensive medication to modify his behaviour. It is also possible that he may have to be hospitalised. We know from work done by the Nuffield Centre that hospitalisation drives up social care costs rather than reduces them.

Examples such as George, of which there are many thousands, throw doubt on the Government's contention that we are all in this together, because George is not. Local authorities are facing cuts to capital funding of the equivalent of 45 per cent in the CSR period, compared with 29 per cent over the public sector as a whole, according to the Local Government Association's figures. Local authorities are having to make cuts now. They have started to make cuts, as exemplified by George, and, from next October, people such as George will no longer be eligible for the mobility component of the disability living allowance—which, again, while saving a relatively small amount of money for local authorities, will remove a vital source of freedom and independence for individuals such as George, thus driving up the expense.

Cuts to social care are already happening. As we have heard, the Local Government Association has warned that from 2011, many local authorities will raise eligibility criteria. We know from work done by the Audit Commission, of which I am the last remaining member—take a good look; a member of an endangered species stands before you—that local authorities have three default behaviours when faced with cuts. The first is to increase eligibility criteria; the second is to make cuts. The last thing they do is transform services. The kind of cuts that most local authorities will have to make will simply not respond to that default behaviour, and it will cost us. Through my work as chief executive of Turning Point, I have seen local authorities form many innovative social enterprises that provide effective and often preventive services, which also get cut at times such as these. There is a resistance to innovation in many local authorities that goes unchallenged, so it is not just for central government; there is a challenge for local government as well. Many short-sighted decisions operate on a false economy, causing greater harm and cost in the long term.

There is another way. Some local authorities are going much deeper by restructuring services quickly and providing innovative ways in which to engage individuals and their communities in the redesign and delivery of services. Unfortunately, there are not enough of them, and the speed of the cuts is outpacing their ability to make changes. I ask the Government three things. First, what modelling have they done on the likely impact of cuts and raising eligibility criteria on social care and health spending? Secondly, what incentives can be put in place to encourage local authorities to innovate and work in partnership with the not-for-profit sector and the private sector in service redesign, rather than slash and burn? Thirdly, what monitoring do the Government intend to put in place to inform us all of the impact of cuts on the vulnerable, in order to ensure fairness?

My Lords, I thank my noble friend Lady Thornton for securing and introducing this debate. It could not be more timely or on a more important subject. Local authorities will suffer an overall reduction of 26 per cent in their revenue funding over a period of five years, which averages about 7.25 per cent a year. They will also suffer a reduction in capital expenditure of 30 per cent. I do not think that cuts of this magnitude are warranted by our economic situation. They seem to be driven by factors other than what the economy requires. They form part of an economic strategy that is likely to do us a lot of damage in years to come.

However, these cuts are being made, and I want to start with that. What are the likely consequences of these cuts? The Government say that savings can be made, and I agree. They can be made by removing all traces of waste, maximising efficiency and productivity, sharing departments or curbing excessive senior pay, but these actions have their limits and can take us only so far. Therefore, sooner or later, jobs will have to go and services will have to be cut. The question for us is: who will bear the brunt of these job losses and reductions in services?

The Home Secretary has said that there is a real risk that the cuts will affect women, ethnic minorities and other groups disproportionately. The IFS has said that the poor will be disproportionately hit more than others. Cuts therefore need an equality audit. After some confusion and hesitation, the Government seem to have realised that they have an obligation under the law and therefore some kind of equality audit is being done in relation to women but, so far as I know, no such assessment or audit has been done in relation to ethnic minorities, and I wish to know why. There are people, such as my good friends Professor Michael Keith of Oxford University and Professor Modood of Bristol, who have been doing some counting on how these cuts will affect ethnic minorities. The picture that emerges is grim and I want to share it with the House. There are four levels.

First, cuts in government employment will affect just under 500,000 people and about 100,000 jobs will go in local authorities, which is one in 10. Ethnic minorities are disproportionately represented in the public sector, and therefore they will be the first to suffer. Given the fact that few of them are in senior positions and the sad reality of racism in certain sections of our society, they will obviously be made to bear the brunt of services that have to be cut. Cuts in police funds are also likely to affect ethnic minorities more than other groups. I am particularly concerned about police community support officers, who enjoy the support of the local community, are drawn from local communities, predominantly from ethnic minorities, and do most valuable work.

The second area that worries me is social housing. Seventeen per cent of the white community, 41 per cent of the Afro-Caribbean community and 47 per cent of Pakistanis and Bangladeshis depend on social housing. Ethnic minorities will therefore bear the brunt of cuts in housing benefit. These cuts are more likely to affect larger households where ethnic minorities are more represented. There is therefore a real danger of residential segregation or what the Mayor of London called “ethnic cleansing”. That is exactly what happened in Chicago under Reagan when he followed similar policies.

Thirdly, the Government say that they will protect education and health, but the question is: how are resources going to be distributed and used in those areas? Primary education and the special educational needs of ethnic minorities will certainly suffer and although the NHS budget is ring-fenced in real terms, job losses will occur and many services will be cut, particularly in relation to ethnic minorities, such as mental health or translation for those who cannot speak English. Let us remember that ethnic minorities make up 11.4 per cent of the NHS workforce. Few of them are in managerial positions and therefore are likely to be the first to bear the brunt.

Finally, I turn to the voluntary sector. In the past two years, there has been an increase of around 80 per cent in the demand for services from ethnic minority voluntary service organisations. But their resources are limited and cannot cope with the increase in demand. Some 42 per cent of ethnic minority charities have an income of less than £10,000 and rely on public sector funding. Some 49 per cent of their budget comes from central government; 26 per cent comes from local government; and 16 per cent from the health authorities. When these budgets and grants are cut, ethnic minority organisations will suffer most.

I want to raise a larger cultural or philosophical problem, which is of great importance. As the state shrinks and offloads its functions to other organisations in the name of the big society, things of a peculiar kind begin to happen. As the state retreats there will be vast gaps, which will have to be filled. Who will fill those gaps? We are told by the Prime Minister that the big society will fill the gap, but the big society is an abstraction. It consists of a number of institutions, some of which are better organised than others. Therefore, there is a real danger that religious organisations, especially churches, will step in to fill the vacuum left by the state. This has happened and continues to happen in the United States.

Churches are better organised. They have large sums of money available to them and have networks of voluntary workers. As the voluntary sector suffers the squeeze, churches will step in as they are already beginning to do. I am particularly worried not just in relation to the white population or the Christian community, but equally worried in relation to the Muslims because many of them are in need. They are the most unemployed and the most alienated. They would want to turn to mosques or mosque-related charities to help them with the problems that the state has offloaded on them. I shudder to think of where, as a consequence of this, the mosque and mosque-related charities will get their money.

Finally, I have three questions. First, will the Government undertake an equality audit in relation to ethnic minorities? Secondly, will they continue to monitor the situation periodically for the next four years? Thirdly, will they ensure that the voluntary sector is well funded and does not fall into the hands of religious organisations of this or that kind?

My Lords, I, too, thank the noble Baroness, Lady Thornton, for calling this important and timely debate. I am honoured to follow the noble Lord, Lord Parekh, who recently spoke about the need for our society to be one in which everyone feels that they could belong. He warned of the dangers of alienation and isolation, which he has just repeated. Yet the latest UNICEF report on child welfare in developed nations again places us towards the bottom of the table. It highlights that, in particular, we have a long tail of child poverty. Many of our children in poverty are more deeply impoverished than those of our peer nations. They are more deeply alienated and isolated.

Perhaps I may refer to the comments made by the noble Lord, Lord Bates, and talk about the efficiencies that still might be made by local authorities. I read with interest the Philip Green report on efficiencies that could be made across government by using its size and volume to commission services in a much more efficient and effective way. I welcome what the Royal Borough of Kensington and Chelsea and the London Borough of Westminster are doing in terms of sharing services. At this critical time, I very much encourage that motion towards those new efficiencies. The right honourable Iain Duncan Smith and the honourable Graham Allen have worked together in establishing the importance of early intervention in breaking the cycle of intergenerational poverty. They highlight the huge cost to our society now and in the future for failing our most vulnerable children and families. I pay tribute to all the parties for their commitment to this endeavour.

We are in a dark time. We need only look to Eire to see the risks we face and the need for retrenchment, so we must take this opportunity to focus our resources on the essentials and to innovate. As my noble friend Lord Adebowale said, we need to redesign our services and delivery. If we can take a breath and step back, as the noble Baroness, Lady Sherlock, said, we must do that because many families and young people are going to lose out under the current arrangements. I hope that the Government will listen to the words of my noble friend Lord Low, and that they will monitor carefully the impact of these cuts on the most vulnerable.

I wish to consider how we can do this for the Sure Start children’s centres. Will the Minister consider giving guidance to local authorities on how to keep the essentials of children’s centres alive at this time and how to make them as financially independent as possible? I would welcome the opportunity to discuss the matter outwith the Chamber, given her vast knowledge of local authority affairs and her responsibilities in this area.

Recently I visited the Melcombe Primary Children’s Centre in the borough of Hammersmith and Fulham, and I was impressed and moved by what I saw. On Tuesday I received an e-mail from the manager, Joan Murphy, which says:

“This is just to keep you updated. As you are aware, the funding for children’s centres will not be ring-fenced next year. We have received information from Hammersmith and Fulham borough informing us that:

1. The local authority will not be funding any centres under the new arrangements and

2. No funding expectation should be assumed.

We are therefore extremely concerned about our future”.

I also received a letter from one of the mothers I met at the centre. She is a Thai woman and I will read her words verbatim except for making occasional amendments for the sake of clarity:

“I want to say that I am one person in the children’s centre. Every time that I go to children’s centre I see people and family enjoying friends and family, and then when I come back, everyone has very nice smile. I want to see my daughter come back again. I stay very far. Need to take two bus and come back two bus. Long way to go, but I happy to go this class because everybody very good people in there and very good parent in there. I mum and very happy to take daughter place very clean lots of toy and very good children. Somebody I know tried to go to another centre near their house and then they came back again because they say in this centre good students and quiet … We have very big trouble before but Adrienne help me a lot”—

the family welfare officer. She continues:

“And then when I want my help sometime they come to my house for helping. I mean like we need to come to them to help but they come to my family … Staff help me and tell me and always smile and this very nice”.

She goes on to say that:

“Another one parent she have problem with her baby who die soon but council not give her no stair. She need to carry baby go upstair downstair every day. She quite old lady. I not understand but Adrienne try to help her”.

This refers to another parent, an elderly lady with a child suffering from muscular dystrophy for whom no appropriate housing could be found. She had to carry her child up and down the stairs.

I want to make the point that it is crucial to social cohesion that these centres continue to exist. They offer a place for parents on the edge of society to gather together in order to do improving things with their children and meet other parents, thus easing their sense of isolation. Without that these parents can easily become depressed. They lose their joy in life and in their children, and the vital attachment which we all recognise, particularly in the earliest years between parent and child, can be undermined.

Not all children’s centres are excellent. Melcombe Primary Children’s Centre certainly seems excellent to me and I hope with all my heart that something can be done to save its services. Meeting with the chief executive of the London Early Years Foundation yesterday, I heard some helpful suggestions on how children’s centres can be made more self-supporting and effective. They can adopt a Robin Hood approach, asking parents to pay for services at different rates according to their means. They can make use of charities such as Home-Start to provide services for families. They can adopt the reserve grandparents model from Denmark and become multigenerational centres while saving money. They can make use of time-banking or become largely independent social enterprises. They can indeed be at the very heart of delivering the big society.

I ask the Minister as a matter of urgency to consider whether guidance can be given to councils on the essentials of what needs to be saved and how children’s centres can become more self-supporting. I ask her whether a kite-mark might be developed to be given to local authorities that adopt best practice in this area, as has proved very effective for universities in improving support for care leavers. I ask her whether more could be done to encourage philanthropy and to encourage businesses to consider corporate social responsibility in this area. I look forward to her response.

My Lords, with the leave of the House, may I speak in the gap? I apologise for this but due to an error on my part my name was not added to the list. I declare interests non-pecuniary with connections with the Scouts and the youth service in Lancashire. I concentrate my remarks on a belief that the severity and speed of the cuts in local government are unjustified and dangerous. I accept the need for cuts; my background in local government over 27 years tells me it’s not unusual, as the song says. However, the severity and depth is awful.

I am worried about the implications for the voluntary sector, whether it is for the youth service or victims of domestic violence. It is no good those in government or at any local level saying that we must protect the voluntary sector—the voluntary sector is voluntary in terms of local government, so much of the money is spoken for. I regret that we do not have the information on the RSG today but I know that there is evidence that local government is going to suffer massively.

Perhaps I could slightly challenge my noble friend Lord Parekh, because on the day that the Prime Minister spelled out the implications of the big society I was speaking to a Republican mayor from a small town in Texas. He said: “You know, this is not new. Ronald Reagan tried this. My local church is by and large a very wealthy community”; he was a pastor at the local church. He said: “We were only too willing to help. But then we discovered that to replace the public spending, 200 people in a local church community had to raise $500,000 a year—merely to stand still”. This was far below a level in which they could build up and implement improvements in local services.

I am deeply concerned about where we are heading. We have all sorts of local initiatives working well with people who are heavily committed to working in partnership, whether it is with the churches, Physically Handicapped and Able Bodied youth centres or victims of domestic violence. It takes years to build up the commitment, whether it is finding the churchwarden who will run the local church youth group, or finding the people who will help with the multicultural, multi-faith, multiracial youth group in my home town of Preston. Whatever it is, it takes years to develop this level of community activity and I am deeply worried that people are really crying in the wind if they think these services can be protected—but perhaps the Minister will be able to assure us that she will take back the message that we in local government ask not to be spared, but for equal treatment at the right speed.

My Lords, I congratulate not only my noble friend for introducing the debate but all those who participated in what has been a very thoughtful exploration of the issues which are faced up and down the country. In doing so I declare interests as—like the noble Lord, Lord Shipley—a vice-president of the Local Government Association and a member of Newcastle City Council, and in my case also a president of Age UK Newcastle and vice-president of Newcastle Council for Voluntary Service.

Those few noble Lords who were present two weeks ago may have had the dubious pleasure of hearing me address the House and refer to Engels. Today I want to begin by demonstrating the breadth of my exploration of 19th-century political philosophy by quoting another luminary, Karl Marx, who famously proclaimed that history repeats itself; the first time as tragedy, the second time as farce. I hasten to assure your Lordships that the modern Labour Party owes more to Marks and Spencer than to Marx and Engels, but I invite you to join me on a journey back into the past and to return to 1979, likened on a couple of occasions in a debate in another place the other day, to which the noble Lord, Lord Shipley, referred, to “Life on Mars”. I noticed rather surprisingly that Mr Pickles did not add the word “bars” to that phrase.

Nevertheless, as an exercise it is worth repeating because in 1979, as some noble Lords will recall, the noble Lord, Lord Heseltine, as he now is, campaigned on a platform of setting local government free and within six weeks announced the first round of financial penalties on overspending councils—of which, I confess, my council was deemed to be one—and, incidentally, then set off a chain of cuts and capping which went on for several years. At the same time, the new Government also increased VAT, although by considerably more than the present Government propose to do in a few weeks’ time.

So there is a sense of déjà vu—except for this: the cuts will be much worse this time. They are preceded by extensive cuts in June of this year; they embody 36 per cent cuts in formula funding and, as we heard from the noble Lord, Lord Adebowale, 45 per cent cuts in capital, which will have significant implications for both the private and voluntary sectors. I invite the Minister to indicate what estimate the Government have made about job losses in those sectors.

I congratulate the noble Lord, Lord Bates, on being the only Conservative Back-Bencher to speak in the debate; on being virtually the only one present during it; on coming from the north-east; and, like the Minister, although praying in aid the deficit—the standard mantra we hear from the government Benches these days—on not claiming, at least on this occasion, that the deficit arose solely because of the extravagance and expenditure of the Labour Government. Perhaps he recalls—as no one else on the Benches opposite seems to do—that the Conservative Party pledged itself to spend exactly the same amount of money at least until November 2008.

The noble Lord need not take it from me that there are serious issues here. I can refer him to the Liberal Democrat leader of Newcastle City Council pro tem, Councillor Faulkner, who warned the Deputy Prime Minister that the city cannot take another spending blow similar to the one made over the summer. He did that two months ago and then last week, in endorsing the approach of the north-east councils, he said:

“We believe the Government has been very slow to open its eyes about the impact on local government and in particular of not taking account of deprivation”.

He went on to say:

“It is going to be the most challenging four years that we have ever faced”.

An anonymous council—even in these days of WikiLeaks one has to respect some degree of anonymity—has decided that it will be making substantial cuts in its back-office services and £12.5 million-worth of cuts in children and young people’s services, £4.5 million in adult social care and £2.5 million in housing front-line jobs, exactly fulfilling the warning of the noble Baroness, Lady Eaton, chair of the LGA, that this would follow.

I would like now to deploy another 19th-century writer—this time it is not a political writer but the novelist Charles Dickens—in looking at the Government’s approach. We are being led through great expectations to a bleak house and eventually, of course, to hard times. In the context of local government we are being led by Mr Pickles, who brings all the qualities of that blunt northerner Wackford Squeers, together with some of the qualities of Mr Bumble, in his approach to this local government settlement. He was the first Secretary of State to settle, offering up the biggest cut of any department except Defra in percentage terms but actually seven times more in cash terms—the £5.6 billion to which people have referred—and heavily front-loaded, as others, including the noble Lord, Lord Tope, have said. He has so far refused to authorise capitalisation of redundancy costs, as referred to by the noble Lord, Lord Shipley, and I again ask the Minister to say how, if capitalisation cannot take place, the redundancies can be funded without affecting front-line services.

Faced with criticism from all sides politically in local government, particularly with regard to the effect of the cuts on the areas which are the most disadvantaged, the Minister who was first to settle is now scurrying around to be the last to extract concessions from the Treasury to mitigate the damage that would otherwise occur. To invoke Dickens again, he is a sort of Oliver Twist manqué. Oliver Twist asked for more, but he did not first of all offer half his dinner up in the workhouse as a sacrifice. However, in addition to that, Mr Pickles has engaged in some diversionary activity. He has used a smokescreen to virtually accuse councils of sitting on £10 billion of reserves, as if they were casually lying around. He ought to know that, of that amount, some £6 billion is earmarked; it cannot be used other than for authorised purposes—for example, pensions reserves, major repairs or capital. Capital cannot be used, of course, for revenue purposes unless specifically authorised, hence the request to authorise capitalisation to deal with redundancy payments. In fact, only £3 billion out of £68 billion of revenue is in unallocated reserves. In addition to that, some is in school reserves, and it is not evenly spread about.

An additional diversionary tactic was a rather squalid attack on the chief executive of the Local Government Association and his salary, and indeed on other chief executives promoted by the Secretary of State and the Minister for Housing. It was the same Secretary of State who appointed the chief executive of Doncaster Council at a salary significantly more than that of the Prime Minister. I agree with him that joint services should be brought to bear. There are savings to be made of that kind, but they will not be made overnight. Therefore there is a need to avoid front-loading, and to give the local authorities and others time to develop that approach. That includes, of course, Total Place, although I agree with the noble Lord, Lord Shipley, that progress so far is slow, and it is disappointing that there are only 18 pilots.

Obviously it is good that £2 billion less will be cut from social care than would otherwise be the case. However, it must be borne in mind, first, that the Local Government Association’s prognosis is that a 4 per cent increase year on year is required because of demographic trends. The Government appear only to accept something like 1.4 per cent. Secondly, the deployment of the National Health Service proportion has to be agreed with the National Health Service. It is not simply to be transferred. In any case, it looks very much as though the £2 billion surplus in the non-domestic rate accumulation will be applied effectively to pay for this; but that is money that ought properly to be in local government in the first place. Therefore it is a little much to claim the credit for that. There are issues that arise here. The Association of Directors of Adult Social Services says that the £2 billion over the next four years is good news, but only in a settled state—and, of course, we have not got a settled state, given rising demand and rising costs.

There are then some further questions for the Minister. First, is there an estimate of what is going to happen on eligibility criteria and of how many authorities at the end of the day will be extending assistance to those other than the most critical? That question was asked by the noble Baroness, Lady Sherlock. Secondly, what would be the impact on third-sector providers of social care? Thirdly, in view of the capital restrictions, what estimate has been made of the potential reduction in aids and adaptations? Several of your Lordships speaking in this debate have referred to the need to recognise that social care does not stand alone, a point made by my noble friend Lady Thornton and the noble Lord, Lord Low. A whole range of services are clearly connected with social care—housing, schools, transport, leisure and culture. All are relevant to adult services, not just for the elderly but for younger adults who may suffer from a disability.

In summary, it seems that the new localism is more about localising blame than localising opportunity and genuine decision-making. If I can congratulate the Government on anything, it is that they are going one better than Karl Marx, because on this occasion history is repeating itself at one and the same time as both tragedy and farce.

My Lords, this has been an extraordinarily interesting couple of hours. I was just thinking to myself as I was sitting here that I was sorry that I was not Freddy Howe, because we could perhaps have done a two-headed job on this. I am going to have to try to stand in on those aspects of the debate concerning health as well as deal with local government.

I shall start from where noble Lords would expect me to start. Everything that we are talking about today takes place against a background of a very difficult economic situation. I am not going to level cheap shots about that; I have done that several times, but I will not today. We have to accept that, whichever Government had come in, there would have had to have been immediate reductions in expenditure. I know that if the Labour Party had got in, it would immediately have had to make, and had expected to make, reductions of anything up to £50 billion at once. We know that that is in the Treasury reports.

Where we are starting from, probably, is how you deal with that deficit and where you lay the main difficulties. I have to say to noble Lords opposite that if local government does not bear it, somebody else is going to have to. We are all in this now—someone said that we are in this together—to try to sort out the best way out that we can. This Government believe that the best way of dealing not only with the deficit but with the future way of managing services and taking people’s lives forward is to bring in what we are calling “localism”, which is to devolve absolutely everything that we can from the centre to the local. Many people have said it before—many Governments have said it, and I am going to say it again—but this time it will happen. When noble Lords see the decentralisation and localism Bill, they will understand that everything—the decisions that affect all our lives—will go from the centre and be dealt with by the local. Local authorities will work with local social enterprise, local and voluntary organisations, other local public bodies and the health service to put their services into place and to have access to all the money that would have been at the centre—certainly in terms of local government money. This is a huge transference of funds and responsibilities.

To many of the questions that I have been asked today, which will be in Hansard for people to look at, the answer is: do not look back to central government for the answers because they will not be there. They will have to come from local government, from relationships with local government and the working from there on how the money will be spent and under what conditions. That is a big responsibility that is being handed down.

We started with the thoughtful and measured introduction by the noble Baroness, Lady Thornton, on adult social care and the future of health services. The issues of PCTs and GP fundholding take me back; we have all been here before. I start with adult social care. The £1 billion is not ring-fenced but is down and intended to be used for adult social care. Everybody appreciates that there are huge problems building up: demography, the elderly and the need for all the services, which the noble Baroness pointed out. The expectation is that money will be passed round social care from the health service and spent accordingly. A health Bill is due, where I am sure some of the matters that the noble Baroness raised will come up.

On the question of GP commissioning and what they will have to do, shadow GP commissioning will be set up to look into most of the systems and matters that the noble Baroness raised. PCTs are already developing good commissioning practice, on which they will capitalise. I read the other day that GP commissioner pilots are being set up that will work out what they have to do. Shadow bodies will be introduced as soon as possible to help test the new system. We are allowing three years to consult on the reforms and put them into practice, which means that there will be time to ensure that any problems in the system—the relationship that the GPs will take the responsibility for—can be ironed out. The White Paper will include all these.

The noble Baroness and other noble Lords raised the eligibility criteria for various aspects of services, some of which are as important—such as home cleaning—but perhaps less recognised than others. Support for day centres, residential care and care in the home will all be in the hands of the local authorities. I know that they already have to make decisions on criteria but they will also make the decisions that follow up on that. Inevitably, we are now looking not just to the reduction to funds going forward. Everybody has been working under considerable constraints for some time. So quite a lot of the changes that people have been talking about and the restrictions have been around for longer than this Government.

I am grateful to my noble friend Lord Bates for his stringent and stirring words in defence of the budget reductions. He said much of what I would want to say. We have to make the reductions but there are better ways of doing things. There are opportunities that will come out of this. The noble Lord, Lord Adebowale, asked about social enterprises. The noble Earl, Lord Listowel, asked what co-operation and what other means of looking at services—such as social enterprises— would be used. This is all again part and parcel of managing a budget and being sure that you get reductions and efficiencies of service and that you use everybody’s skills. Social enterprises are a fabulous way of dealing with the social services requirements and the needs of people. We expect to see more of those over the next few years.

The noble Baroness, Lady Sherlock, talked about the cuts to adult social care. With the extra £1 billion, we think that there should not be cuts. Local councils do not solely rely on government grants. They have council tax as well. The noble Lord opposite was a bit withering about reserves. Some councils have reserves and would be able to use some of those.

While the settlement is clearly challenging, we do not think that there should be a huge impact on adult social care given the £1 billion in the local government settlement and another £1 billion earmarked through the NHS budget for spending from next year onwards. With a strong focus on efficiency and co-operative working with others, we believe that adult social care should continue to be a top priority of local authorities.

The noble Lord, Lord Tope, referred to front loading, as did other speakers. I know that there has been a lot of concern about the front loading of the grant reductions. That is a matter for the spending announcement which will be made in the next few weeks. If front loading occurs, it is because we need to deal with the deficit as soon as we can and get that under control. If we can cope with that, it will make everything much easier as we go forward.

Noble Lords asked many questions in their excellent speeches. I accept immediately that reductions in social care and health services constitute a sensitive area for many people. Many noble Lords are involved in the services and in voluntary organisations and I understand their anxieties. Some of the questions can be answered at this stage and some cannot. I have been asked to give assurances. The best that I can do in that regard is to look carefully at the questions that have been asked and ensure that proper replies are given to them.

Noble Lords discussed whether philanthropy could be the answer to some of these problems. The right reverend Prelate the Bishop of Ripon and Leeds mentioned that. He is very concerned about children and young people and the need for organisations to do more for them. Everybody wants to be able to do more but under the circumstances people may have to rationalise what they are doing and try to ensure that they provide as good a service as they can.

One recognises immediately what the noble Lord, Lord Lipsey, and others have said about the patchiness of services and the low standards of care at home. However, these sort of questions have been raised over a number of years and it is disappointing that they have still not been addressed. I do not think that maintaining standards, and people’s view of standards, should be totally governed by finance. Everybody has a part to play in ensuring that the resources that we have are used to good effect and that people looking after older or elderly people do so to the best of their ability. As to the state of residential care in old people’s homes, I agree that some homes offer better care than others.

The noble Baroness, Lady Barker, has a lot of experience and I listen to her very carefully when she speaks. I understand that more details about the £100 million in transformational funding will be available. It is £100 million over 2010-11 and 2011-12, so it is £100 million over the two years. She asked about the capacity and willingness of GPs to commission social care. Our understanding is that GPs are going to be told that this is what is expected of them. They are going to be required to commission and provide the services that everybody needs. That, again, will have to be tested out under the transitional arrangements.

The noble Baroness, Lady Wilkins, asked whether we could meet to discuss portability and I would be happy to arrange for that to happen. I know that matter is being looked at and so we will arrange to do that. The noble Baroness also asked about DLA removal. There are currently two mismatched systems for assessing the needs of disabled people and I think the measures are being looked at. The two systems do carry the potential for duplication and so that needs to be assessed.

A number of questions were asked about modelling of what is going to happen as a result of the reductions. I do not think there will be central modelling, but I will of course take back the concern that some care should be taken to see what the effects are on the services and the way they are run.

It has been an extremely interesting debate and has raised a whole host of issues, some of which I have dealt with, some of which I have not; some I hope I have dealt with adequately in some way. Nonetheless, the debate was well brought and I am glad we have had it. Two people were mentioned. One is George, who we need to know about; the other is the elderly gentleman with COPD mentioned by the noble Baroness, Lady Thornton, who I believe will be looked after properly.

I start by thanking the Minister and all noble Lords who have taken part in this debate. The noble Baroness’s first remark—that she wished she had had the noble Earl, Lord Howe, with her—is exactly right, because this did need both the local government and the health perspective to make it a rounded debate. I regard this as the start of the discussion about social care. We need to think about how we have these debates so that we can have the full range of government response that is required. This timing was perfect because we have identified in your Lordships’ House today the questions that need to be asked and that we need to keep asking about these issues. We have had several themes. We have had what I suspect is, from the coalition’s point of view, a lobby. The noble Lords, Lord Tope and Lord Shipley, are in there lobbying on the front-loading issue, backed up by my noble friend Lord Beecham. We have had individual stories, which are a very important way of addressing issues that cut across so many government departments. Unless you consider George’s story, the stories that the noble Lord, Lord Low, and the noble Baroness, Lady Hollins, described, and the issues for people with learning disabilities or whatever they are, you cannot test whether these systems are working, how they are evolving and how they are changing.

My noble friends Lady Sherlock and Lady Wilkins talked about children and the disabled. The noble Earl, Lord Listowel, gave a very moving account of the Sure Start centres in Hammersmith and Fulham. It will be a terrible tragedy if they are closed, as it looks like they might be.

We talked, as this House always does, about the partnership with the voluntary sector. The right reverend Prelate, the noble Baroness, Lady Barker, the noble Lord, Lord Adebowale, and my noble friend Lady Farrington emphasised the extremely important role of the voluntary sector. However, as the right reverend Prelate said, it is not a substitute for properly funded public services.

Then we talked about who pays and fairness. The noble Lord, Lord Adebowale, and my noble friend Lord Parekh raised these issues. I have to say that I was disappointed that the noble Lord, Lord Bates, and the Minister basically said—I paraphrase—“Well, actually, tough, because this is tough”. The noble Baroness also used the words, “We are all in this now”. Actually, we are not all in this now. Some of us are not in this, but the vulnerable, the poor, the disabled and the children are, and it is a grave problem. Some big questions were also raised by my noble friend Lord Lipsey.

We have raised many questions that still need to be answered. The Government are abrogating wholesale their responsibility towards some of the disabled, the elderly and the vulnerable in this country. We need to keep doing our job. We need to keep asking these questions, because that is what we are here for. I thank noble Lords and I beg leave to withdraw my Motion.

Motion withdrawn.