My Lords, I start by drawing the attention of the House to my interests, as laid out in the register, as vice-president of the Local Government Association and as an elected member of Sheffield City Council. We have the luxury of three hours for this debate, which is good on such an important issue, and I have the added luxury of 15 minutes. I promise noble Lords that I will not take that long but will leave wiggle room for others who might wish to expand on what they wish to say. I thank the many people who have helped us get ready for this debate: we had a wonderful briefing note from the Library and many organisations have sent us briefings, including SOLACE, the Local Government Association, trade unions and third sector and charity organisations. I also thank noble Lords who are going to speak in the debate for putting down their names. I hope that they will contribute to this debate and give food for thought for Ministers in terms of how local government can go forward from the situation in which it now finds itself.
I am very pleased to be leading this debate because to me it is a vital issue that affects every village, every town, every city and every region: local government has a positive power to change people’s lives. Just think of the older person who is becoming vulnerable and possibly losing their independence. With good public health, good housing services and good social services, that person can continue to lead an independent life with dignity. Just think of the young man who might be on a crossroads between violence and going forward to have a fulfilling life. With good youth services, and education services, that young person can be supported to make the correct decision and have a successful life.
Local government can facilitate enterprise and business locally with good business development services, planning and support services provided by local authorities. They can help to create vibrant, successful and sustainable communities: libraries, parks, clean air, shared spaces and bringing people together to give them opportunities to achieve. That is the vision that I think most people have of a good local service: bottom up and delivering for people—not just a service provider of last resort but a local democratic hub that facilitates and brings opportunities for people and businesses to succeed.
My Lords, I did not have the long and distinguished career in local government that the noble Lord, Lord Scriven, obviously had, but I did spend a period in the chamber of Oxford City Council. I learned a lot from those experiences, such as the excellence of many local government executives. When cutting my teeth as a local councillor, I also learned a lot from those who are now in your Lordships’ House, such as the noble Lords, Lord Hunt of Kings Heath and Lord Liddle; I am pleased to see the latter in his place. Indeed, they cut their teeth on me with some inspired heckling over the years—all forgiven, but never forgotten, I assure them.
I should also make a declaration of interest: not in the conventional sense but rather, a declaration of residence or work—and as a consumer of local authority experiences—in three different places. First, I work in the City of London, which is an extraordinary place. You would not invent the governance of the City in a month of Sundays, but in an amazing and largely non-partisan way, it works. There are the streets that you could almost eat the apocryphal breakfast or lunch off, and it delivers very good services both within the City and to its outliers in a broadly non-partisan way, which is good.
Secondly, I award a mark, with some temerity, to the City of Westminster down the road, where I first moved when I went to another place and have lived ever since with my wife, who also works in London. It is clear that the City of Westminster behaved pretty disgracefully in the past, mucking about with the sale of council houses, which was a shaming event. But it has served its time, worked its way out of the situation and now, extraordinarily—it is hard to work out quite how—manages to deliver level council tax demands with a very high level of services, including the street cleaning that I mentioned. It is funny how you judge local authorities by the things that first hit you in the face, and street cleaning is obviously one.
12:23 pm
Lord Beecham (Lab)
My Lords, I refer to my local government interests in the register. In my 52 years as a Newcastle City councillor, I have lived through difficult times for local government. In all that time, I cannot recall so many Conservative councils criticising a Conservative Government for their failure to fund adequately the provision of local services, as is now the case.
The failure to update the council tax system, which is now 27 years old, and to take into account the widening gap between authorities like mine—and others in the north-east—and those in the more prosperous parts of England in the amount that council tax yields has exacerbated the problem. It is ludicrous to leave unchanged a system that allows council tax on a band H property near where I live, on the market for £4 million, to be only three times the amount payable by residents in the council ward I represent in a band A property worth £40,000. I concede immediately that the Labour Government should have addressed this issue, as I argued at the time, but it is all the more essential to do so when the pressure on budgets becomes ever more heavy and government cuts bite ever more deeply.
It is sobering to recall that, between 2010 and 2017, homelessness nationally rose by just under 40%, the number of looked-after children by just under 11% and the number of people aged over 65 requiring care by 14.3%. Cuts to environmental services, culture, highways, transport, housing and planning services range from 14.65% to a staggering 52.8%. Meanwhile, the failure adequately to fund the NHS and the police service has added to the problems facing individuals, communities and the councils which seek to serve them. Moreover, we all know that GP practices are under great pressure.
I remind the House that, for five years, the Lib Dems were party to the damage inflicted on individuals and communities not only by the cuts to which I have alluded but by a range of other policies. These include the abysmal impact of universal credit, with 40,000 new council residents affected by so-called welfare reforms; the bedroom tax, which in Newcastle siphons off £2 million a year from 3,000 residents and the local economy; the dismantling of regional offices of government which have facilitated an understanding in Whitehall—in fairness, they had been established by a previous Conservative Government, but now of course they are no longer there—so that the diverse needs of different parts of the country are not addressed; and the failure to invest in improving highways and rail services in the north-east.
As the Public Accounts Committee reported last July, between 2011 and 2017, government funding of local authorities fell by 49.1% in real terms. In Newcastle, that translates into cuts that currently stand at £270 million a year, rising over the next four years to £327 million, with £16.9 million required in the upcoming 2019-20 budget. The loss is already £1,000 per head of population and £2,550 per household, rising to £3,000 per household by 2022. These figures come after raising council tax next year by the permitted amount of £5.2 million and business rates by £1.8 million or 1.7%.
My Lords, I draw the House’s attention to my interest as a vice-president of the Local Government Association. The situation that local government finds itself in is unprecedented. Over my 16 years as the elected Mayor of Watford—the noble Lord, Lord Beecham, may be interested to hear that this covered several Governments, including the last Labour Government—I lived, battled and struggled with these changes.
We are now in an era of increased demand, in particular for services for the elderly, children with special needs, those in social care and homeless families. Yet councils have fewer resources than ever to deal with these demands, and some are at breaking point. This situation—where think tanks, eminent charities, unions and the Local Government Association all agree that the current situation is unsustainable—is the culmination of well over a decade of year-on-year cuts. These need reversing. Local authorities need a significant injection of cash now.
While the impact on these services has been gradual but significant, it has been different in different types of councils, in different areas and in different parts of the country, which is why it took so long to get a collective national agreement that local government is underfunded and at crisis point. As emphasised by the noble Lord, Lord Patten, the narrative until very recently, heavily peddled by some Secretaries of State, was that there was plenty of money sloshing around local authorities, reserves were high, they had plenty of capital assets and they were juicy pips that needed a good squeeze. In truth, local government surpassed itself in trying to cope with reduced funding, often finding innovative and enterprising ways to generate income and protect services. As in any sphere of public administration, not all councils were perfect, but each pet peeve of a Minister, an MP or the TaxPayers’ Alliance made a headline that served to reinforce this negative view of local government as an easy target for austerity cuts. By absorbing a lot of the early cuts through innovation and good practice, we found that, instead of receiving due recognition from the Government, we had simply fed a narrative that we could be cut still further.
12:41 pm
Lord Kerslake (CB)
My Lords, I thank the noble Lord, Lord Scriven, for initiating this debate. On this occasion, I agree with pretty much everything he said in his very strong speech. I should also declare my interests as president of the Local Government Association and chair of Peabody, Be First and the Centre for Public Scrutiny. My other interests are as listed in the register.
When we look at what has happened to local government over the past eight years of austerity, two dominant stories emerge. The first is of a sector that has faced up to the challenge of spending reductions unmatched in any other part of the public sector. The LGA talks of councils losing 60 pence in every £1 in government grant over the 10 years from 2010 to 2020. Even if we take account of changes such as business rates retention, we still see a reduction in effective spending power of more than one-quarter and nearer one-third. This is the reality of what has happened.
Despite this extraordinary, unprecedented reduction, local government has kept the show on the road. Indeed, only one council has required government intervention due its financial difficulties. Financial planning has, by necessity, got better, and most councils now have a good medium-term financial plan in place. Effective scrutiny in the best-run councils has made a difference by providing constructive challenge. I would be very surprised if this year any council is unable to set a balanced budget for the year ahead. This is to the immense credit of local government.
The second story, though, is of a decline in local services and in public satisfaction with local government. We cannot disguise this. The National Audit Office’s report Financial Sustainability of Local Authorities 2018 shows that, between 2010-11 and 2016-17, local authorities cut cultural and highways services by more than one-third. They did this in good part to protect the statutory adult and children’s care services, but even these are now facing real and increasing pressure.
We often talk about services such as libraries, leisure service and the street scene as discretionary services, but they form an essential part the quality of life of our places, and in the end—this is the key point—they are the services that people think they are paying their council tax for, so we have an enormous mismatch that is getting bigger. Those two local government stories of effective financial management and sharply declining services, despite efficiencies, go hand in hand. At root, they result from a failure to develop a sustainable model for local government finance.
I have argued for some time that delivering the first five years of austerity did not automatically mean that local government could deliver a second five years of austerity. You could not run the same record twice. In fact, the growing pressures on adult and children’s care alone, which make up more than half of local government spending, told us that that was impossible. We could see it; we did not need to look in the crystal ball. We are now seeing the consequences of that undeliverable plan which was put in place.
My Lords, I shall concentrate on the provision of social care but, before that, I want to mention something that I would call an essential service but which turns out to be discretionary. Here I shall lower the tone of the debate so I hope noble Lords will not mind; I am talking about the provision of public conveniences, lavatories, toilets or loos throughout the country. Those that are left are now often maintained by town or parish councils, but for how long? In 2010, there were over 5,000 public toilets; now, there are 4,486. Is it right that fast-food chains, supermarkets and coffee shops have now virtually taken the place of public toilets? What happens when these places are closed, when managers are reluctant to let everyone use their facilities or when there are no accessible toilets? We should not forget the silent number of people trapped in their homes because of continence problems.
I turn now to social care. As the noble Lord, Lord Kerslake, said, we are no nearer to seeing the Government’s Green Paper; as late as October, we were told it would be with us by the end of the year. The funding issue is a fiendishly difficult problem because social care encompasses so much and is so little understood. We need a different term; I agree with the noble Lord, Lord Patten, about language. The word “social”, according to the dictionary, means,
“marked by friendly companionship with others”.
But, in local government terms, it has a much sterner face to cover the state’s obligation to help care for children, including those with mild or severe learning difficulties, as well as disabled and elderly adults. It may have to cover playschemes for disabled children, personal assistants, aids and equipment, care at home and residential care.
Not only are we all living longer, but there is now a better survival rate for people with serious health conditions. I believe that the dictionary definition of the word “social” is one reason why so many people think the service is free for council tax payers rather than means-tested, or partly means-tested. Anyone who thinks the answer for even quite severely disabled people is NHS continuing care should think again as it is very difficult to get. As for delays in hospital discharges, these are still causing a problem due to care packages having to be negotiated or re-negotiated. Can the Minister say how the Government have evaluated the impact of health and well-being boards in tackling the increasing number of these delays?
12:57 pm
The Lord Bishop of Worcester
My Lords, I rise with a heavy heart to raise questions concerning the ability of local councils to deliver essential services to their communities. I welcome the prospect of increased short-term government funding but, without that being increased and continued or there being rises in council tax, whatever the rights and wrongs of that, I question whether it will be sufficient to enable councils to meet rising demand, especially in social care. That issue is of immense concern, but others have spoken eloquently about it.
I want to take your Lordships to Worcester—what better destination could there be?—to consider not social care but another service that is under pressure as the county council struggles to make ends meet: the archive service. A proposal has recently been made to cut £405,000 from a £700,000 budget that is already down from £1.2 million in 2010. That proposal is being considered at the moment and causing immense concern. This is the sort of cutting to the bone and into the bone to which the noble Lord, Lord Scriven, referred. The Worcestershire Archive and Archaeology Service—I declare an interest, though not a financial one—cares for our diocesan archives, including items of great public significance such as Shakespeare’s marriage bonds. The service is located in the wonderful award-winning Hive, unique as a joint university/city library, which was voted in 2017 by the Archives and Records Association as the record-keeping service of the year. It was found as being,
“determined to maintain a quality service to the wider community in the county despite acute financial pressures”,
with tribute paid to the,
“range and depth of activities and success in placing itself at the heart”,
of cultural life. The irony is that, while devastating the service, the proposed £405,000 cut would amount to a saving of only 69p per resident per annum, equivalent to only 0.18% of the council’s social care expenditure. I suppose the proposal is indicative of how desperate the council feels.
Some might consider an archive service not to be an essential service, whether it be mandatory or discretionary. I beg to differ. It matters, as the British Archaeology News Resource put it, because of the possible,
“irretrievable loss of hundreds of years of dedication and expertise”.
The history of a place is not in the cold, dead stones or the reams of paper in an archive; it is in the people who care for them, know the records intimately and pass on that passion and knowledge to others. It is in the people who bring stones and those manuscripts to life. Lose them and you lose the history. Now, more than ever, we need the lessons of history.
My Lords, I declare my interest as a Cumbria County councillor. I well remember my political apprenticeship on Oxford City Council in the 1970s and those enjoyable debates with the noble Lord, Lord Patten. I also remember an unhappier time in the 1980s when I was a member of Lambeth Council. The events there did a lot of long-term damage to the reputation of local government. I am now delighted to be a member of Cumbria County Council in the native community I grew up in, where, if I might say so, the Labour group that I attend reminds me so much of the Labour Party I dearly love.
The central thrust of my argument is that, with the public spending review coming up this year, it is essential that the Government set up an independent inquiry into the structure and future financing of local government in England. Although he is no longer in his place, I recommend that the Government invite the noble Lord, Lord Kerslake, to chair such an inquiry. These are centrally important issues. I think Ministers will accept that the Government have no bandwidth to address them themselves in the coming months because of Brexit, but they have to be looked at. What better means of doing that than by having a quick but independent look at these questions?
I will argue why this is essential from my experience in Cumbria. Cumbria is not like Newcastle, about which my noble friend Lord Beecham, with his wonderful record of service there, spoke so eloquently. It is a mixed place: half of it is rural market towns, relatively affluent, and attractive to incomers and tourists, but the other half is very industrial or post-industrial, with pockets of deep deprivation and a lot of places that feel left behind, as we say nowadays. One of the extraordinary things about Cumbria is that, if you contrast the ward on the west coast in Workington with the ward in the east of the county near Penrith, you will find that there is almost a 20-year difference in life expectancy. That is shocking.
1:10 pm
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I will mention my own journey in Sheffield in the local authority, first as a back-bench councillor helping individual constituents, then as leader of the opposition, many times clashing with the then chief executive, the noble Lord, Lord Kerslake—I am not sure whether he will raise that—then as chair of scrutiny, holding the executive to account, and then having the great pleasure of leading that great city and that great council. I was then put on early retirement when I lost my seat and am now back again as a local councillor. I saw the power that local authorities can have to affect individuals and communities and make a real difference to people’s ability to succeed in their life.
That is what the situation should do, but we must look at what it has now become in many cases. Sadly, in some cases local authorities have not just become the provider of last resort but are struggling to be even that—we only have to look at Northamptonshire, Somerset, Norfolk and Lancashire County Councils, and the National Audit Office warning that reserves are running out. In some cases, they are not just unable to provide the opportunities that I talked about but are unable to provide the very statutory services that they are there to provide in an emergency as a safety net.
In 2010, as leader of Sheffield City Council, I was not in total opposition to some financial reductions. At the time, I did see wiggle room and that changes could be made. I must say, it has now gone too far and is damaging not just institutions but the very people in those communities whom local authorities are there to serve. Some local authorities are finding it nearly impossible to keep their head above water, and are struggling to provide the minimum statutory services. This is not good for local communities; it is not good for democracy; and it is not good for either the people or the country.
The Local Government Association predicts a £3.1 billion shortfall by 2019-20, rising to £8 billion by 2024-25. Adult social care will see a £1.3 billion shortfall, predicted to be £3.6 billion by 2024-25. Children’s care—some of the most vulnerable young people in our country—will see a £949 million shortfall, predicted to be £3.1 billion in 2024-25. Homelessness support is predicted to have a £110 million shortfall in 2019-20, looking to rise to £241 million by 2024-25. SOLACE, which I thank for its briefing, has said that one in three councils in the country has had to make a reduction in the minimal statutory service offer. Two-thirds of social care authorities have drawn down reserves since 2016—if they keep doing so at the same rate, the reserves in the system will last only three years. We are talking about being at the bone, and in some cases going into the bone.
This is coupled with rising demand and need: 1.27 million homes for those in greatest housing need; 1.17 million homes for young families who cannot afford to buy; 690,000 homes for older private renters struggling with high housing costs beyond retirement. One thousand new children’s cases are on the desks of social workers every day. Looked-after children’s demand is up 11% over the last few years. The demand for homelessness services is up by 34%. The need for care of the over-65 year-olds is up by 14%. The areas in which councils can make a huge impact—helping create economic growth and vibrancy—are the ones that have been hardest hit, because in many cases they are not statutory. Transport services are down by 37%. Housing services are down by 46%. Planning services are down by 53%.
I must tell the Minister that back in Sheffield and across communities north, south, east and west, the situation is becoming untenable and unsustainable. Warm words from the Dispatch Box that reserves are there will not help young men needing youth services. It will not help elderly mums needing social care services. It will not help families going into homelessness to get a roof over their head. It will not help local businesses get the support they need to create enterprise and jobs in their area.
It is time to stop the short-term sticking plasters, and to start thinking about what is needed strategically. We need a much more long-term and strategic partnership of equals between Whitehall and local government if the latter is going to return to its true role in communities—unleashing the opportunities of businesses and people across the country. This must start with more direct cash to local authorities’ budgets to deal with the higher demand. It must be able to concentrate on the here and now in basic services. The £8 billion gap will not be closed by council tax and business rate changes.
We must accept that the council tax model is not fit for purpose and needs change. We need to look at other forms of wider tax revenue-wielding powers that local government has, and look at money that is held by Whitehall which should be devolved by design and right down to local authorities, not held with strings by Whitehall while it tells them how and what to spend it on.
The new fairer—or rather very unfair—funding formula must not be driven by political dogma but must be based on need, including a deep and central place for deprivation at its very heart. It cannot just be on a per capita basis. You cannot solve the economic and social problems of the UK if you leave the left behind even further behind.
The jiggery-pokery of social care precepts and referendums on council tax show why Whitehall has got this wrong. Financial freedoms to raise what is needed locally should be the norm, with local people deciding through the ballot box whether a local authority is doing the right thing and charging the right amount, not an official or Minister sat in Whitehall. This must be backed up by a strong and fair tax distribution system from the centre—again, driven by deprivation and need.
We need a social care funding solution which deals with the issue of an ageing population. We cannot leave it to short-termism or in the “too difficult” tray. The dignity and independence of too many of our older people rely on that—and we all have a vested interest to make sure that that happens.
We clearly need a proper, open and transparent discussion about social care funding, including looking at models such as those of Japan and Germany to see how this can be done. We also need to have clear, open and transparent five-year funding deals for local government, with no extra strings attached, which will allow local government to plan with some stability for its local area. As I said, we need to move away from the strings-attached Whitehall model of funding that stifles local innovation and undermines local democracy and accountability.
We also need a new partnership between local and central government on housing. The housing crisis is a national disgrace. The new homes bonus needs to be stable, not short term. We also need to build a large number of social homes—3 million, according to the latest report by Shelter, produced just a few days ago. This will not be done just by raising the borrowing limit for local authorities. A new style of partnership is needed between local and central government and the private sector which delivers good, stable, well-designed and environmentally friendly housing. This cannot be done with a silo approach and different departments working in different ways.
Local authorities also need to be involved much more in Brexit planning. We feel as if we are on the edge, completely ignored, yet we will have to deal with some of the major issues that a no-deal Brexit will potentially cause, and some of the social and economic problems that it will cause for local people—and the £35 million mentioned by the Secretary of State is not enough to deal with the problems.
In the long run, rather than devolution to local areas by consent, we need devolution by design: a new system of federal government in the UK where we have devolution, with power and money nearest to the people at a local level so that they can design local solutions. The power of Whitehall should be about key strategic issues. We need to move to a much more bottom-up, democratic way of allocating resources and governing the country and rise to the challenge of improving local economies and dealing with social or cultural advancement.
After all, it is only back to the future. We can see from previous generations how local authorities can and do shape areas, improve people’s lives and create a system and a framework for enterprise and local businesses to flourish, deliver vibrant local areas and offer opportunities and hope to local people and businesses. We must stop talking about local authorities in silos and stop talking about them being just the provider of last resort. We should fund them properly and give them the powers and the space to create great communities.
Thirdly and lastly, we have long lived in the West Country, in the area of that Liberal bastion, South Somerset District Council, which was turned into a Lib Dem stronghold thanks to the magic political touch of the late and highly respected Paddy Ashdown. It still is, despite our best attempts. A non-partisan evaluation of the South Somerset area would include the worry locally about scary suggestions that we will have our wheelie bins collected only every three weeks. I think that is probably a wheelie bin too far for many of us. Although the council is building more in the local area, which I support and have supported publicly—no nimby here; we must build more houses—it has sometimes lacked understanding of the need to provide new housing estates built for sale with shops and all the rest. It has not really attempted to soften the edges of housing estates with better landscaping that reduces complaints from local people and makes high-quality building more acceptable and welcome in their area.
None of those issues will be solved just by more money. We need imaginative leadership from high-quality men and women in local authorities—such as the noble Lord, Lord Kerslake, I am sure, in his day, in Sheffield. Sometimes they are there; sometimes they are not. There are problems with the quality of some who work in local authorities, despite the reasonable remuneration and pensions on offer. How adequate is their training? I do not know the answer to that; perhaps the noble Lord, Lord Scriven, and other noble Lords can help us by explaining what the training is really like.
One way forward may be to do what many charities do: hire people leaving professions and businesses who have the high energy levels for one more big job, particularly given that people are being expected to work into their late 60s and 70s. There is no magic in good management; it is pretty transferable from one place to another. Perhaps such a transfer to the world of local government would add to efficiency. It is not all about money; ability capital is just as important.
Please do not think it unnecessarily combative of me to say how surprised I was when, in his largely non-partisan speech, the noble Lord, Lord Scriven—and perhaps other noble Lords—seemed to airbrush from history the fact that back in 2010, the Liberal Democrats and the Conservatives were in what I thought was a very welcome coalition. We did some good, between us. This cannot be airbrushed: I must take responsibility for what we have and have not done, as must the Liberal party—particularly Mr Nick Clegg, who has now fled to the west coast of the United States of America.
There is a linguistic problem in that, as I understand it, “essential” does not exist in the local authority dictionary: something is either “mandatory” or “discretionary”. Using those words leads to a conceptual cop-out. Anything can be represented as an essential service if local people and councillors say that it is, and that they should have this, that and the other. We must be very careful in our use of language.
Like talented people, money helps local authorities a lot, but once one has beaten a path through the dense thickets of local authority finance, which I have heard gloriously described with masterful understatement as a “somewhat complex subject”, money must be found from somewhere—but where? We know that in Europe at the moment, we are in low-growth mode: this week, the IMF told us that Germany and France are unlikely to grow faster than the UK in the next two years. Indeed, just as the City of London accelerates despite the current political shot and shell, official labour market data published on Tuesday by the Office for National Statistics shows the highest employment rate ever, with more people in work. That means more tax for the Treasury to spend in local areas.
Of course money is vital, but where should it come from? Out of whose pockets and how? Through extra taxation or a higher amount? If so, how much? The Liberal party needs to be open about both its chequered past in this area during the coalition, and what it proposes to spend and where it will come from in future. We need to be efficient and realistic in the use of both our money and our language. After all, there is no universal declaration of local authority rights, of which we must be well aware.
Yet we have to cope with a rising demand for support services. In Newcastle, some 12,000 children aged under 16 live in low-income families—25.4% of their age group compared with a national average of 16.8%. Those are the 2011 census figures; they will be significantly worse by now. The highest level of poverty is to be found in households with children aged from birth to four years old. Many of these families and others rely on food banks for sustenance. The country’s busiest food bank is located in the ward I represent. In Newcastle, we have just under 5,000 people receiving ongoing and long-term support, 3,300 of them aged over 65, with 2,000 receiving short-term support from the council’s reablement service. Last year saw an increase of 36% in adults receiving safeguarding. However, the pressure on staff is tremendous and we struggle to maintain the extent and quality of the services we supply.
Some 44 years ago, as chairman of the social services committee, I inaugurated the city’s welfare rights service. Last year, it helped 19,000 residents to secure £30 million-worth of unclaimed benefits and supplied 6,500 with debt advice. It is a costly service for the council but at least for the moment we are continuing to provide it. I hope that that remains possible, but this is not a service required by statute, and without a change in government policy, there must be a risk as to its future and thereby to the people who desperately need support.
Depressing as this litany of problems and needs is, the damage to local government and the people it serves does not end there. Let us consider the impact of right to buy, which has led to a huge extension of private rented sector and high-rent properties without councils being able to use the proceeds to build genuinely affordable properties to replace them. The Government are belatedly planning some support for new social housing, but their concept of affordability is still connected to an inflated private sector market at the national level which bears little relation to the economy of regions like the north-east. In any event, the numbers are too few.
The sector has also faced pressure to outsource services, just as has been required of the probation service and the Prison Service, with disastrous results as we have frequently discussed in this Chamber. The role of local councils in education has been drastically reduced, with all manner of organisations replacing them, many deemed by Ofsted to be failing the children consigned to them. In one case in Newcastle, they simply closed down and abandoned a brand new building. Talking about young people, we have to recall that the coalition Government also did away with the important Sure Start programme. In addition to this litany of problems, we have a police service that is undermanned and overstretched, like so many others, with a significant reduction in neighbourhood policing reducing teams covering two or three council wards to single individuals.
This debate will exemplify the parlous state of local government today. I sympathise with Liberal Democrat Members of this House whose communities are suffering from government policies that I and other Members have criticised, no doubt to be amplified by other speakers. But I have to remind them that much of the damage to local councils and their residents or employees emanates directly from the coalition Government of which they were a part. An apology would be welcome.
In fairness, their former partners appear to be threatening to make matters worse. The Government are now consulting on a new formula for their funding of local government. This would remove deprivation from the formula covering waste disposal, public transport, libraries, leisure, homelessness and recreation, and replace it with a simple population basis, restricting the deprivation factor to adult social care, children’s services, public health, highways maintenance, flood defence and fire and rescue services. It is quite clearly a cynical attempt to divert financial support from urban areas to Conservative-controlled areas. Can the Minister say whether, and if so when, this House will have an opportunity to discuss any of these proposed changes? Above all, at a time when the Government proclaim that austerity is over—for too many people a questionable assertion—can they at least pledge to provide the funding required to provide services of the extent and quality that is desperately needed?
Back in Watford, we discovered that you could only go so far with efficiency savings. Sharing services, doing more with less, streamlining services and taking out duplication were the stock phrases that we all absorbed. But there comes a point when there is really nowhere for councils to go but to cut services that are relied on by very vulnerable people.
I sincerely hope that it is now irrefutable that local government cuts have impacted on the poorest people in the poorest places. They are also those people least able to both cope and protest about it. It is not only the welfare and benefit cuts but the luncheon club not operating or the reduced days that the library is open, the community centre offering fewer activities and the youth services that are slashed. Often the precise impact of cuts is underestimated because the real problem can be the compound effect of cuts by different councils in two-tier areas, of local charities and of partners in the same area all scaling back their provision because of the loss of grants from the local authority or funding from health and well-being boards, which are all cutting back. It seems that nobody is holding the ring for the cumulative impact on a neighbourhood except councils—and we, for too long, were not listened to.
Even street cleaning and bin collections impact most on the poorest areas. While we and other councils bent over backwards to prevent the front line being cut, that was unsustainable. The front line is being impacted more and more. Our staff are up against it. Staff reductions have meant that there is just no slack in the system. District councils are feeling it the most. Services that prided themselves on being proactive, such as environmental health and enforcement services, have been pushed into reactive mode, fearful of yet more work coming down the tracks and feeling overwhelmed and unable to respond.
On the recent Homelessness Reduction Act, for example, every councillor I knew applauded the Government’s intentions, but also dreaded not having the resources to do the job properly. I applaud those thousands of staff who with expanding workloads even worked unpaid overtime, with new roles, more responsibilities and far less funding, and still served their communities well. Yet a recent Unison survey showed that their morale is low and their confidence level in being able to deliver for their most vulnerable residents is dropping.
Many services report that there is a worrying increase in the impact of funding cuts on the mental health of their residents. Our housing partners will say that nowadays what was once exceptional behaviour is becoming commonplace and that the resources to deal with it are just not there. Access to services is more limited, there are longer waiting lists and the entry bar for help gets set higher. With the health service, running red is now the new normal. Even police services admit that they are now pushing back on mental health-related issues that they used to take in their stride. Is that really what we want?
As for prevention, upstream work, which we all know works and will ultimately save us money, is being squeezed out. It is a short-sighted, costly mistake. We are being pushed into sacrificing long-term solutions and sustainability for short-term expediency. For many, just legally setting next year’s budget is as far as they can look.
The Government are holding out for the holy grail of the business rate retention to give a major investment of cash to local authorities—but will it? Councils are already collecting an increasing amount of business rates for central government, while their revenue support grant continues to be cut. Surely it is time to redirect this money back to local authorities and local communities. With the rumours coming out regarding the fairer funding formula, which appears to be taking deprivation out of the formula in favour of “rurality”, will we see a further increase of the least-deprived areas getting the most money? The staggering 2015 survey by the Joseph Rowntree Foundation showed that that was the case. More recently, the IFS concurred that the most deprived local authorities had seen cuts of £220 a head compared with cuts of £40 a head in the least deprived areas.
I remain uncharacteristically pessimistic about the future without a radical overhaul of local authority funding. Which tax has to have a referendum before it can raise more money? The answer is none except council tax—and if a similar measure is required the following year, it needs a second referendum. This capping, plus years of central government diktat making councils keep council tax rises low, has contributed to the state we are in. It is surely time to end this.
Finally, and very worryingly, two recent reports from the APPG on children in social care highlighted how financial cutbacks have meant that local authorities can now intervene only when problems reach crisis point and children’s lives are potentially at risk. Early intervention work no longer happens, and social workers are overwhelmed by large case loads, high turnover and poor supervision. These problems for the future are stacking up now. Our children are the future, and they deserve better.
To their credit, the Government have belatedly recognised that pressure and have put in a further £l billion of short-term funding for the settlement next year, and we should recognise that. However, it is just that—it is short term and one-off. We urgently need a longer-term plan to put local government on a sound footing. You can have a broad base of services and a broad set of funding sources, and you can have a narrow range of services and a narrow range of funding sources, but what does not work is a broad range of services and a narrow range of funding. It is very simple. If we do not sort this out, we will see both effective financial management and services put at risk in the future.
The plan for a sustainable financial system must be a central and core part of the forthcoming spending review. If people ask whether local government is that important, the answer is that it accounts for over a fifth of public spending and deserves central billing in the discussions about the spending review. A key part of that review must of course be the long-awaited Green Paper on adult social care. I say “long awaited” because I think that its publication is now likely to be almost a year late.
Unless there is a fundamental rethink of local government as a whole, I will have real concerns about a number of things that the Government are doing, particularly the fair funding review. I shall set out three of those concerns. First, I have never met a council that thinks that its funding under the formula is fair. This review will open up division at a time when local government needs to work together collaboratively, as we heard earlier. Secondly, it is hard to see how any meaningful redistribution can be made without significantly increased resources. Without them, you damp the system enormously, in which case the question is: why are you doing it in the first place? Thirdly, like other noble Lords, I am seriously concerned at the suggestion that has recently been reported in the Guardian that funding will be redirected away from deprived inner-city areas by removing or reducing the poverty weighting. That, to me, would simply create an instability in one part of local government to help another. It is not the answer. It seems that, without a holistic approach to both the level and the sources of funding for local government, we are heading for real trouble here. I would welcome the Minister’s reassurance on this issue.
Finally, what on earth has happened to devolution? I ask myself whether it is another Brexit casualty. This was brought home to me recently in the work that I am doing as chair of the UK2070 Commission, which is looking at the spatial disparities in this country. If you go on to our new website, you will see a brilliant article by Professor Philip McCann of Sheffield University that demonstrates pretty conclusively that, with the possible exception of Slovakia, the UK is the most geographically unequal country in western Europe—I emphasise: not just a bit but the most. It is also one of the most centralised. The OECD has proved to my satisfaction that there is a clear connection between centralisation and inequality. We need a strong, well-funded local government not just because it delivers vital services but because it plays an essential role in creating a fairer and more prosperous Britain.
My next question is: where will councils or outsourced companies find enough carers or personal assistants after Brexit? There is increasing worry among people with neuromuscular conditions, for example, about the long-term status in the UK of personal assistants from EU countries, particularly if there is no deal. PAs provide invaluable support to enable disabled people to go about their daily routine, as well as in the working environment through, for example, the Access to Work scheme. A Skills for Care report in 2017 estimated that around 95,000 workers in England’s adult social care sector are from EU countries, and that excludes personal assistants. What steps are the Government taking to incentivise all care workers from EU countries to stay in the UK? There are already about 7 million unpaid carers in the UK, with this figure rising, so we cannot rely on any more. Many family carers are facing serious mental health problems of their own, as the Guardian pointed out last week.
As for funding, the movement for independent living for disabled people has been giving the matter a lot of thought. I am particularly grateful for a discussion paper written by Gerry Zarb at the SPECTRUM Centre for Independent Living, who makes the point that people simply do not rate the provision of social care as anywhere near as important as health, which is why the Government find it so difficult to contemplate solutions that cost money. It is not universally understood that they are both inextricably entwined.
We need to know exactly what value the Government place on the whole social care system. The shortfall in funding is thought to be over £2 billion just to meet existing demand, and we know demand is going to increase each year, but disabled people of working age who may or may not have paid work must not be overlooked. It is sometimes said that the importance of appropriate care for this group of disabled people is that they can potentially become part of the taxpaying workforce, but there cannot be deserving or undeserving disabled people. I hope the Green Paper will make that clear by saying that every disabled person—employed, self-employed, unemployed or retired—should be able to live a life of dignity and respect. Many disabled people active in the independent living movement are keen to help with the whole process of designing, commissioning and delivering support, with co-produced solutions and partnerships between public bodies and service users. I hope that offer is taken up.
I have great respect for our county councillors and I very much hope they will reject these proposed cuts, which would be a false economy and represent a major reputational as well as cultural loss. Cultural and heritage services are an essential part of our civilised society, of which we can be justly proud. I raise the matter in this debate as just one example of the desperate measures some councils are considering to make only very small cuts in overall budget, and the resultant threat to the delivery of essential services.
Our authority’s spending this year—its net revenue budget, taking out direct schools grant and all the rest—is about £380 million. This year, we have to make £39 million-worth of savings, bringing the total savings we have had to make since 2010 to £200 million. Half of the authority’s spend goes on what is called the people directorate: the care of children and adults. There are still immense strains on adult social care, but the crisis of the moment is around looked-after children, for which we set a budget this year of £43 million —we now think that we will have to spend £54 million. While we are cutting £39 million, we are coming under intense pressure on looked-after children. That is in part because of a rise in numbers and in part because of a rise in the cost of placing people in residential accommodation.
For the future, I see very little happy prospect without some uplift in government grant. On present projections, we are required to make some further £50 million in savings over the next three years, unless public spending projections change. I simply do not know where this will come from. We are looking rather desperately at trying to cut the cost of social care placements for people with very special needs.
There is one opportunity to save a lot of money in Cumbria, but it is in the Secretary of State’s hands. We could have a local government reorganisation, which would create a unitary authority. It is estimated that that would produce savings of £25 million. An application from the county council to this effect has gone to the Secretary of State, Mr Brokenshire, and I hope he is looking at it seriously. It is a difficult problem for the district councils and the MPs because people do not like this change. But in the financial situation we face, it would be irresponsible for the Government not to permit this to go ahead.
For the longer term, we need a change in government policy on the financing of local government or else we will face the total evisceration of local services. I think about all the grants in the area that I represent and all the local organisations that will have to close: the library will have to close and we will not be able to keep supporting our baths and our theatre club. David Cameron used to speak of the big society. It is the big society that is suffering most from this deep austerity.
I recognise that there are many claims on future public spending, but I hope there is consensus—I would like to hear this from the Minister—that local government has borne a disproportionate share of austerity and that this now needs to be corrected in the coming public spending settlement. Of course, if we want to have decent services, we will have to pay a bit more tax, not just at the top but one that everybody can afford. Social care is a real test of this. We cannot address the question of social care without a willingness to pay, and I think that there would be such a public willingness to pay.
My argument is this. Yes, local government has coped remarkably and has had to continue to innovate boldly in its provision of services. Services have to change; they cannot be preserved in aspic. We have to be innovative, but national government has to help local government in this situation. As mentioned by the noble Lord, Lord Kerslake, we have to have a long-term plan for structure, finance, how we handle business rates and what the Government want local government to be able to achieve. We need an urgent independent look at this at this time of wider national crisis that makes it so difficult for us to concentrate on these questions.