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Central and Local Government

I am grateful for the opportunity to contribute to the debate. In the new year I shall be taking up a position as a Parliamentary Private Secretary within the Department, so this is my last opportunity to speak. I thank the Chairman for her good offices and all the guidance that she has given to me while I have served on the Committee, and I particularly thank the staff, who have done a tremendous job in drawing up the report and in getting our sometimes rambling discussions into order. The hon. Member for Mole Valley (Sir Paul Beresford) seemed to be painting a picture of local government pre-1997 that was all sunny uplands. I was a local authority member for more years than I care to remember, certainly during the 1980s and 1990s, and that was not how I remember it. The then Conservative Government saw local authorities as theirs to command, and if they did not do as commanded, the Government abolished them, as they did with the metropolitan counties, or they starved them of funds, as happened year on year in the 1980s and 1990s. In Wigan, we had to make £10 million of cash cuts every year for three years on the trot; that was 1980s pound notes and not 2010's pound coins. We had to make a considerable reduction. There was almost no notification whatever of those cuts. In February, we were given the figure. By April we were starting a new financial year. It was a fire-fighting exercise in which we rushed around trying to make cuts and balance the books. There is no way in which local authorities can plan properly in those circumstances. We found that programmes were being cut halfway through. Money was being wasted on those programmes and no benefit came out of it. My view of the last Conservative Government's local authority relationships is different from that of the hon. Gentleman. On top of that, we had micro-management. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) mentioned compulsory competitive tendering. I was chair of the committee that had to implement CCT in Wigan. It reminded me of the French education system, under which every child in every school in every village in France would open their book at the same page at the same time on the same day. The micro-management of CCT meant that every council had to do everything in a certain way, and a week later they had to send out another letter and so on. It was more like a French farce than French education. The hon. Gentleman mentioned inspection regimes. I seem to remember that inspections were brought about by the Audit Commission set up by the then Conservative Government; I checked that with my hon. Friend, whose memory is better than mine, and he agreed. I do not disagree in principle with inspections; I think it is right for local authorities to be properly inspected, and to be shown, in a proactive and positive way, where improvements can be made. However, I do not like the prescriptive system we had in the past, under which authorities that did not do as they were told got clobbered. That was very difficult. One problem was that targets were applied everywhere, so there was no relationship with local need or a local authority's resources, but we now have a different system. Under the new regime, targets are agreed by the local authority, which means that they have relevance to the area. More importantly, because local authorities are engaged in strategic partnerships that involve people and sectors across the entire community, such as commerce and voluntary organisations, targets—whether to do with sport, industry or regeneration, for instance—are part of an overall package bringing together all the sub-partnerships. That enables councils to promote their area on the basis of targets and priorities set by the local community, which is a very different way of dealing with things. We can now also work in strategic partnerships with primary care trusts. The Conservatives deprived local authorities of such influence in the 1980s and 1990s when they took their members off area health authorities, which resulted in a complete split between local health provision and local government provision. We have now addressed that, however. We can meet hospital and other health trusts and the family care trusts, and therefore we can draw together those elements of local government service that are particularly relevant to the broader social services. I do not know about other areas, but in Wigan we hold regular meetings—at least six a year—with health organisations and those involved in the local economy. The local MPs are also invited and can make a contribution. That works well and enables us to have better co-ordination. My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) said that her authority has a public health officer who is jointly employed by the local authority and the PCT. We have that in Wigan as well, and it serves to cement the ability of those employed in the social and health services to work together better. There is also much pooling of resources between the two areas, so that people who are moving from social service care into health care do not fall between those two nets. There is not the problem of their being told, on the one hand, "No, you're not yet a health service problem; you're still a social services problem," and, on the other hand, social services saying, "No, her ability to look after herself is much worse, so she has to come under the health service." That happens where each service is protecting its own budget, so by pooling budgets we can prevent people from falling between those nets—or at least we can stop that happening often. Another idea that the Government are taking forward which I warmly welcome is that of multi-area agreements, for which we have pilot schemes in city regions. In the Greater Manchester area, the Association of Greater Manchester Authorities is generally recognised as being foremost among city regions in the way that it has set up voluntary relationships since the Greater Manchester council was abolished. What was important initially was that all but one of the councils were Labour controlled, but that has changed over time. I pay tribute to the leaders of all those councils, from all parties, because what has not changed is their recognition that this is not a zero-sum game. They see that if Tameside gains a benefit, it is not at the expense of Wigan but to the benefit of the whole of Greater Manchester. Therefore, all the leaders come together to ensure that Greater Manchester is seen as the beneficiary. With multi-area agreements and city regions, it is important to ensure that that approach is built into the psyche of local authority leaders. They should not see the situation as a zero-sum game, but see that something that benefits one authority in a city region will roll out benefits to the others. We have come a long way. I accept that the Government think that they have gone a lot further than the Committee thinks, but everyone on the Committee accepts that there has been significant movement in shifting the balance of power between central Government and local authorities. There is an awful lot more to do, but I perceive a willingness in the DCLG to ensure that that shift continues. That bodes well not only for local government but for citizens. Let me make some final points about local government finance, which, as hon. Members have said, is crucial to the relationship between central and local government. One of the best actions that the Government have taken in that regard is to introduce the certainty of a three-year system in the comprehensive spending review. That certainty of funding will allow local authorities to plan much better and to institute programmes knowing that they can carry them through. Let me make a suggestion to the Minister that I hope she will take back to the Secretary of State for discussion in the Cabinet: rather than having three-year blocks, which means that at the end of a block there is certainty only for the next year, there could be a rolling three-year programme. With such a programme, one would have some certainty in the first year regarding the next two years, and in the second year, one would have some indication as to what the fourth year would bring. Such a system could be used in both local and central Government to allow local authorities and Departments to plan more effectively. If finance is crucial to the relationship between central and local government, it is important to get the figures right, particularly the balance that central Government pays to local government. I think it is a universally acknowledged truth that a council in search of a revision of formula funding is a council in search of money. We must always recognise that there will never be a perfect funding formula, as there is no such thing. The idea of a perfect funding formula is a chimera, or a holy grail that can never be grasped. However, I think that our funding formula is reasonably reflective of the needs and resources of local authorities. If that is the case, it is incumbent on the Government to ensure that the formula is put into action as quickly as possible. It cannot be right that many local authorities are massively overfunded while others are massively underfunded. The needs of Kensington and Chelsea have been assessed at £89 million under the formula, but it is receiving £104 million in Government grant, whereas Wigan's needs have been assessed at £135 million, but it is receiving only £129 million. One local authority is receiving £14 million more than it is entitled to under the formula, while another is receiving £6 million less. I spoke earlier about the relationships between PCTs and local authorities, and unfortunately the same problem arises with PCT funding. I shall again make a comparison between Kensington and Chelsea and Wigan. Kensington and Chelsea needs £277 million but gets a grant of £337 million, which amounts to overfunding of £60 million. Wigan needs £537 million but gets £512 million in grant, which amounts to underfunding of £25 million. Adding together £6 million and £25 million makes a total of £31 million. That is the amount that the Wigan authority is not allowed to spend—last year, this year and next year—on the services that it wants to provide. Another way of looking at it is that it is money that is being taken out of people's pockets and, given Wigan's population of 300,000, that is a lot of money per head. That brings me back to the earlier point about the existence of a postcode lottery. It is clearly very much easier for a place like Kensington and Chelsea, which is getting so much more funding than it is entitled to, to reduce council tax or increase services, or do a bit of both, than it is for a place like Wigan. People ask why Wigan does not have the same services as other authorities, but they have no knowledge of where we stand in relation to the funding formula and the amount of money that we get. It is extremely important that the Government move forward as quickly as possible on funding. I do not want to return to the huge cuts that we used to get in the 1980s. Because of my experiences then, I am a big supporter of the damping process and the floors and ceilings that have been introduced, but the pace of change in funding for family care trusts and local authorities is far and away to slow. Speeding it up would help local authorities, and ensure that citizens were being treated fairly. One last point on the financial history is that we surely have to recognise that council tax is inherently unfair. That is what it was designed to be, and one of the few achievements of John Major and his Government was to make sure that it was. It is quite wrong that a person who lives in 25-bedroom mansion should pay only three times as much council tax as a person who lives in a two-up, two-down terraced house. That is not the right way to organise finances. The Lyons review was at least an opportunity to open the debate about that, although my hon. Friend the Member for Sheffield, Attercliffe suggested that it was a lost opportunity. The Government's response was far too timid, and we need to look at ways of ensuring that many more bands are introduced and that there is a much fairer relationship between bands. Finally, it is essential to have constant revaluations of houses in the council tax system, to ensure that the system does not get into the same untenable state that characterised the old rates. This is an excellent report. I am glad that I was able to contribute to it, and sorry that I will not be able to help my colleagues on the Committee in compiling further reports for the House. I believe that this is an extremely important area, and it is one that I feel very strongly drawn to.