21 December 2010
Ministers robustly defended their decision to frontload cuts to local authority budgets today, claiming the move would kick start organisational reform.
Local Government Secretary Eric Pickles was giving evidence to the Commons Communities and Local Government select committee on last week’s local government finance settlement. Housing minister Grant Shapps and decentralisation minister Greg Clark were also being quizzed.
Pickles said he had responded to concerns that councils would be unable to handle greater budget reductions in the first years of the spending review ‘to a high degree’ by placing an upper limit of 8.9% on their annual cuts and finding money for a £85m ‘transitional fund’.
He said: ‘It is important to understand that if we had created a thinnish taper we would not have been doing local authorities a favour at all.... The amount of frontloading is very important to encourage local authorities to deal with this question of restructuring [of administration and services].’
Pickles said that local government ‘has received more notice than any other department’ about the cuts. ‘It would have to be beyond the point of negligence to the point of stupidity if you had not expected cuts of this magnitude,’ he added.
Pickles dismissed warnings by the Local Government Association that frontloading the cuts would lead to 140,000 job losses this year as a ‘back of the fag packet’ calculation. When pressed by the committee he refused to reveal his own estimate.
Shapps claimed the budget cuts would not impact the frontline. He said no local authority had done everything possible to reduce back office and management costs yet. ‘We know it is possible they just need to get on with the job... Restructuring has to be frontloaded, otherwise you take the salami slicing approach rather than doing what’s really required to restructure,’ he said.
Earlier in the session Pickles had rejected claims from the MPs that the severity of the cuts to local government was a consequence of his failure to fight hard enough on behalf of his department in the run up to the Spending Review.
He added: ‘I believe these reductions are manageable and they are deliverable and have to be seen within the context of the acute economic crisis this country is in. It seemed to me to be a straight choice between a managed reduction in local government expenditure or waiting for a couple of years and seeing uncontrolled cuts.’
Pickles also rebuffed suggestion from MPs that the 68% cut to the core Department for Communities and Local Government budget would hamper policy objectives. Revealing that overall staff numbers would be slashed by 40% and the number of director generals reduced from 6 to 3 he said the move away from central command and control made it all possible.
He added: ‘If we had been awash with money my department would have still been reduced... A more streamlined department will increase the department’s influence in government but that comes largely because the localist agenda is central to this government’s platform.’
Shapps was forced by the MPs to yet again defend his reforms to social housing. He said introducing rents of up to 80% of market rate, flexible tenancies and other changes would deliver more affordable homes, bringing down waiting lists.
‘The idea is it’s much more flexible than the current system, where there is only one offer. Not everyone on this ever growing waiting list is the same. Some can afford to contribute more to the rent or after a while can afford to contribute more. A much more varied type of waiting list applicant might now be able to be housed,’ he said.
Clark was questioned about community budgets. There was widespread disappointment at the small scale of the pilots announced in the spending review following the success of the Total Place pilot projects under the previous government.
Committee member and Conservative MP Mark Pawsey asked why the government was being ‘so timid in this area when there’s ample evidence it works’.
Clark replied: ‘You ain’t seen nothing yet. In the New Year we will have more to say about community budgeting. It’s important to signal to areas on the first wave they should be getting on with their pilots but we want to see it much more general.’
