John Denham: 'Huge cuts to CLG budget will hit the poor hardest'

Published by Jon Land for 24dash.com in Local Government and also in Communities, Housing

People in the "greatest need" will bear the burden of paying off the record levels of debt left by Labour, a Government minister said today.

Faced with condemnation of more than £1 billion of cuts to local government funding in England, Bob Neill said tackling the "economic mess" was the first thing that needed to be done in order to provide sustainable public services.

Former communities and local government secretary John Denham said the "huge cuts" would hit the poorest hardest.

At Commons question time Mr Denham said: "The Conservative Party was elected on a promise to slash public services this year. The Liberal Democrats must answer to themselves."

He asked Mr Neill why they were "so unfair".

Mr Denham said: "Why is it the impoverished northern mill towns, the ex-coalfields and the struggling seaside towns that will take the largest share of the cuts?

"Why is it the big cities, Manchester, Liverpool, Leeds and Birmingham that will take the largest cuts?

"Why will impoverished Newham have a cut of £4.6 million and wealthy Richmond just £900,000?"

Mr Neill said Mr Denham was a member of a Cabinet which "left this country record levels of debt".

Labour's former home secretary David Blunkett said: "It is inevitable that if you cut external funding to authorities based on the fact that they received it specifically because of their levels of deprivation ... those in greatest need will inevitably take the biggest cuts."

Mr Neill was drowned out by uproar from Labour benches as he replied: "Those in greatest need ultimately bear the burden of paying off the debt..."

Speaker John Bercow was forced to intervene in what he called "high octane exchanges" to allow Mr Neill to continue.

Mr Neill told Mr Blunkett: "I hope you will recognise that if we are to have sustainable and quality local government services the first thing we want to do it to get this country's economic mess sorted out."

Communities and Local Government Secretary Eric Pickles today gave MPs details of the £1.166 billion reductions in grants to local government.

In a written statement he said: "The Government is clear that deficit reduction and continuing to ensure economic recovery, is the most pressing issue facing Britain.

"This will restore confidence in the economy and support the recovery.

"Advice from the Treasury and Bank of England is that it is better to start to make the reductions in the current financial year.

"Not to do so will simply delay the need for savings in future years, thereby compounding the impact on public services, including those delivered by local authorities, in the future."

The £29 billion "formula grant", the main source of funding that local government receives every year, was not being reduced this year.

Mr Pickles said where revenue grants had been reduced no local authority would face a cut of more than 2%.

The Communities and Local Government department and its quangos would face a cut of 10% in its running costs for 2010-11, he pointed out.

To give town halls greater flexibility in spending the reduced level of funding Mr Pickles said there would be less ring-fencing "freeing up resources to concentrate on local priorities and the delivery of essential frontline services".

He added: "I am absolutely clear about the importance of the services which local government provides.

"So we have been determined to ensure local authorities can shield their key frontline services."

He acknowledged that "making savings in-year will be challenging for local authorities, as it will be for other parts of the public sector" but was "satisfied that we have adopted a fair approach to making the necessary reductions in the different grants and funding streams".

Mr Denham said Mr Pickles had "failed to defend" his department, leaving local communities and local services bearing "the biggest share of these cuts".

He said: "You have introduced a package of cuts on services and housing that fall unfairly on the communities with the greatest needs.

"You need to do better than that because you have failed in your job so far and you'll have to be a great deal more careful in what you do in the future."

Mr Pickles accused Mr Denham of operating an "extremely effective burnt-earth policy", adding: "You left a legacy where the cupboard was bare. All that was missing was a note of apology.

"The cuts that we've had to make are cuts that have been imposed on us by you. We've managed to ensure that not only formula grant has not been touched to these authorities, but no authority on revenue is going to face a cut greater than 2%.

"That is much better than the £50 billion of unallocated cuts that was the legacy left to this department."

Labour former minister Fiona Mactaggart said her "diverse and deprived" constituency of Slough would face cuts "90% of which will land on education and children's services and community safety initiatives".

She demanded: "If someone isn't protected and dies as a result, whose fault is it Slough Council's or yours?"

Mr Pickles said: "If you are complaining about 0.91% cut, goodness knows what you would have been talking about when Labour had allocated cuts of £50 billion and the effect that would have had on your community.

"If anyone is looking for complaints, you should look to yourself."

Local authorities were also warned that transport projects prioritised by the Labour government may not be given funding.

Transport Secretary Philip Hammond said all major schemes granted early-stage approval would be reviewed as the Government seeks to cut costs.

Final decisions on funding would be put off until after the Government-wide spending review in the autumn, he said in a written statement.

"The Government has made clear its most urgent priority is to tackle the UK's record budget deficit, in order to restore confidence in the economy and support the recovery," Mr Hammond said.

"Only once the Government's spending review has been concluded will the Department for Transport be in a position to identify those major investments that can be supported."

Mr Hammond issued updated guidance to councils warning that construction work on any schemes which had not yet been fully approved was "very unlikely" to begin before the end of 2010-11.

"In view of the likely budgetary constraints, and the consequent likelihood that not all schemes will be able to proceed on their planned timetable, it would be inappropriate for the department to continue to invest time and resources on development of schemes at the same rate as before," he said.

"Local authorities will also wish to consider carefully whether investing further time and resources in developing such schemes ahead of the spending review is justified.

"They should not assume that schemes prioritised under the previous government's Regional Funding Allocations (RFA) process will be funded to the previous published levels."

Commenting on the cuts to local authorities, Local Government Association chairman Dame Margaret Eaton said: "We have to recognise that these cuts will be painful to implement this year and will have a significant effect on services and the people who rely on them.

"Councils are having to implement a big slice of the Government's £6.2 billion initial savings in the middle of the financial year. Town halls have already carefully planned their budgets, made commitments and set priorities and it is not easy to change their plans in the middle of a year. Extra flexibility to take local spending decisions will help councils cope.

"Further cuts are inevitable and we will work with the Government to deliver reform and minimise the impact on services people rely on. Councils will want assurances that savings will be made by pruning out the maze of quangos, middlemen, bureaucratic funding streams and audit arrangements so that we can protect front lines services that the most vulnerable people depend on.

"Town halls are the most efficient part of the public sector. They have already committed to 4% efficiency savings this year and have made significant savings, including job losses in many areas, to weather the financial perfect storm created by the recession.

"We need nothing less than a transformation of the way the public sector works to deliver savings through a bonfire of bureaucracy, a radical scaling back of the quango state and giving power to the people who know their areas best.".