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Humble pie for Pickles? We do hope

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A week ago today honourable members gathered in the House of Commons for the latest bout of Communities & Local Government Questions - the monthly session aimed at giving the opposition a chance to grill ministers about their decisions and the general goings-on Eland House. But of late, CLG Questions have become something of a farce, with ministers dodging questions, giving misleading answers or answering questions that weren’t in fact asked, while opposition MPs seemingly flounder. Such is parliament, you might say.

But last week was a particuarly poor effort - not because communities secretary Eric Pickles took time out to criticise LGC’s coverage of his department (“I have not necessarily found the Local Government Chronicle a very accurate reflection of what is going on in my department, ripping read though it undoubtedly is”) - but because ministers’ answers were ever more slippery.

Case in point were a number of references to “Labour’s cuts” to the Working Neighbourhoods Fund, in response to questions from MPs about the impact of spending cuts on councils in deprived areas, which as LGC revealed last week are set to be hit the worst.

“Labour’s cuts” ?

Local government minister Bob Neill spoke of the Labour government’s decision to remove WNF funding from Sheffield “which will cost the city some £38 million”. “We will endeavour to find the means to cushion that,” he said. With regard to Rochdale, Mr Pickles said ministers “face a particularly difficult task we must bridge just short of £6 million that the Labour Government took from the working neighbourhoods fund”. “But we will certainly seek to provide [a] cushion,” he added.

Finally, Mr Pickles told David Blunkett, Labour MP for Sheffield, that he faced a “great dilemma” after the decision “taken by the Labour Chancellor to remove £300 million from the working neighbourhoods fund, which will hit Sheffield particularly hard”. “At the moment, I am trying to ensure that Sheffield and all those authorities are cushioned against Labour cuts,” he said.

Are you catching the theme tune here? The refrain is to lay the blame at Labour’s feet for the disproportionate impact the CSR cuts are set to have on the most deprived authorities by attributing that impact to “Labour’s cut” to the WNF.

The problem with this is the previous government did not cut the Working Neighbourhoods Fund. Indeed, in November 2009 it announced a £40m boost to the fund – worth £1.5bn over 2008-09 to 2010-11 – bringing the fund to around £500m this year.

As ministers have conveniently forgotten, it was the George Osborne who cut the WNF this year – slicing close to £50m from the pot in 2010-11 in his June “emergency” budget. The CSR then stated that the WNF, part of councils’ Area-Based Grant, would not continue next year – a £500m “coalition cut”, if you like.

Pickles’ “shorthand”

So, although it is true to say that the Labour government never confirmed the WNF would continue it did not say it would be cut and it certainly did not cut £6m in WNF from Rochdale or £38m from Sheffield or £300m in total. Why Labour MPs didn’t point this out one can only wonder.

But when this was put to Mr Pickles’ team in DCLG, a spokesman conceded that the previous government did not cut WNF and said that the secretary of state had been using purported “Labour cuts” to WNF as “shorthand” for around £300m in savings in regeneration spending, to be accrued by 2012-13, that were set out in the previous government’s April budget.

So if Labour did not cut WNF as ministers said, what cuts will Mr Pickles and his team be “cushioning” in the local government settlement?Their own of course, which brings us to the question, asked by shadow communities secretary Caroline Flint that prompted Mr Pickles’ to cast dispersions on LGC.

Caroline Flint (Don Valley) (Lab): It is not really turning out to be a very good day for the Secretary of State, but you know what? Ithas not actually been a very good fortnight since he told council leaders on 6 November that talk of front-loaded cuts was “fiction”. Now it seems that reality is beginning to dawn on him. According to a report in the Local Government Chronicle, he has been attending emergency meetings with the Treasury to plead for more money to mitigate the effect  of those cuts, which could mean some councils losing up to 20% of their funding by April 2011. Whether or not it is true that the Secretary of State has been lobbying the Treasury to come up with more cash, may I urge him to start listening to the concerns of local government and ensure that councils get a fair deal that stops the damage caused by the heaviest cuts falling in the first year?

Mr Pickles: I am sorry to say to the right hon. Lady that I have not necessarily found the Local Government Chronicle a very accurate reflection of what is going on in my Department,ripping read though it undoubtedly is. I must also admonish her in the mildest possible terms for using a partial quote. What I said was ridiculous was the idea that councils would face a 20%cut in their total spending ability in the first year. The right hon. Lady has to recognise that she needs a policy. She knows, I know and the House knows that the Labour party Government were going to impose £5 billion-worth of cuts on local government, which would have been front-loaded.

What Mr Pickles said on 6 November was that the calculations that London Councils chair and Hackney LBC leader Jules Pipe (Lab) had made which showed frontloaded cuts of 15-20% to Hackney LBC next year, could be entered into the Booker Prize for fiction and that the settlement would not be “anything remotely like the figures suggested by Jules”. He then added, in a subsequent dialogue with Mr Pipe (see the transcript below - and more here), that “certainly I can’t imagine a government moving forward and taking 20% out in year one”.

Cap in hand to Treasury

What we now know of course is that since the London Councils summit Mr Pickles has been forced to go cap in hand to chief secretary to the Treasury Danny Alexander seeking more cash for local government to “cushion” the impact of the cuts as they’ve been set out in the CSR. LGC was told this was the case by a source close to Mr Alexander and by sources within DCLG. (And note that Mr Pickles did not deny it in his response to Ms Flint).

With the Treasury refusing this request, Mr Pickles and his team are now “desperately” trying to find a means to ‘damp’ the cuts, which their own preliminary figures show range from 38% reduction in some poor areas to 37% increase in some wealthy areas. As LGC reveals today this is likely to involve changes to the CSR settlement - with cash shifted from DCLG’s own budget into the local government settlement - as well as a ‘four-banded’ system to help redistrubute grant from wealthy to poor councils.

So the dilemma that Mr Pickles faces is not mitigating “Labour cuts” to the WNF, rather his own cuts and in particular the removal of funding streams within the Area-Based Grant, that were previously targeted at the most deprived areas: funding streams that were established in the first place to mitigate the failures of the overall block grant to fairly redistribute resource to the poorest councils.

Mr Pipe was right

In this sense, further comments Mr Pickles made at the London Councils summit are revealing (see transcript below). He said that in determining the settlement he thought the “the individual amounts that came by ABG weren’t going to make that significant difference when the total amount was going down”. Hence funding within the ABG was either cut or rolled into the overall block grant.

So Mr Pickles thought cutting the ABG would not make much of a difference. Odd then that he and his ministers should now be complaining about the impact of a (fictional) Labour cut to what was effectively just one element (the WNF) of the ABG and saying that this effectively was the reason deprived authorities were set to be hit the worst.

But in truth not so odd. Because what Mr Pickles and his team have now realised is that their cuts – particularly those to the ABG – are going to have a disproportionate impact on the poor that will blow the coalition’s commitment to fairness out of the water.

What they have realised, of course, is that Mr Pipe and other council leaders and chiefs - not to mention London Councils, SIGOMA and the LGA - are right. The cuts hit the poorest the worst and hit hardest in the first year.

Mr Pickles’ last ditch measures to mitigate the impact of his own zealous spending cuts are an admisison of this - but though schadenfreude might have us enjoy his eating a large slice of humble pie, for the sake of those deprived authorities that may now get some “cushioning” we should be thankful that Mr Pickles looks ready to swallow it.


Transcript: Eric Pickles and Jules Pipe, 6 November, London Councils Summit

Eric Pickles: I’ve taken a view that the block grant is probably the more distributive element that exists within local government finance that the individual amounts that came by ABG weren’t going to make that significant difference when the total amount was going down … What I’m trying to do is arrive at a position where an authority like [Hackney LBC], which I think is about 80% dependent upon central government grant, is not faced with an adverse situation. You say you feared 20% ? Well that’s like your worst nightmare really – maybe you’ve put those [figures] together at Halloween – but certainly I can’t imagine a government moving forward and taking  20% out in year one.

Jules Pipe: I would hope not. I can only work on the figures the Treasury have released so far and as I said in my comments if no further funding streams are available or if there’s no re-phasing then that is the position we would face on the figures issued so far … and many authorities in this room will have seen their figures … and on the figures released so far it’s very heavily frontloaded compared to the announcement of 7.25% per year and what was in your letter.  Is there a guarantee then, that I won’t receive even less than that, say a 15% reduction, which is double what your letter said?

Eric Pickles: Well we’re looking at putting these together…. [Heckling] Oh dear, we’re playing hunt the figure. So if it isn’t 15% is it 14% Eric? Well if it isn’t 14%is it 13% Eric? If it isn’t 13% is it 12% .. Well I’m really sorry I’m not playing that game. However, I do want to make it absolutely clear that what I will be doing is trying to make it as manageable as you can. But Jules,  you’ve got to play your part , you’ve got to start cutting down your costs, you’ve got to start restructuring, you’ve got to start, perhaps, not being as dependent on temporary staff as you currently are.

Jules Pipe:  Well, we’ve cut our temporary staff by a third over the last four years; also we have been the third highest authority in the country on efficiency savings taking out £65m over the last five years … the third highest in the country … So I don’t think I can take any lectures on making savings as a local borough.

More on Eric Pickles VS Jules Pipe here.

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