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August 2014 Dear colleague, These are difficult and challenging times for you, your fellow councillors and staff and above all for the communities you serve. Because of the financial circumstances the country faces you are being asked to do more with diminishing resources, and after the general election you are going to have to continue to manage with less central government funding. Local government has faced the biggest cuts of any part of the public sector. The LGA says that over this Parliament, local government core funding will fall by 40% and councils will have to make £20 billion of savings. As a result, you are having to take very tough decisions about the future of local services at a time when there are rising pressures, particularly the growing number of older people and

children’s

services. Labour is committed to balance the books in the next parliament so budgets will be extremely tight. We will need to make big reforms without big spending. And as we will inherit, and stick to, the G

overnment’s

spending plans for 2015/16, we will not have any more money to give to local government. But there will be one difference; the money we have will be distributed more fairly. The Prime Minister and the Local Government Secretary say that tough times involve tough choices, but they have forgotten one very important principle. Tough times demand tough choices that are fair. And yet if we look at the way in which the Tory led Government has chosen to take most from those who have least

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the most deprived local authorities

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it is clear just how unfair and unjustifiable this is. This is confirmed by the Joseph Rowntree Foundation which published research in November stating:

“Cuts

in spending power and budgeted spend are systematically greater in more deprived local authorities than in more affluent

ones”

We have done an analysis of how the reductions in government funding for local authorities have affected different communities in different parts of the country. They show that under the Coalition, households in the ten most deprived local authorities in England will have faced a reduction in spending power per household 16 times greater than the ten least deprived. What is more because of these decisions the principle of a local government grant settlement which equalises differences in needs and differences in resources between authorities is being eaten away. On current plans, the revenue support grant element, which recognises need, will shrink from £15.2 billion in 2013-14 to £9.3 billion by 2015-16. To illustrate what this will mean, just look at the differing fortunes of Leeds, Newcastle, Sheffield and Wokingham using the government own preferred measure of spending power per dwelling. Spending power in Leeds will be lower than

Wokingham’s

in 2014-15, and will fall every year despite higher service pressures. Spending power for Sheffield and Newcastle will broadly match

Wokingham’s

in

2015-16 and then fall below it in future years despite greater need. Newcastle has 101 looked-after children per 10,000 people, whereas Wokingham has 24. Homelessness and supported housing costs are £145 per dwelling in Newcastle and £48 in Wokingham. Statutory concessionary travel costs are £85 per dwelling in Newcastle and £14 in Wokingham. How can anyone describe as fair a funding system that fails to recognise such large differences? And this is not the only example of unfair choices the Coalition has made. They introduced the bedroom tax which penalises families in your area who are trying to stay in their own family home and they cut council tax support which has forced up council tax for over 2 million people on low incomes across the country. I know that many in local government have been doing their very best to support people who are now struggling to make ends meet. David

Cameron’s

Government have made the wrong choices. They have ducked tough decisions and passed the hardest ones down to you, and they have failed to apply the basic principle of fairness. They had a choice, and they made the wrong one as far as communities up and down the country are concerned. The other area in which they have made the wrong choice is localism.

They’ve

talked a great deal about it; indeed the first responsibility of the Department of Communities and Local Government is described as:

“Supporting

local government by giving them at the power to act for their community without interference from central

government.”

Those words will raise a wry smile in town halls and council chambers up and down the country as elected representatives reflect on the Communities

Secretary’s

determination to tell them how to collect the rubbish and control every local government publication. And they will remember the legislation he put in place to take planning powers away from local people. But the real charge against the Coalition is that they have failed to take localism far enough. I do not think that they understand the scale of the choice that we face as a country about how to build our economy and provide local services in an era of less money. For me, there is an inescapable conclusion. In these circumstances, and with these pressures, the centre has to be willing to let go so that local communities can decide on how best to use limited resources. Only by radically rethinking the relationship between central and local government in the years ahead will we manage to achieve better with less. Local government was already recognised as the most efficient part of the public sector, and it has continued to lead on this. Adversity has also had one beneficial effect. It has encouraged innovation; things are happening now that would not have happened before. England is crying out for devolution. Most people understand now that you

can’t

run everything from the centre. And we will not address the crisis of confidence in politics unless and until we share power across England.

And that is why a Labour Government will offer a new deal for England. We will pass power, money and responsibility down to you and give you and your communities the tools so that you can do the job. And in return, what we ask is that you use this power to work together

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towns and cities, counties and districts, joint committees, economic prosperity boards, combined authorities

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and be held to account locally for how you use this funding and these powers to answer the big questions we face. How can we support businesses to grow, create the jobs that will pay good wages and build an economy that is sustainable? And with an ageing population, and a wish to tackle crime, nurture the next generation, and help families in difficulty, how can we provide public services in an age of less money in a way that is built around people and places and not institutions and silos?. So what does this all mean in practice? If we are going to build a strong economy for the future we must play to the strengths of our great cities and counties, and all parts of England.

Britain’s

industrial revolution changed the world. Innovation in technology, production and manufacturing was the foundation on which many of our great cities were built

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Leeds, Manchester and Birmingham among them. And as our economy has changed, we still have great companies, and successful new industries. But for some people the link between growth and better living standards has been broken. Look at the use of zero-hours contracts, the rising housing benefit bill because more people who work need help to pay the rent, and the huge demand for food banks. Inequality is the problem we need to address both between people and between regions. Between 2007 and 2012, only one in eight of

England’s

second tier cities had output per head above the national average. In Germany, by contrast, all eight of their second tier cities were in that position. How will we change that? By devolving £30 billion of existing public spending over the next 5 years - three times as much as the current government

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to local authorities, combined authorities, economic prosperity boards and local enterprise partnerships for economic development. Funding not for projects decided in Whitehall, but funding for local plans to get the right infrastructure in place to help people, goods and digital commerce move about. Support for the right skills, more high quality apprenticeships and the businesses of tomorrow. And more homes to tackle the acute housing crisis. Housing completions are half what we need, the building of social homes is at a 20 year low, and more and more families in private rented accommodation find themselves paying off someone

else’s

mortgage instead of paying off a mortgage on a home of their own.