Exclusive: Cameron breaks his Sure Start promise

20 centres have been closed since May 2010 despite Cameron's promise to protect funding.

Yes, we back Sure Start. It's a disgrace that Gordon Brown has been trying to frighten people about this.

David Cameron, 5 May 2010

The day before the general election, among other things, David Cameron pledged to protect Sure Start, the network of children's centres founded by the last Labour government.

Asked for a guarantee that the centres would continue to receive funding, he replied: "Yes, we back Sure Start. It's a disgrace that Gordon Brown has been trying to frighten people about this. He's the prime minister of this country but he's been scaring people about something that really matters."

Based on this answer, many reasonably assumed that Sure Start, like the NHS and foreign aid, would be ring-fenced from George Osborne's £83bn spending cuts. Indeed, at Prime Minister's Questions on 2 March 2011, Cameron told the House of Commons that Sure Start funding was protected and that "centres do not need to close".

Freedom of information requests by the New Statesman to the Department for Education, however, have found that 20 of the centres have closed since May 2010, including seven in Redbridge, three in Bromley, and two in Knowsley. The department was unable to tell us how many would close by 2015 but the figures suggest that hundreds will be shut down by the end of this parliament.

The reason for the closures is that, contrary to Cameron's protestations, Sure Start funding is not protected. Shortly after the coalition came to power, the budget for the centres was amalgamated into a new "early intervention grant", which also includes funding for programmes related to teenage pregnancy, mental health and youth crime. These programmes received nearly £2.8bn in 2010-2011 but, this year, they will receive £2.2bn - a real-terms cut of 22.4 per cent.

In an act of reverse redistribution, it is the poorest areas that will be hardest hit. Funding for Sure Start and related programmes is being cut by an average of £50 a child across England this year.

In some of the poorest areas of the country, including Tower Hamlets, Hackney, and Knowsley (where centres have already been closed), it is being cut by £100 a year. By contrast, in wealthier areas, such as Richmond, Buckinghamshire and Surrey, the cuts will amount to just £30 a child.

For a government that is ostensibly committed to social mobility to refuse to protect Sure Start is remarkable. Policymakers have long looked to schools and universities to narrow class differences but neuroscientists have since shown that the early years, when brain development is at its most rapid, offer the best chance to improve the life chances of the poorest.

Scandinavian countries, which have invested heavily in children's services for decades, now enjoy the highest rates of social mobility in the world. Tony Blair's decision to launch Sure Start in 1998 was an enlightened attempt to emulate that success. The current Prime Minister must explain, for the first time, why the coalition government is destroying this legacy.

A version of this article appears in this week's New Statesman.

Update: Labour have responded to the story here. Yvette Cooper, shadow home secretary and shadow for women and equality, said: "This is outrageous. David Cameron and education ministers promised us they were protecting Sure Start. But now we know that is rubbish. The 20 per cent cut they imposed on the budget which funds Sure Start is hitting services hard, and they are taking away help for families at the most important time in a child's life.

"Sure Start is one of the best things the Labour government introduced - supporting young families at the very beginning of a child's life so they feel the benefits for decades to come. So much for ministers' rhetoric about early intervention. These facts show a complete betrayal of David Cameron's promise, and a betrayal of parents and toddlers who depend on Sure Start to help their family get on."

 

Update 2: Wandsworth Council, Greenwich Council and Hackney Council have been been in touch to say that they have not closed down any Sure Start centres. The figures were obtained by a freedom of information request to the Department for Education. We are happy to correct the error.

George Eaton is political editor of the New Statesman.

This article first appeared in the 01 August 2011 issue of the New Statesman, The rise of the far right

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation