Local Government Finance (England)

Annette Brooke Excerpts

Wednesday 13th February 2013 Commons Chamber

[Annette Brooke (Mid Dorset and North Poole) (LD)]

My starting point is to accept that the cuts are tough, but that as local government accounts for about 25% of all public expenditure, local authorities were always going to have to play their part in fixing the black hole in the nation’s finances.

I want to recognise the fact that local government has shown great skill in reducing its budgets. Committed local authorities have protected front-line services, and it is a credit to councils across the country that satisfaction in council services has gone up. It is important to recognise the positive leadership given by many councillors in responding to the challenges presented to them.

I welcome the fact that this local government financial settlement is moving away from an unfair and incomprehensible formula grant system. This will put more power into the hands of local councils by letting them keep more of what they raise locally in business rates. I am firmly in favour of the principle of localisation of business rates. Local authorities will directly retain nearly £11 billion of business rates instead of returning them to the Treasury. Allowing councils to keep more of the business rates they generate should encourage them to have a greater stake in driving growth in their communities. It is a move in the right localist direction.

I hope we will travel further, but I understand the necessity for safety nets and protections in the early days of this system. If councils really make the system work for them, they will bring in considerable extra funds. Whatever they do with the extra funds they bring in by their own actions, it means that they can protect their spending more, which is the important thing. This is the message—that authorities must get on and improve their local economies so that they can protect the front-line services people rely on so much.

We need to recognise, however, that uncertainty exists as we move to the new system. Looking further to the future, there are fears of more cuts to the local council tax benefit support grant. The current situation worries me. It will be interesting to see how different councils handle it. However, the future is potentially more worrying. The National Association of Local Councils has expressed concern about billing authorities’ passing 100% of the available parish grant to local councils this year and in the future.

We had a rather rushed debate about rural councils the other night, but I think that points were well made. Those of us who represent rural areas—including my hon. Friend the Member for South Dorset (Richard Drax), who cannot be present for the debate—feel that the extra cost of providing services in rural areas needs to be assessed. We need to be given some factual basis for it, and we need to look beyond one year. The £8.5 million provided by the Government shows that they were listening, but I think that, just as there was concern about a two-year grant, there is concern about a one-off payment of £8.5 million. I do not think that, in itself, will solve the problem, although it is very welcome.

[Andrew Bingham]

I, too, was present for the debate on the settlement for rural areas, and I share the hon. Lady’s concern, as does my hon. Friend the Member for Beverley and Holderness (Mr Stuart). Is she, like me, slightly heartened by the Minister’s assurance that he will listen and talk to us beyond this settlement, so that we can discuss future settlements and those of us who represent rural constituencies can perhaps rest a little easier?

[Annette Brooke]

I should certainly like that conversation to reach some conclusions before 2020.

I am glad that the Minister listens to representations, and that there will be more flexibility for shire districts and fire and rescue authorities in relation to the referendum that is required for council tax rises of more than 2%. The rule is being amended to enable shire districts with the lowest council tax rates this year to introduce rises above that level without a referendum, as long as the cash increase in the basic amount is no more than £5. That option will be available to Dorset’s fire and rescue service, which is acknowledged to be very efficient. Dorset fire authority will be given more choices when it sets its budget for 2013-14, although it will face some very difficult challenges.

Many councils are sharing services to cut costs. I have mentioned East Dorset and Christchurch, which have a single chief executive. However, they recognise that they must go much further, and they already have, effectively, a single planning department. There is scope for transforming the delivery of council services.

We should also acknowledge the Government’s provision of other funding pots for local government. The additional £2.4 billion provided for adult social care was extremely important. However, I would be remiss if I did not mention that Poole unitary authority—like so many other authorities—is very concerned about the continuing pressures on the overall budget for support for individuals needing care. The Local Government Association is pleased that the Government have listened to its concerns about the sector, and I note the increased funds that councils will receive for their new public health duties.

There are no two ways about it: we live in difficult times, and difficult decisions are having to be made. However, if there is flexibility and we really work with the local community, difficult times may be the right times in which to use our reserves when that is appropriate.

--- Later in debate ---

[Diana Johnson (Kingston upon Hull North) (Lab)]

I have listened carefully to the debate and I have to say that the Government are out of touch with what is going on in many parts of the country. I want to talk about what is happening in my home city, because the disproportionate nature of the cuts in Hull needs careful examination.

In the past two years, Hull has lost £163.50 per person, compared with a national average of just £74 per head. From the cumulative figures that have been provided by Newcastle city council, it appears that, over the four-year period, the figure for Hull will rise to £228.36 per head. Hull is taking a much larger share of the Government’s council funding cuts than many wealthy areas. When I looked through the figures, I was particularly struck that West Dorset district council was losing only £2.70 per head.

We know that, from April onwards and up to 2015, Hull will lose a further 7.2% in what the Government are now calling “spending power”. As has already been said, the Prime Minister’s West Oxfordshire council will be receiving a rise, even though it is the 316th least deprived local authority area out of 325. Hull is the 10th most deprived area and is taking a much larger cut. That is not fair, and I think that that unfairness forms the basis of the objections of many Labour Members—the lack of fairness in the distribution of the cuts that are taking place.

[Annette Brooke]

Will the hon. Lady clarify whether she was comparing like with like, given that West Dorset is a district council and Hull, I presume, is a unitary council?