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Local Government Finance Settlement

Volume 453: debated on Tuesday 28 November 2006

With permission, I should like to make a statement about local authority revenue finance for England in 2007-08. Sensible planning for service delivery needs a stable and predictable funding environment. The quality of councils’ forward budgets, their relations with stakeholders whose budgets they support, and their ability to set low and sustainable council taxes, will all be promoted by predictable funding.

As I told the House last January, we were then setting out firm proposals for forward financial allocations on a two-year basis—including the use of projected data for population and council tax base. As 2007-08 is the second year of a multi-year settlement, the policy is not to change the settlement, including the data used in the grant calculations, from that previously announced, other than in exceptional circumstances.

This year’s announcement therefore contains no surprises for local authorities. I make a virtue of that, because I am convinced of the advantages of multi-year financial planning, and most of what I hear from councils and their delivery partners, such as those in the third sector, supports that view. Today’s announcement launches a period of statutory consultation, and I will fully consider any representations made during the consultation period in the light of the policy in relation to multi-year settlements.

Within the framework of stability, I am able to provide adjustments to grant allocations for the voluntary merger of the fire services of Devon and Somerset under a new single combined authority, should that go ahead for 2007-08. Today, I am also updating details of individual specific grant allocations to local authorities for 2007-08.

With the next spending review period, we will move to give three years of grant allocations to local government: for 2008-09, 2009-10 and 2010-11. The stability provided by multi-year settlements will allow local government to publish three-year council tax figures, and we would expect it to take up that opportunity. More widely, such security on funding will enable councils to move forward on providing more flexible, efficient and responsive services to their communities, as was set out in our October 2006 White Paper, “Strong and prosperous communities”. It will facilitate the move towards new, more inclusive local area agreements that are tailored to meet the needs of individual areas and the drawing together of different stakeholders to provide better, more cost-effective services that seamlessly meet the needs of clients.

Total revenue grants to English local authorities will be £65.7 billion in 2007-08, an increase over 2006-07 of £3.1 billion, or 4.9 per cent. Part of that increase is in specific grants, and it includes dedicated funding for schools and a further £525 million in neighbourhood renewal fund, allocating extra help to the 86 most deprived local authority areas in England. Within that total, formula grant will total £25.6 billion in 2007-08, an increase of 3.7 per cent. That means that by 2007-08, the increase in Government grant for local services since taking office will be 39 per cent. in real terms. The provisional standard multiplier for national non-domestic rates in 2007-08 will be 44.4p in the pound, and the small business non-domestic rating multiplier will be 44.1p. That means that, once again, businesses and other non-domestic users can look forward to predictable and stable rates.

Grant floors—minimum guaranteed increases from one year to the next—are a permanent part of the system. I need to strike a balance between funding stability and the cost of the floor. This year, I am able to improve floor protection for fire and rescue authorities, while easing the impact of floors on upper-tier and shire district authorities. I can thus today confirm my proposal that, for 2007-08, the floors will be: for authorities with education and social services responsibilities, 2.7 per cent.; for police authorities, 3.6 per cent.; for fire and rescue authorities, 2.7 per cent.; and for shire district authorities, 2.7 per cent. Within each group of authorities, those above the floor will have their grant increase scaled back to pay for that floor.

We have provided a stable and predictable funding basis for local services. We expect local government to respond positively as far as council tax is concerned. We thus expect to see an average council tax increase in England in 2007-08 of less than 5 per cent. We will not allow excessive council tax increases. We have used our reserve capping powers in previous years to deal with excessive increases and we will not hesitate to do so again if that proves necessary.

I am also announcing consultation on alternative notional amounts for Devon and Somerset fire and rescue authority and Somerset county council. That will enable like-for-like comparisons to be made between 2006-07 and 2007-08 budget requirements for capping purposes. This is being issued today for consultation to ensure that, should the proposed merger go ahead for 2007-08, the relevant authorities will know, in advance of setting their budgets, the budget requirement figure for 2006-07 that the Government will use when considering using their capping powers.

The supporting people programme has proved to be a highly successful one that has provided support to more than 1 million vulnerable people each year. In July, I announced almost £1.7 billion of investment in supporting people and I am pleased now to confirm the grant allocations for 2007-08. Additionally, I can announce a further £40 million of administration grant for authorities in 2007-08 to help them to manage that important programme. I am pleased to announce that if authorities generate savings under the programme through their careful management, they will be able to roll forward those savings from 2006-07 to 2007-08, in order to reinvest in the programme.

The Government have provided another significant boost for local authorities, setting out a financial package that is stable, predictable and adequate to meet the pressures that local authorities face, but keeping council tax increases down to acceptable levels. I have placed copies of the tables showing grant allocations and copies of the supporting documentation in the Vote Office and the Library, and full details are being made available to local authorities on our website. I look forward to receiving consultation responses, and I commend the proposals to the House.

I thank the Minister for early sight of his statement and for the supporting documents. I have always considered the Minister for Local Government to be someone who respects the Chamber, so I am sorry that he chose to release the details of the settlement in a press release yesterday. Clearly, the spirit of Jo Moore lives on in his Department.

Since 1997, council tax bills have rocketed. They have gone through the roof, rising by 84 per cent., and that takes the average bill for a band D property to £1,268 this year. A 5 per cent. rise this year will mean an extra £63 on the bill of a typical pensioner couple or a family, and that is equivalent to paying £111 every month of the year. What is the Minister’s estimate of the extra burden on the vulnerable? I remember the deep shock felt by households when the average band D bill breached £1,000. It took seven years of this Labour Government for us to reach that oppressive figure. From the figures before us, we can calculate—I suppose that that is the advantage of multi-year financial planning—what bills will be by the end of Labour’s third term, if there is a 5 per cent. annual increase. The average council tax bill will be £1,500.

The Minister’s last major adventure in capping resulted in nearly half the savings going on the cost of rebilling. Will he at least spare himself the embarrassment of capping authorities in cases in which the savings are trivial? Will he confirm that his capping powers will not be applied to the Olympic levy on council tax, and if costs continue to soar, as they did in Montreal, will Londoners be paying the Olympic tax for the next 30 years?

We have long been promised the publication of Sir Michael Lyons’s recommendations on local government finance, but a spokesman in the Department is reported in last week’s Municipal Journal as saying:

“we have never made a commitment to publish the report at all”.

Will the Minister give a clear undertaking that the Government will publish Sir Michael’s recommendations well in advance of the debate on this year’s settlement? One of the key drivers for soaring council tax is the failure of the Government to finance fully the burdens that they impose on local councils from Whitehall. Will the Minister confirm that, on top of the figures given today, the Chancellor will look to meet a target of 3 per cent. cuts from local authority budgets?

The finances of local authorities, particularly those with social services departments, are closely linked with the NHS. Across the country, local hospitals are cutting staff recruitment, abolishing posts and cancelling operations because their budgets are in the red. In July, the Local Government Association and the NHS Confederation published research revealing that seven out of 10 local authorities have been hit by cost-cutting pressures from the NHS. Are there any measures in the settlement to address that problem, or do the Government have their head in the sand, with regard to Labour’s NHS cuts?

The Chancellor has set in place a landfill tax escalator, and is making municipal waste collection ever more expensive. The costs should be funded under the “new burdens” principle, but the Department for Environment, Food and Rural Affairs argues that it does not apply, because of the “polluter pays” principle. What representations has the Minister made to remedy that injustice? In conclusion, no wonder the Minister thought that this was a good day to bary—bury—bad news. The bad news is that an ordinary family in an ordinary house face the prospect of paying a crippling £1,500 in council tax by the end of Labour’s third term—truly, a shocking and crippling legacy.

I am grateful to my hon. Friend the Member for Bolsover (Mr. Skinner).

I thank the hon. Member for Brentwood and Ongar (Mr. Pickles) for his comments about my attitude to the House, but I can assure him that the details of the statement were largely announced to the House last year, so there has not been a breach of privilege in the House. If there had been, I would take it very seriously. I thank the hon. Gentleman for his opening remarks but, in response to the questions that he asked, I specifically announced that the Government would not tolerate average tax increases above 5 per cent.—that is the same policy that I pursued last year. Last year, he attempted to portray that as an actual increase in everyone’s council tax of 5 per cent. Of course, that was not the case this year, and it will not be the case next year. I accept his point that an advantage of multi-year statements is that we can predict council tax increases in future, but a disadvantage of that sensible policy from the Government’s point of view is that the propaganda and spin that he put on the figures is made worse. Such a practice does nothing other than unnecessarily frighten particularly vulnerable people, so I urge him not to indulge in it. [Interruption.] What was wrong about it was that the accusation was made last year. It was not true then, and it will not be true this year.

The hon. Gentleman asked about the Olympics. The £20 levy for the Olympics, which has been agreed between the Government and the Mayor, cannot be changed without the agreement of the Mayor and the Greater London authority. The hon. Gentleman’s party was supportive at the time of the bid, and the Prime Minister graciously said so. I accept that it is the job of Her Majesty’s Opposition to oppose, but sometimes I think Her Majesty should ask for her money back because they have not provided value for money. The hon. Gentleman’s worry about the Olympics is therefore not borne out. He asked an important question about the Lyons review, which is due to report to the Chancellor and the Secretary of State by the end of the year, and decisions will be made at that time. The hon. Gentleman described the 3 per cent. efficiency target as a cut—I assume that he was referring to the Gershon figure. Local government has a good record on efficiencies, both cashable and non-cashable, and I am pleased to report that our all-party work with the Local Government Association has resulted in improved efficiencies and services.

The hon. Gentleman said that the NHS budgets are in the red, but the NHS budget has not been cut. NHS trusts and hospitals are required to balance their books, and it is amazing that the Opposition should fail to support the concept that public services should balance their books. Councils must do so—that is quite right—and most of them take a responsible attitude towards the requirement. The increasing work that they do through local partnerships, particularly the new financial arrangements of local area agreements, means that the aligning of financial budgets by the partners is important. The hon. Gentleman therefore made a significant point. As for his point about waste, my Department, the Department for Environment, Food and Rural Affairs and the LGA have important work streams on waste issues, which receive substantial attention in the White Paper that we published on 26 October. In giving a reaffirmation of the new burdens principle, I should point out to the House that those new burdens can only be calculated on a net basis, even though they are sometimes presented on a gross basis.

I welcome my hon. Friend’s statement. May I draw his attention to an anomaly that affects the city of Newcastle upon Tyne? The population figures that the Government use to calculate the city’s entitlement to rate support grant seriously understate the real population of the city. This has been the case for a number of years, and the gap between the two figures is widening. Will my hon. Friend meet me and the other Members of Parliament for the city, and also perhaps the leader of the Liberal-controlled local authority and a representative from the opposition party in order to discuss the anomaly and see what can be done to rectify it?

Of course I would be delighted to meet my right hon. Friend, the leader of his council and any other representatives who wish to participate in a discussion of the issue. In the formula announcement that I made last December and confirmed in January, I changed the formula calculation to take into account population projections as well as historical trends, so there was a change in that direction. I am aware that his council and some others are raising the important matter of the population figures. The Government rely on the best data available, which are provided to us by the Office for National Statistics. The ONS constantly reviews the data and has a work stream through the population statistics working group to examine the matter. One can go only so far in future projections to be consistent with the overriding policy of financial stability and predictability.

I commend the Minister for making the statement available much earlier than is usually the case. I congratulate the Government on moving to a three-year settlement, which will allow local authorities to plan much more effectively. However, it will not have escaped Members’ attention that the Labour manifesto pledge back in 1997 to abolish universal and crude capping has still not been delivered. We do not have crude and universal capping. What we have is a benevolent Minister who reluctantly uses his reserve capping powers but achieves the same end, and our strong and prosperous communities still have to dance to his tune.

The Minister neatly side-stepped the question from the hon. Member for Brentwood and Ongar (Mr. Pickles) about whether and when Sir Michael Lyons’ report would be published. I hope he will answer that question on the record. In relation to the three-year settlements and picking up a point that has just been made, can the Minister confirm that those will be sufficiently flexible so that if a local authority experiences a swift change, such as inward migration, or if the census data prove to be inaccurate, it will be possible during that three-year period to adjust the settlement?

On the 2007-08 announcement, does the Minister not accept that it is his settlement of 2.7 per cent. for many authorities, combined with public sector inflation and the financial impact on local authorities of the cuts in many primary care trusts and many acute trusts, that make inevitable an increase in council tax of double the rate of inflation, hitting the poorest—often our senior citizens—the hardest? Is it not time he stopped punishing local authorities? Instead, he should congratulate them on moving forward with the Gershon savings at a rate that central Government cannot match. He should introduce a local tax based on ability to pay, give local councils control of business rates, allow fair votes for local elections and scrap the hundreds of targets that are imposed on local authorities by his Government.

The 2.7 per cent. floor that the hon. Gentleman mentions benefits his own authority, which is a floor authority. Without the floor, there would be a significant shortfall, and the hon. Gentleman and his colleagues would no doubt lobby me for the floor. I therefore expect a letter of thanks for it, although I doubt whether that will be in the Christmas box for the Woolas office this Christmas.

The Lyons report will be complete by the end of the year. [Hon. Members: “Will it be published?”] Of course it will be published. [Hon. Members: “When?”] The hon. Members for Brentwood and Ongar (Mr. Pickles) and for Carshalton and Wallington (Tom Brake) will have to be patient. That approach was used in the past with the Layfield review and other independent reports.

The answer to the question about three-year settlements is yes, because the settlement takes into account the updated data.

On council tax increases of twice the level of inflation, I repeat that the 5 per cent. figure to which I referred last year and this year is the national average, so it does not mean that council tax will rise by 5 per cent. in every authority. Council tax is set by individual local authorities, which has been the case since its introduction.

On hitting the poorest hardest, the poorest benefit most from the council tax benefit system, which contributes just under 15 per cent. of total council tax revenues. That point is often missed out from the debate for what I assume are entirely honourable reasons.

On the Gershon review, this morning I congratulated local authorities at the conference of the Chartered Institute of Public Finance and Accountancy on their success in reaching their Gershon targets a year early, and I am happy to repeat those congratulations.

If the new formula supporting social services had been fully implemented in this settlement, how much extra taxpayers’ money would Wirral receive?

I am very grateful to my right hon. Friend for asking that important question. The funding blocks for children’s social services and for young adult’s social services come with floors, while the funding block for elderly social services does not. All the formula grant is covered by floors, and the floor for my right hon. Friend’s authority is 2.7 per cent this year. Without that floor, I estimate that the loss to Wirral would be around £4 million. It is not possible to say—I am more than happy to clarify this matter in writing—what effect the removal of the floor would have on children’s social services and on young adult’s social services.

The Minister is a reasonable guy, and I like him. Will he give me an honest answer to this question? Cheshire is under-resourced in respect of education—it is one of the worst funded authorities in the country—and the same is true of social services. If the Government limit the money that they give to Cheshire, and if Cheshire cannot raise the level of local tax above 5 per cent. in order to provide the services that it requires, how can the local authority provide facilities for, in particular, the elderly and children, when it is under-resourced and limited on what it can raise itself?

I thank the hon. Gentleman for his comments, which I sincerely reciprocate—I genuinely thank him for what he has said. He has raised a difficult issue. Councils led by all political parties have identified that they face pressures, particularly in social care. We work with councils and their representatives to identify the causes of those pressures, and we work out with them, often successfully, what we can do together to address them. The plain fact of the matter is that the public—I am sure that the hon. Gentleman will back me on this point—will not tolerate excessive increases in taxes and particularly in council tax. The Government do not have a solution to the issue set out by the hon. Gentleman. We must square the circle through efficiencies, the improvement of services and better joint working with other public service agencies, which has resulted in significant improvements in Cheshire and elsewhere.

How can the Minister describe as a significant boost a settlement that gives a council such as Gateshead, which is often held up by Ministers as an example of good local government, 2.7 per cent.—some 30 per cent. below the English average—and that gives the north-east a settlement below the English average even though it is widely acknowledged that its needs are higher than that? Under this settlement, what prospect does Tyne and Wear passenger transport authority have of clawing back some of the £7.2 million that it cost us to introduce the Government’s free travel scheme; and how on earth is it supposed to finance that scheme next year, given the inadequate system of local government finance?

I congratulate my hon. Friend on continuing his important campaign on behalf of bus users in Tyne and Wear. As he knows, the Government provided £350 million last year, and £367 million this year, for the concessionary fare scheme. In addition, there has been an uplift across the board in grants provided to local authorities. Having looked particularly at regional distribution, I can confirm to my hon. Friend that over the past 10 years the north-east has not been at the bottom of the league on a regional basis as regards the allocation of grant funding. We are in discussions with him about this important matter.

The issue of social services is fundamental. The Minister will know that the Prime Minister and the Chancellor have just put together a document about the challenges facing the Government which highlights the problems that arise in a society in which the numbers of elderly people and young people are growing in proportion to the total population. Those are precisely the groups that make the most demands on social services, and where significantly higher statutory demands are laid upon local authorities and the most pressure from budgetary provision is felt. What forecast has the Minister made for the evolution of demand in that sector, and what plans does he have to meet it?

The right hon. Gentleman speaks with great authority and knowledge on these matters, and I believe that he understands the Government’s argument, which is that we have provided extra revenue and capital support for social services—I could read out the substantial figures. The answer to his question is that the Government are proposing, through the White Paper, a partnership approach whereby local authorities are freed up to work more effectively with other partners, especially the health service. Spending on social services has increased year on year above inflation. That is not to say that there are not significant demographic and other pressures on councils and on central Government; that is why it is right and wise of my right hon. Friends the Chancellor and the Prime Minister to deal with that in their reviews.

What assessment has my hon. Friend made of the impact on local government finance of implementing the single status and equal pay Acts? I have gained the impression that his Department has been in denial about this for some time. Has he now woken up to the size of the problem, and what are his plans?

I can assure my hon. Friend that I am not in denial, and neither is my Department, about the importance of equal pay for equal value, not only in achieving equality and fairness for women workers, especially low-paid workers in local government, but in ensuring the balancing of the books on which we place such importance. Equal pay is very high on our agenda; indeed, this morning I held yet another substantive meeting with the Local Government Association to consider some of the potential solutions.

Will the Minister meet council leaders and Members of Parliament from the London borough of Sutton to discuss two matters: first, the effects of cost shunting from the local NHS on to local social services as a result of bed closures and cuts in staffing in the local NHS and tens of millions of pounds of cuts in primary care services; and secondly, the double disadvantage that the poorest of my constituents suffer as a result of not counting within the formula allocation and not benefiting from targeted grants because we are regarded as being a leafy suburb but in fact have pockets of deprivation that are not properly met by the grant system?

I shall be more than happy to look at the situation in the hon. Gentleman’s borough, but I must point out again that our policy is a fair one. I acknowledge, as do the Government, that the point about pockets of poverty in relatively well-off areas is an important one. That is one reason why we apply the floors within the formula, of which his authority is a beneficiary.

While I welcome the stability of the two-year settlement and the fact that population projections will now be included, may I draw the Minister’s attention to the problems faced by authorities such as Milton Keynes council, which has a rapidly increasing rate of population growth but is limited by the damping effect introduced to protect authorities affected by the floor? Will he allow representatives of the council to come with me to make representations to him on its specific problems as a housing growth area, and on the way in which that should be reflected in the formula?

I congratulate my hon. Friend on her persistent campaign to raise the issues affecting Milton Keynes, which she has acknowledged as being problems of success. This is a new issue that we have to deal with. I can assure her that the specific issues facing Milton Keynes are being considered, and that discussions are taking place on possible ways forward, not only for her area but for areas in a similar situation. I do not believe that this settlement specifically addresses the issue that she has raised, but I can give her the assurance that it is high on our agenda.

As a councillor on Kettering borough council, may I draw the Minister’s attention to the acute pressure on the planning departments in small district authorities, particularly in growth areas? Will he consider lifting the cap on the planning fees that developers have to pay? If a developer makes an application for 5,000 houses, that can occupy all the planning department’s time, yet the recompense that it receives is totally inadequate.

I congratulate the hon. Gentleman on raising this issue, which we have debated before. He has made an important point in a non-partisan way on behalf of his constituency, and the Department is indeed looking into the matter.

My constituency is benefiting from £1.6 million of neighbourhood renewal funding. This is because super-output areas, rather than borough-wide statistics, have been used to target those resources. My constituency is in the relatively wealthy metropolitan borough of Stockport, as my hon. Friend the Minister knows. Will he increase the use of super-output areas to ensure that resources go to all deprived areas, irrespective of the council area in which they are located?

My hon. Friend makes an important point about super-output areas, which are the sub-ward areas of highest deprivation. I have announced today the allocation of neighbourhood renewal funding, and it is for the local authorities and their partners to allocate that funding to try to meet the floor targets on deprivation that we have set for them. The review of the neighbourhood renewal fund will take place in tandem with the comprehensive spending review, and the issue that my hon. Friend has raised is one of the subjects under consideration in that review.

I want to return to the issue of population change, and to refer the Minister back to the Westminster Hall debate that he and I attended on 1 November. He said that he would write to me after that debate, but will he instead tell me today whether he will look again at the situation in local authorities such as my own, as well as in other London boroughs and places such as Peterborough and Slough? Apart from the change in the trend in population increase in such places, they have faced huge and sudden increases in population since the accession of the 10 new EU member states. Will he look again at the possibility of giving a gateway grant to such local authorities to deal with the one-off effects of those circumstances?

The hon. Gentleman referred to our fruitful debate on this issue in Westminster Hall. I cannot give him the commitment that he is looking for, however. The best data available to the Government are those produced by the Office for National Statistics, and I am obliged—as any Government would be—to use the best data. The work stream that is examining those data is ongoing, as his local authority and the others that he mentioned have requested.

My hon. Friend said in his statement that there would be no surprises for local authorities. Does he agree that his intervention last week in the negotiations on the local government pension scheme was a big surprise for local authority workers? He must have surprised not only the workers, probably scuppering the genuine negotiations, but the Prime Minister, who had said at the Dispatch Box 24 hours earlier that he would do all that he could to help to reach a successful outcome.

I am grateful to my hon. Friend for giving me the opportunity to put it on record that the statement issued last Thursday on the future of the local government pension scheme was influenced by discussions involving trade unions and employers, and that it refers to a consultation on the best way forward. On behalf of members of the scheme, and with regard to the viability of the scheme, I have an obligation to move forward in accordance with the timetable outlined to participants in the tripartite committee for some months and, indeed, years.

In town halls up and down the country, the Minister’s statement today will have disappointed many people, not least because it represents a thoroughly bad deal for local government, which is struggling to provide the services that all our communities need and deserve. It seems to me that the Government are effectively asking councils—

Order. When a statement is made, it is the practice in the House to put a question. The hon. Gentleman has so far not put a specific question. If he does so, I will allow him to continue.

As ever, Mr. Speaker, I am grateful for your guidance. I was just coming to the question. Given that the Government are asking local councils to do more and more with less and less, which services that local councils currently provide does the Minister think they no longer need to provide? Will he give us an answer, instead of giving councils more and more responsibilities to discharge with existing funds?

With respect, if the hon. Gentleman will give the House an undertaking not to distribute a Focus leaflet attacking tax or council tax increases, I will give a straight answer to his question. The fact is that neither Her Majesty’s Treasury nor the council tax payers in his constituency or mine are aware of the mystical tree on which he thinks money grows. Stockport borough council has had an average increase for 10 years of 4.5 per cent. in real terms. Admittedly, that includes the schools budget, but a real terms increase has been provided for other council services. Politics is about making those hard choices, for which he does not seem to think he should take responsibility.

The need for a successful conclusion on the local government pension scheme has already been mentioned. Will my hon. Friend give a commitment that he will call in the employers and trade unions to see him, so that he can stress the need for further discussion and compromises on the way forward?

I am grateful to my hon. Friend, who plays a positive role on behalf of his constituents, particularly low-paid workers. I can give him that commitment. As I said a moment ago, the statement to the House refers to a consultation on the future of the local government pension scheme, and meetings are already in the diary to continue discussions on the future of that pension scheme, so that we can move forward with a strong final salary pension fund that is fair to scheme members now and in the future.

The Minister will know of the problems faced by Northamptonshire county council, as he met an all-party delegation last year. He will know that we cut 600 full-time equivalent jobs, and that we cut deeply into services. This year, we have a £45 million shortfall on a balanced budget because of the support grant that he has announced, which we knew about last year. We can shave the employment structure to the bone, but we are still left with an £18 million shortfall that can only be dealt with by service reductions. How can the Minister reconcile that scenario with his claim that his party is improving local government services?

I am not the only one who says that local government services are improving. The independent Audit Commission and the Local Government Association say the same, backed up by independent research and evidence from respected market research companies and opinion pollsters. I am sorry that the hon. Gentleman chooses not to join me in congratulating local government, but I really cannot accept the argument that a shortfall on projected desirable expenditure is a cut. It is not, it never has been, and it never will be.

I welcome the extra £525 million that has gone into the neighbourhood renewal fund. That money is extremely useful and, as I am sure my hon. Friend knows, the excellent Labour-led Wigan city council uses it very well.

In his statement my hon. Friend made no mention of double damping, which was raised by my right hon. Friend the Member for Birkenhead (Mr. Field). I think most people would welcome damping, or at least understand the need for it; what we cannot understand is why there should be additional damping before the final damping in the formula.

Replying to my right hon. Friend the Member for Birkenhead, my hon. Friend said that he could not assess how much the amount would be. The Wigan treasurer estimates that, for Wigan, it will be £8 million, as against the extra £4 million that we have. Will my hon. Friend give careful thought to the issue of double damping and try to resolve it, so that local authorities can address the needs of their social services departments?

My hon. Friend makes an important point. I will of course look at the specific figures relating to his authority and similar authorities that have presented the argument about double damping in a responsible way. As I tried to explain to my right hon. Friend the Member for Birkenhead (Mr. Field)—I am grateful to my hon. Friend for acknowledging this—the social services budget for the elderly is not damped, whereas the budget for children and young adults is. I have been able to make progress on the overall damping. Wigan city council, owing partly to a success on which I am happy to commend it, received a 3.9 per cent. increase this year.

As the Minister turns his mind to the new three-year settlement, will he consider the position in Croydon? Comparisons with Ealing, which has similar social indicators, show Croydon’s budget to be £40 million adrift of where it should be. What consideration can the Minister give to a fair deal for Croydon in future years?

I hoped that the hon. Gentleman would thank the Government for the local enterprise growth initiative funds that Croydon received this year. That excellent scheme, for which I commend the council, is working very well, but I do not accept the hon. Gentleman’s premise. All local authorities can and do argue that they are special cases. We have to balance the demands on central Government funds. I believe that overall I have distributed the money fairly, and in a way that is perhaps more transparent than has been the case in recent years.

When my hon. Friend decided that Liverpool city council should receive a 2.7 per cent. floor uplift, did he take into account a recent report by KPMG which suggests 43 ways in which the council could save money on the external contracts negotiated by its former chief executive Sir David Henshaw? One of them commits the council to a service charge of £11,000 a year per councillor, to be paid to a company called Liverpool Direct for computers supplied to councillors.

Clearly more savings can be made in Liverpool. Will my hon. Friend examine the report to ensure that he and his officials know the background, and to ensure that Liverpool council tax payers receive the best services that can be provided from the significant resources that the council receives?

I, like my right hon. Friend, want the best for the council tax payers of Liverpool. I am grateful to her for raising the important point about the KPMG survey. Of course, in terms of the allocation of revenue support grant one cannot take into account such specific reports, but Liverpool is subject to the Gershon requirements, as are other authorities, and I would have thought that a consideration of that important report would be a contribution to that agenda in Liverpool.

Does the Minister recall that he met with a delegation from the London borough of Bromley in June of this year, and does he accept that during that meeting he appeared to agree with its point that formula grant is only part of the picture and that we would not be able to come to a fair assessment of the treatment of Bromley or any other authority until a comprehensive list of all grant, including specific grant, is published for each local authority? Will the Minister undertake to do that, and what comfort will his settlement give to my constituents in Bromley, as it appears that their formula grant will be nailed to the floor for a fourth successive year?

I hope I am not being churlish or disrespectful, but I say again that it would be nice to get a thank you for the floor, especially as Bromley council is part of the London Councils Association which argued for the floor in the first place. But notwithstanding that, the point that the delegation made was on the pockets of poverty, which a Member has raised. What I have done is to make available all the specific grants that are within the remit of my Department and portfolio today. The Department for Education and Skills today also publishes the dedicated school budget for schools. Surety and predictability of funding are an important part of our policy, and next year I will be able to announce three years of funding.

Today’s East Riding Mail reports that the new East Riding of Yorkshire Primary Care Trust wishes to close the bedded units in Beverley, Driffield, Hornsea and Withernsea. Does the Minister accept that such financially driven cuts must be stopped, or else the consequences will be dire not only for patient’s but for local authority budgets?

It is only proper for me to respond by saying that our public services have to balance the books. I do not think that the good people of east Yorkshire—of the beautiful market towns and other places that the hon. Gentleman mentioned—misunderstand the point that the Government are making when we say that there has been a real-terms increase in health expenditure in this country of 90 per cent. so far. I disagree with the idea that a trust or hospital that is balancing its books can be fairly described as making cuts; it is not doing that. The hon. Gentleman does his campaign no good by pretending otherwise. The public simply will not believe him when he says on the one hand that there are cuts, and on the other hand criticises the Government in other forums for allegedly overspending on public expenditure.