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Local Government Expenditure

Volume 476: debated on Tuesday 20 May 2008

10. What proportion of local government expenditure was (a) raised locally and (b) met by Government grant in 2007-08. (206431)

About a quarter of council revenue spending is financed by council tax; about three quarters is financed from Government grant.

Is the balance of funding right? If more money were raised locally, would not local authorities and local councillors be more receptive and sympathetic to the needs of people who live in their areas?

Some argue that, but it is also important for all local councils to be properly funded. That requires a significant redistribution of central Government funding, which we make each year, and, thus, a significant proportion of central Government support, which we give each year. Over the past 10 or 11 years, the proportion of funding raised through council tax has remained at about a quarter. The proportion of central Government funding has, of course, risen: local councils have seen rises of more than 39 per cent. above inflation over those 10 years, which directly contrasts with the three years before 1997, when there was a 7 per cent. real-terms decrease.

Why is local government grant divided in such a way that a child educated in Devon receives £500 per annum less than a child educated in Manchester? Given that teachers are paid the same nationally, how on earth can that be fair?

Quite simply because, although the hon. Gentleman’s party leader does not appear to want to continue it, we have a system of funding local councils and the people who live in their areas according to the needs in those areas. That is intrinsic to our system, and that is the way it will remain.