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Local Authority Funding

Volume 524: debated on Monday 28 February 2011

4. What assessment he has made of the effects of reductions in formula grant funding on local authorities in the most deprived areas. (42488)

5. What assessment he has made of the effects of reductions in formula grant funding on local authorities in the most deprived areas. (42489)

Authorities in the most deprived areas will, thanks to the banded floors, receive a smaller reduction in formula grant than others. We have given greater weight to relative needs in the formula grant, and our new transition grant will make sure that no council has a spending power reduction of more than 8.8%.

If fairness is at the heart of this Government’s decision making, as clearly stated in the coalition agreement, why are the most deprived areas being hit the hardest? Given that the Minister wrongly stated that the most deprived area—Liverpool—did not receive a 30% cut to Supporting People funding, when can Liverpool expect to see a recalculation based on the 1% national average, which would result in an £11 million improvement in its settlement?

Here is something for Labour Members to take into account: one cannot take money away from authorities that are not getting it in the first place. Of course, the biggest spenders, even if we use percentages in the same region, are going to feel the impact in a different way. Liverpool, for example, still receives £764 a head, whereas my authority, by contrast, receives £229 a head.

Will the Minister congratulate Liverpool city council, which is making £100 million-worth of efficiency savings? Does he agree with the independent efficiency expert Colm Reilly of PA Consulting who said that, given the huge cuts in Government funding, the council cannot make the scale of savings necessary without affecting front-line services?

As I have said from the Dispatch Box before, nobody says that this is going to be easy. The deficit—the size of the debt—left to the country by Labour makes these reductions inevitable. However, Liverpool is latterly doing something about it; the problem is that it did not plan for this far enough in advance. Had it done so, it would have been in the same position as Trafford and other local authorities that are carrying out these reductions without some of the pain now experienced in Liverpool.

I used to be a councillor in Trafford, and I think the Minister should reflect on the fact that the deprivation there is nothing like it is in Liverpool, Manchester and Salford—there is no comparison. The areas I have mentioned have higher levels of poverty and unemployment and much greater inequalities in health than other areas. Despite that, Ministers have chosen to inflict the deepest, the most swingeing and front-loaded cuts on those deprived areas. Will the Minister comment on the letters from 131 Labour council leaders and 88 Liberal Democrat leaders, many from deprived areas, who are united in their anger at the unfairness of the cuts and at the constant political attacks on them by Ministers, which we have heard again today?

The hon. Lady refers to Trafford, where she used to be a councillor, but that council receives much less money from the Government than do other councils, including Liverpool. The idea that they are in the same position is untrue. In addition, the hon. Lady should know that we have protected the level of reduction for some of the most needy councils by having banded floors, which means far smaller reductions in the most needy areas, while the transition grant means that no area can be affected by more than 8.8%. A range of other measures, including an increase in the deprivation index from 73% to 83%, also apply.