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Government Funding (Distribution)

Volume 526: debated on Monday 4 April 2011

5. What assessment he has made of the equity of the distribution of Government funding for local authorities. (50343)

The local government settlement is a fair outcome in very difficult circumstances—those circumstances being that we are borrowing £400 million every day to plug the gap left by Labour. We have worked hard to get equity between local authorities, giving proper attention to both their level of dependency on Government support and their local resources. That is why we have transferred the needs-based element from 73% to 83% of the formula grant and introduced the banded floors. As a result, for every pound per resident of formula grant that goes to the least dependent authority in London—Richmond—Lambeth will get £4.86, which is almost five times as much per resident as the least dependent authority.

As far as equity for local taxpayers goes, the council tax freeze will provide £2.4 million to Lambeth this coming year.

Of course, the fact is that the most deprived single-tier local authorities are seeing their spending power reduced by nearly four times the amount of the least deprived local authorities. For example, Lambeth—the Minister omitted this point—is having to make just under £40 million-worth of cuts to services in my area, including to Lambeth senior citizens day centre in Brixton Hill. That centre provides food and a place to go for—[Interruption.]

Order. It seems to be contagious. Both sides are taking too long. We will have a quick question from Mr Umunna.

The older people’s centre is facing cuts of up to 80%. Will the Minister come with me to the centre and explain how he will help it to continue to survive in the coming financial year?

According to Lambeth council’s own website, it is reducing its front-line service provision by £1 million, but I draw the House’s attention to the fact that it is also increasing its reserves from £83 million last year to £93 million this year. Perhaps the question about equity would be better directed at the council than at us.

Some councils, many of them Labour-controlled, are protecting overpaid bureaucracies and slashing services run by the third sector, while others are embracing social enterprise and charities in new models of social services provision. Will the Minister recognise good behaviour in future allocations to get true equity to the people who need it?

I thoroughly understand my hon. Friend's point, and as he will know, the local government resource review will look at those matters in the near future.

The wheels are well and truly coming off the Government’s explanation for their swingeing cuts to local government—that is pretty clear. Contrary to his assertion that he would protect the most vulnerable by making his cuts “fair and progressive”, the Secretary of State is actually imposing the biggest cuts on the country’s poorest communities and leaving more affluent areas relatively unscathed. Even his own Housing Minister confessed last week that the poorest areas will shoulder the harshest cuts. Will the Minister replying do the decent thing and admit that the Secretary of State’s declaration about fairness and the Chancellor’s assertion that we are all in it together are completely and utterly preposterous?[Official Report, 26 April 2011, Vol. 527, c. 2MC]

The hon. Gentleman has of course used a selective quotation, and that is entirely his prerogative, but it does rather undermine his case. The reality is that no local authority in this country faces a reduction in its real expenditure of more than 7.7%, and offset against that is the new homes bonus that we have announced today, through which Lambeth, for instance, gets £1.9 million.