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Local Government Grant Formula

Volume 597: debated on Monday 29 June 2015

4. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need. (900599)

15. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need. (900610)

Councils facing the highest demand for services receive substantially more funding, including through the grant formula. In addition, with the introduction of business rates retention in 2013-14 there has been a deliberate shift away from keeping authorities dependent on grant and towards providing councils with the tools and incentives they need to grow their local economies and promote sustainable house building.

I thank the Minister for his response, but that is simply not the case, is it? Extreme cuts in areas of need have put councils in an impossible situation. Some have found it so hard to protect essential services that they have had to use funding that had originally been allocated for local welfare assistance schemes. That means that, at times, there is nothing left for people who are in desperate need, such as care leavers, those who are homeless and those who are fleeing abuse. Does he really think that it is acceptable for councils to have to make those choices?

The north-east and the north-west still have the highest spending power per household after London. The average spending power per household in the north-east is £2,313, and the figure for the north-west is £2,250. Those figures are both higher than the England—excluding Greater London Authority—average of £2,086. Spending power per household in the South Tyneside area will be £2,402 in 2015-16, which is more than the England—excluding Greater London Authority—average and also more than the metropolitan area average of £2,226, so I do believe that adequate resources are being provided.

The Secretary of State is a decent man with an open mind who has often spoken of the importance of fairness, so how does he explain the fact that while the great city of Birmingham, which has high need, has had a £700 million budget cut equating to £2,000 per household, the leafy shire area of Cheshire East, in which the Chancellor of the Exchequer’s constituency is located, has had an increase in spending power of 2.6%? If fairness is to mean anything, it must lie at the heart of the funding of local government. Fairness should be based on need.

I thank the hon. Gentleman for his kind words about my boss. I wonder whether the hon. Gentleman still agrees with what he told the Municipal Journal on 29 September 2010:

“Labour was wrong in 1997 to downgrade the role of local government”.

We are not doing that; we are trying to upgrade the role of local government, and I remind him that spending power per household for the Birmingham area will be £2,554 in 2015-16, which is more than the England average excluding the GLA, more than the metropolitan area average and more than the Cheshire East average of £1,851.

There are many areas of high deprivation in the Shipley constituency. Does the Minister agree that people who are in need in otherwise affluent areas should be treated in the same way as those who are in need in deprived areas? What can he do to ensure that Bradford Council treats all those in need equally, and that it does not simply direct its resources to those in need in its Labour heartlands?

I am sure that any constituents who are in need have a doughty champion in my hon. Friend. If he believes the local authority is being deficient in any way, he will not be slow in coming forward to tell it so. Councillors in local government have had to take difficult decisions—I served in local government, so I remember some of those, too—but it is right that councils spend their money equitably for the residents across their entire area.

In my constituency, over the next five years, the number of residents aged 65 and above will increase by 20% and the number aged 95 and above will increase by 50%. What funding support can the Minister offer to meet the unique challenges of age and rurality in my constituency and others like it?

The funding changes made by the previous Government have already delivered a steady reduction in the so-called “urban-rural gap” in spending power levels. Consecutive settlements have helped to address that gap, and between 2012-13 and 2015-16 it reduces by £205 million. I hope those resources will be of some assistance.

20. The National Audit Office is clear that local authorities with the highest levels of deprivation have seen the greatest reductions in spending power, and in Cumbria rurality compounds the problem. Does the Minister accept that the cost of providing services in sparsely populated areas means that less money is then available to address our needs? (900615)

Allerdale is classified as a rural authority and, as such, it received additional funding via the £15.5 million allocated to rural areas for 2015-16, which was £4 million up on last year’s figure. In addition, it is worth pointing out that the Cumbria local enterprise partnership receives some £48 million in growth deal funding, part of which I hope will be to the benefit of the hon. Lady’s constituents.

It is important that local government grant and council tax payers’ moneys are put to the best use. Labour-led North East Lincolnshire Council is considering whether or not to establish its own funeral service, an area already well-served by private businesses, which fear that the council will exploit its monopoly position of providing cremation services. Will the Minister assure me that he will take the matter up with that council?

My hon. Friend will be aware that we have given councils greater powers, and the matter he raises is a local one. Perhaps we can have a discussion on it, but all I will say is that the council will have to make sure that it enjoys support from local people if it is going to undertake this. Councillors should ask not for whom the bell tolls, lest it tolls for them.

May I associate myself with the Secretary of State’s earlier comments on the atrocities in Tunisia and say what a pleasure it was to see him recently at the mayor-making in Croydon? Many people across local government hope the new Secretary of State will adopt a fairer approach than his predecessor. Over the past five years, Newham, which has very high levels of social deprivation, has lost more than £1,000 of funding per household while wealthier Elmbridge in Surrey has had an increase of more than £40 per household. How will his approach in future spending rounds put an end to this blatant unfairness?

I thank the hon. Gentleman for welcoming me to my new responsibilities—at least that is what it said here. [Laughter.] I should explain, for his benefit, that I began my career in local government, serving on Basildon District Council, a robust place once described as the only local authority in the UK where at council meetings the councillors would actively heckle the public gallery. I also thank him for being nice to my boss. May I remind him that part of our approach is to give councils extra resources, and extra sources of resource, with which they can address issues? Local authorities now benefit from nearly £11 billion under business rates retention, with the scheme estimated to deliver a £10 billion boost to national GDP by 2020. By 2015-16, 94% of local authorities will see growth in business rates above their initial projections, which will be worth some £544 million. We are giving local authorities the methods to succeed.

I thank the right hon. Gentleman for welcoming me to my position as well. As he seems to want people to believe that the Government’s approach is fair, why have the 10 councils with the most children in care lost three times more funding than the 10 councils with the fewest children in care?

I am very glad to see the hon. Gentleman in his place. We all know that money is tight, but it is worth reminding the House that the Department for Communities and Local Government contributed a package of £230 million to the recent in-year savings exercise, which was found mainly from unallocated contingencies and better than anticipated land receipts. As a result, we did not need to reopen the local government finance settlement for councils for 2015-16. I understand that that was received well across the whole of local government, even in some Labour authorities.