Skip to main content

Local Government Finance

Volume 599: debated on Monday 14 September 2015

4. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need. (901299)

14. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need. (901309)

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

The Minister’s implication that areas of need are being fairly treated by the local government grant formula is simply not proven by the evidence. Research by the Chartered Institute of Public Finance and Accountancy found that many councils serving the most in need have been worst hit by the cuts. Indeed, in the list of councils worst hit by the cuts, Bradford council came 353rd out of a possible 383. Surely he agrees this is not fair.

Bradford has an area spending power of £2,295 per dwelling, which is 10% above the national average, and Bradford council also has £136 million in its reserves. It might want to deploy part of those reserves to address some of the challenges it faces.

Since 2010, funding to my constituency has been cut by a staggering 54%. Does the Minister agree that this cannot be acceptable given that during the same period some constituencies have benefited from a rise in funding? Does he realise that the funding formula is seriously flawed and in urgent need of review?

I do not agree. Burnley has an area spending power of £2,112 per household, which remains above the national average. In 2013-14, 2014-15 and 2015-16, we provided Burnley council with a £1.9 million efficiency support grant—equivalent to more than 10% of its spending power—to support long-term changes to bring costs down while continuing to deliver the services that Burnley’s citizens expect. That is nearly £6 million of additional resources, so, given what some other councils have done, the hon. Lady perhaps doth protest too much.

Lancashire County Council tells me its grant is so inadequate that the discretion it used to have in assisting youngsters to go to schools of their choice has now been withdrawn. If a pupil passes a school to get to the school they want to attend, they will be asked to pay £550 for school transport. This is nothing other than a back-door means of raising council tax on hard-working families in Lancashire. Will the Minister look into what is going on, which is an abuse of the discretion system, and ensure that parents can get their youngsters into the school of their choice?

I know that my hon. Friend has pursued this issue on several occasions, including in a Westminster Hall debate. It is a complicated issue, and local authorities have sometimes had to take difficult decisions on the prioritisation of school transport. There is no easy answer, but he will no doubt continue doggedly to pursue it in the House, as he has today.

Child refugees orphaned or separated from their parents are arriving in Britain in unprecedented numbers because of the current crisis across the EU, but the Government have chosen to slash funding by 18% for gateway councils, such as Kent, Hillingdon and Croydon, which look after the highest numbers of them. What impact does he think this dreadful decision will have on the councils and, more importantly, the children affected?

First, I am joined on the Front Bench by my hon. Friend the Member for Watford (Richard Harrington), whom the Prime Minister today appointed Minister for Refugees. He will sit on the Cabinet Sub-Committee looking to address these issues. I am sure the whole House will welcome his appointment.

Secondly, the hon. Gentleman attacked us over resources. I have a question to ask him about resources.

We are familiar with the issue in Kent, because of what happened in Calais and all that was attached to that, and with our colleagues in local government we are looking carefully at the likely cost. That is one of the issues the Cabinet Sub-Committee will address, including with my right hon. Friend the Prime Minister.