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Local Government Finance Settlement: Transition Grant

Volume 769: debated on Wednesday 16 March 2016


Asked by

To ask Her Majesty’s Government upon what formula they based the transition grant forming part of the recently announced local government finance settlement, and what consultation they held, and with whom, before taking that decision.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so I refer to my local government interests.

My Lords, the approach to allocating resources in the local government finance settlement now looks at the main resources available to local councils. The transition grant is a response to requests from local authorities through the provisional settlement consultation and is for places that did not benefit from these changes in the formula. It will be applied in direct proportion to the difference in the revenue support grant that would have been experienced.

My Lords, was it just coincidence that 83% of the transition grant went to 135 Conservative councils, while 16 Labour councils which received moneys received less than either Surrey or Hampshire did individually? To what extent did authorities in the so-called northern powerhouse benefit from the grant, and can the Minister tell us what the impact on councils will be of the announced £6.7 billion cut in business rates on which they were expected to rely in future?

My Lords, I can say from personal experience of where I live that Trafford did not benefit very much at all, and it is indeed a Conservative council. This money is to make up the shortfall of what would have been expected and will help councils to transition towards full local funding.

My Lords, given the disproportionate distribution of the transitional grant and the benefits for the prosperous south-east as opposed to the north and the northern powerhouse, did the Minister or the Government consult the Office for Budget Responsibility? If not, can the Minister say why not?

My Lords, I do not know whether we consulted the Office for Budget Responsibility but I will let her know. But what is clear is that the transitional funding was given to those councils which were disproportionately affected by the new core funding regime.

My Lords, I declare an interest as a council tax payer in Lancashire. Would the noble Baroness please write to me with information about all the criteria used because it appears to those of us in the north—Trafford is obviously not complaining—that it depends who makes a fuss as to whether local people get transitional relief, and Lancashire does not appear to be taken seriously in terms of need?

I can certainly write to the noble Baroness. I understand that the formula will be published once the first payments have gone out, so that may help. I am certainly happy to write to the noble Baroness either before or after the formula has been published.

My Lords, on the amount of extra costs that we hear constantly being referred to in the Housing and Planning Bill and that will apply to local authorities, how will that be affected by today’s Budget? Is there any help in that, or in the settlement?

My Lords, with permission I will just clarify that the Question refers to the formula of the local government finance settlement. That is why I think it is relevant.

In view of the reduction in business rates, should we assume that there will be a significant increase in council tax?

My Lords, it is up to local areas to determine what they raise in council tax and how that relates to business rate retention. Clearly, there will be some sort of smoothing of that process because we would not want areas to be totally disbenefited by the new system. But generally, councils in the last few years have been extremely responsible in setting their council tax rates, and we expect them to go on being so.

Is the Minister aware that there is a Government in the United Kingdom who have cut back grants to local government even more than the Conservative Government in the United Kingdom? The SNP Government in Scotland have cut back grants significantly more, resulting in cuts in major, vital services to elderly, disabled and young people in Scotland. Can the Minister advise the House what we can do to scotch—excuse the expression—the myth that the SNP Government are in any way radical and redistributive? They are even more right-wing than this Conservative Government.

My Lords, would the Minister care to answer my second question about the impact on councils of today’s announcement of a £6.7 billion cut in business rates on which they were expecting to rely?

My Lords, like my noble friend Lord O’Neill, I have not caught fully the Budget Statement, but I will say that residents’ satisfaction with councils has remained high, and I expect it to go on being so. I will analyse what the noble Lord has said because I simply did not catch it in the Budget.

Can my noble friend tell the House whether councils controlled by the Conservative Party, on average, deliver better value for money than councils controlled by other parties?