Local Government Finance

Debate between Lord Austin of Dudley and Lord Pickles

Wednesday 9th February 2011 Commons Chamber

[Mr Pickles]

Last time we discussed this, the hon. Gentleman made some interesting suggestions about the level of the business rate with regard to the surplus. I am happy to confirm to him what I said last time: that the process of distribution from the Government is based largely on the uniform business rate, and any surplus—[Interruption.] The hon. Gentleman needs to understand that the settlement is made within a defined period and that business rate income goes up and down. The Treasury puts money in and takes money out according to the buoyancy of the business rate. The hon. Gentleman is a distinguished Member of the House who is very familiar with these matters, and he should know these things.

[Ian Austin (Dudley North) (Lab)]

He is right honourable, and he knows a lot more about it than you.

[Mr Pickles]

The hon. Gentleman is quite right to correct me; I beg the right hon. Gentleman’s pardon. He is indeed a very distinguished gentleman, and of course he knows a lot more than a lot of people in this House, including, I suspect, the hon. Gentleman. [Hon. Members: “Hear, hear!”] It is obvious from my hon. Friends’ reaction that I do not need to put that to a vote.

[Ian Austin]

rose—

[Mr Pickles]

I will give way in a few moments.

The phasing of the settlement will be challenging. Councils can choose how they respond. Some have chosen to wring their hands and say that it is all too hard, or to play politics with front-line services. Others have chosen to step up and to protect vital local services, reducing every trace of waste, protecting the most vulnerable and reforming services to deliver better results for less.

--- Later in debate ---

[Ian Austin]

Will the Secretary of State give way?

[Mr Pickles]

The hon. Gentleman must pay more attention. When I say that I will give way in a few moments, that is exactly what I mean, but there is a queue, and he is a little way behind.

Hammersmith and Fulham, Kensington and Chelsea and Westminster councils are merging their back offices to save £35 million. West Norfolk is freezing council tax and car park charges, as well as councillors’ allowances. Reading borough council has decided not to cut but to increase funding for voluntary groups. We have heard today that Ribble Valley borough council has also decided to protect voluntary groups and not to cut front-line services.

I am grateful that many councils have brought the same constructive attitude to discussions about the funding settlement. They have helped us to put the finishing touches to a settlement that is sustainable, fair and progressive. We have focused resources on the most vulnerable communities. We have given more importance to the levels of need within each council. We have grouped councils in four bands. The most dependent on Government funding are seeing proportionately lower falls in grant. The more deprived places will receive far more funding per head than the better-off places. For example, Hackney will receive £1,043 per head and Wokingham will receive just £125 per head. These changes have made the system fairer and more progressive than ever.

[Mr Pickles]

I am most grateful to the right hon. Lady. What she needs to understand is that two figures have been suggested—one by the Office for Budget Responsibility. Following those figures, we decided to move some things from ring-fenced grants into the general grant. That accounts for the difference between the two sizes. With regard to the level of potential surplus, there is a possible notional surplus in 2013 and 2014. As I explained to the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), what happens is that within the total sum available for grant, if there is a surplus, all is redistributed. However, as happened under the right hon. Lady’s Government and under previous Governments, the amount in the revenue support grant is reduced on a compensatory basis, because the level of the total settlement is fixed. There is no difference; it is just a different way of calculating.

[Ian Austin]

rose—

[Mr Pickles]

How can I turn down the hon. Gentleman? He has been up and down like Tigger.

[Ian Austin]

I am very grateful to the Secretary of State. Nobody disputes that savings have to be made by local authorities. [Interruption.] Well, nobody does. The Government cannot have it both ways. On the one hand, they say that we were planning cuts slightly smaller than those that they are imposing, and on the other they say that we were not planning any cuts at all. I am not sure what their argument is.

On the sorts of cuts that local authorities are making, is the Secretary of State aware that the axe hangs over Dudley’s benefits shop, which is helping people who have been made redundant during the recession and hard-pressed home owners who face the risk of repossession to sort out their finances? It seems an utterly ludicrous decision when it costs £300,000 a year to run and brings £2 million into the local economy, of which £1.5 million is spent on supporting local businesses. In the light of what he said about local authorities making inappropriate cuts that target the most vulnerable, will he join me in pleading with Dudley council not to close the benefits advice shop?

[Mr Pickles]

I feel a certain degree of camaraderie and fraternal friendship with the hon. Gentleman, because unlike his party’s Front Benchers, he has said that Labour’s cuts would have been just slightly less than those that we are presenting. I think that is probably true, but the challenge facing local government means that just a couple of million quid would not make all the difference. There are very challenging circumstances.