Lord Beecham
Main Page: Lord Beecham (Labour - Life peer)
Lord Beecham (Lab)
My Lords, I extend the customary thanks to the Minister for repeating the Statement, although what is being offered to local government could best be described as the equivalent of a cup of hemlock, slightly diluted. It is seven weeks since the provisional local government finance settlement was announced. Today, barely a month before councils are required to determine their budgets and set the council tax rate for next year, we have the final instalment.
The reaction to December’s announcement was interesting. The Conservative leader of Bracknell, Paul Bettison, an old sparring partner of mine in the Local Government Association, protested vigorously at the cuts that his and other Berkshire councils were facing. The leader of West Berkshire district council rejected the notion, consistently promoted by Ministers, that councils could easily deploy reserves to close the gap, and the leader of Lincolnshire was critical of the Conservative-led Local Government Association for what he described as its muted response to the Statement, saying that it did not put across the scale of the issue. These are councils whose problems of deprivation and need are significantly less than those of many cities and urban areas—and, indeed, of some rural areas—which have been especially hard hit over the past five years.
The LGA in its response, while welcoming the four-year period of the indicative settlement, raised a number of issues. It asked that the rating appeals system be reformed and that the new system in which councils will retain business rates should be based on a fundamental review of the needs basis and include equalisation as well as incentivisation to promote business development. The Government have announced a long-overdue review of the needs assessment formula in the light of the abandonment of the revenue support grant, but what is the timescale? What is meant by the phrase that this will be used,
“to determine the transition to 100% business rates reduction”?
What action, if any, will be taken in relation to the rating appeals system?
The LGA pointed that while the better care fund is to enhance the amount spent on social care, there is no extra funding for next year and only £105 million for 2017-18, when not only is demand rising but councils will have to meet the cost of the national minimum wage rises, which will be £330 million next year and £834 million a year by 2020. Will the Government comply with the call for the better care fund increase to be implemented in 2016-17, as opposed to two years later, and how do they envisage councils meeting the longer-term costs, not least in relation to the minimum wage point?
Council tax freeze grant will no longer be paid as it has been for the past few years—although, of course, this was top-sliced from the settlement in the first place in a piece of political legerdemain. How do the Government respond to the complaint that £74 million included in the current year for local welfare schemes is not embodied in the settlement? What is the position in relation to the independent living fund, where the £191 million passing to councils last year should be updated to £255 million, the full-year cost? Is that provided for in the settlement? It is noticeable that there will also be a cut of £600 million in education services, notwithstanding the growing pressures reported in the press of rising school rolls and teacher shortages.
Today, it is fair to say that the Government have slightly softened the blow for rural authorities, which will be welcome so far as it goes, but severe problems remain for councils and their communities. The boasted 2% social care precept which councils can levy will help wealthier areas much more than those with high numbers in the lowest council tax bands. As I pointed out last week, Newcastle, with 70% of households in bands A and B, will gain only £1.7 million to reduce the severe impact on its social care provision within the £132 million cuts that the council faces next year. That sum, an annual sum for one council, is almost as much as the entire national transitional grant payable over two years and not far from 10% of the total national amount to be raised by the 2% precept and the better care fund contribution combined.
The Secretary of State claims:
“The devolution of power and resources from Whitehall is gathering momentum”,
and that he has,
“responded positively to sensible recommendations, in as fair a manner as possible, while holding firm to our commitment to free our constituents from the dangers inherent in the deficit”.
What is gathering momentum is the devolution of responsibility without power and the danger of the constant erosion of the services which a civilised nation should be providing across a range of services from social care to education, policing to child protection, public health to libraries, museums and the arts and many others—the very essence of community life and of a healthy local democracy.
Baroness Williams of Trafford
My Lords, in terms of the final settlement and councils about to set their budgets—and I totally appreciate that point because, like the noble Lord, I would wait with bated breath until I knew exactly what I was dealing with in terms of final settlement—through the final settlement today, the Secretary of State has made it quite clear that no council will be worse off and no council will lose anything from the provisional settlement. In fact, Newcastle will benefit to the tune of about £6 million because of the new approach to the settlement. We recognise the difficulties of the first two years, which is why we are providing this transitional fund.
The noble Lord talked about the national minimum wage. It is definitely a significant cost, particularly in the area of social care. That is why the 2% precept, plus access to the better care fund, is being made available.
The noble Lord asked about the review of the needs-based formula. I cannot actually remember the point he made. Does he want to repeat it?
Baroness Williams of Trafford
I think that that will be in place for 2019 and it will be based on wide consultation with local authorities.
The noble Lord also asked why the council tax freeze grant was going. For many local authorities, the council tax freeze grant was a mixed blessing, because, while councils received it, it would also put their baseline down the following year. So many local authorities are pleased in many ways not to be dealing with the freeze grant but having far more control of their own destinies.
The noble Lord asked also about the Independent Living Fund. That will continue to be a separate grant made available to local authorities.
Baroness Williams of Trafford
My Lords, the minute that I got the list of figures, I looked at those for Richmond because I know of the problems and some of the challenges that it faces. That £2.9 million adjustment must have been welcome relief indeed. On the planning fees, obviously the consultation is just beginning but my noble friend has mentioned this to me before and I am looking forward to having a discussion with him during the consultation process.
Lord Beecham
My Lords, I apologise to the House; I omitted to mention my local government interests, which are recorded in the register.
Baroness Williams of Trafford
I think we know that the noble Lord is interested in local government.