Local Government: Finance

Baroness Armstrong of Hill Top Excerpts

Monday 13th December 2010 Lords Chamber

[Baroness Hanham]

My Lords, the noble Lord, Lord Shipley, asked three clear questions. Is it a progressive settlement and reallocation? I think that we will take it year by year. This is a two-year settlement; whether it progresses on, I do not know. Whether it progresses in terms of how the grant is dealt with, we will have to wait and see. The £650 million is the repayment for 2.5 per cent of council tax if it is frozen. The question of whether that will be carried on next year will have to be decided. If it is, that will determine whether it is part and parcel of the baseline. As the noble Lord knows, capitalisation is treated as revenue by the Treasury, so whatever is spent goes back on to the revenue expectation. If that proves not to be sufficient, it will be a matter for each local authority to deal with.

[Baroness Armstrong of Hill Top]

Will the Minister confirm that areas of deprivation have lost out from more than just today’s settlement, because other grants such as the working neighbourhoods grant went directly to the most deprived and vulnerable people? What will the Government do to make sure that some of those communities do not sink further away from being able to turn themselves around? That is what that money was used for. Where is the money coming from that is being used to dampen the worst excesses of the settlement? Which other areas in the rest of the department are losing in order to make sure that the dampening effect can be exerted on the settlement?

[Baroness Hanham]

My Lords, we should be clear that the working neighbourhoods grant was just a three-year fund. There was no expectation—and no money was put aside—for it to continue for longer than three years. The noble Baroness shakes her head, but that is the situation. The previous Government could have decided to continue it, but they did not make that decision; they left it as a three-year grant.

The noble Baroness asked where the other money will come from. We have set up a £1.4 billion regional growth fund, which will be administered by the noble Lord, Lord Heseltine. Councils and local enterprise partnerships will be able to bid for money from that fund, which will be available in particular for private sector-led growth. The expectation is that local councils will work closely with the private sector, not only in local enterprise partnerships but in general, so they will be able to lean on that sector for additional assets.