Local Government: Finance Settlement

Baroness Armstrong of Hill Top Excerpts

Thursday 17th January 2013 Lords Chamber

[Baroness Armstrong of Hill Top]

My Lords, first, I apologise for being late and I thank Members on the Front Bench opposite for their indulgence. I got to Durham station in good time following a meeting in County Hall first thing this morning, only to find that the train I was due to catch had been cancelled because of a body on the line, and the next train was half an hour late, so I am afraid that I missed the beginning of my noble friend’s speech. I want to intervene only briefly, I hope.

Despite all the rhetoric, I am concerned that this year’s settlement is far more complex than previous ones and that therefore it is much more difficult for authorities to work out precisely what they will be getting. Indeed, certain grants have not yet been announced, but here we are at the end of the formal consultation period and at the point where, by law, local authorities must make their decisions. I had hoped that the impact of localism would mean that the settlement would be much more simple and straightforward, but in fact the opposite has happened. It means that localism is not yet a reality. Elements of the settlement are being tied in for a long period, which goes against the principle of fairness. Local authorities largely now try to plan over a three-year period but, because of the lateness of the settlement, they are not in a position to do that with confidence. They now rightly consult their local council tax payers and residents much more than they ever did, but that is being made more difficult when they do not have clear figures with which to work.

I come from the voluntary sector and I declare my interests in all the charities that I am involved with in the north-east that inevitably work with local authorities. They do not know what their allocation for next year will be, so many of them are having to put workers on 90-day redundancy notices in the hope that it will not be necessary but, none the less, they are having to do so in order to comply with the law. That causes great unrest in those charities.

The settlement this year has come inordinately late. Only last Friday did authorities learn about their public health settlement, while many other aspects have not yet been decided. I do not think that that is acceptable to authorities, so I would beg the Government to improve their performance next year. As my noble friend Lord Beecham said, on top of the settlement arriving only on 19 December, which is very late—in the department I used to try to insist that it was delivered during the last week of November at the latest; that deadline subsequently slipped but I think it is what central government should go back to—it is also true to say that there were a lot of mistakes in it. Even the overall amounts in terms of spending power were quite wrong when the settlement was first made in December. It has been incredibly difficult for local authorities to work out with their partners and stakeholders just what the impact is going to be. My noble friend Lord Beecham also pointed out that this has had a real effect on the distribution of the settlement.

I am at a loss to understand why deprivation has so little impact on the decisions being made around the settlement. I wish to goodness that we did not have to say in the north-east that we continue to have more people unemployed, more people on low wages and therefore more people on benefit than in other parts of the country, but we do. That is the reality. That reality means that the needs which local government has to respond to are greater.

On top of that, the Government have set the damping arrangements in stone until, I understand, something like 2020, which I find inexplicable. In my era, damping always caused us enormous problems. Nobody liked it and everybody asked why it was necessary. I used to spend my time explaining that, if you are losing a lot of money, you need a bit of time to adjust. This year, however, damping is working the other way. In Durham, although we are losing, on current projections, over £200 million during the period to 2018, this year we will have to contribute over £9 million to the damping grant, whereas—as my noble friend says—Surrey will receive £59 million. In fact, Surrey is getting an increase in its settlement, whereas Durham is getting substantial decreases in the basic settlement, yet it still has to contribute to the damping, which will give Surrey even more money to distribute to its less deprived population. This seems inexplicable, and I have had difficulty in trying to rationalise it with people, particularly councillors in the locality.

Deprivation raises its head very quickly in all sorts of ways. In Durham this year, we have to make available services for the homeless for the first time ever. The charity that I am involved in has just entered into a contract with Durham County Council to offer services to rough sleepers. There have been homeless in the city, but rough sleepers have never been found there before. That is a consequence of deprivation and of the changes that are going on at the moment, and the local authority has responsibility for it. I would be having a go at the authority if it did not accept that it has a responsibility to respond to this. However, it costs money. Although it is not a massive amount in terms of the overall budget, it is a reflection of that deprivation, and we fear that the changes in benefits on 1 April will bring further challenges. There are huge challenges to local government. I have a rule in the charity that we do not whinge. We are not whingeing; we are asking for timely, proper announcements, and for recognition of deprivation and the cost that that deprivation implies.