Local Government Finance Settlement

Baroness Armstrong of Hill Top Excerpts

Thursday 22nd January 2015 Lords Chamber

[Baroness Armstrong of Hill Top (Lab)]

My Lords, it is a great pleasure to join in this debate. I congratulate my noble and very good friend Lord Beecham, who is from a neighbouring authority. When my noble friend was leader of the old AMA, and then of the new LGA, I was Local Government Minister during the first Labour term from 1997. We did not always agree, but we always had a good relationship. His absolute passion for local government is well known and acknowledged in this House. It is significant that so many Members of this House have kept that commitment to local government, and in that light I really look forward to the maiden speeches that will follow shortly.

As I say, I was Local Government Minister for four years, so I know about formulas and how they are tweaked. I know the sort of information that Ministers get, making clear the potential for fundraising in each area, what one tweak will do to that and all the rest. My father, who was also involved in local government in the old Department of the Environment, used to say that only three people in the country understand this formula and they all disagree. There is a lot in that too.

Essentially, this is about the fact that in this country too much money is held at the centre. Some of that has historically been for quite good reasons, or for reasons that we have always defended but actually need to have the bravery to think about. The reason why so much has been controlled centrally is that the Government have priorities. They want to make sure that those priorities are reflected, and they are committed to sharing money out around the country in order to ensure that those priorities are met. That makes the main issue how the money is divided up to get fairness. Fairness has to reflect need, and I suggest that that is the problem we are discussing today. How do you achieve such fairness with what will be a reducing amount of money?

I want briefly to talk about the authority I live in and where I served on the county council for a brief period, shortly before I became one of its Members of Parliament: Durham, which is now a large unitary authority. Since 2011, Durham has seen its money from central government reduce by £137 million, which is not easy to deal with. By 2018-19, the Red Book states that the reduction will be £250 million, which is not an insignificant amount. The area is hugely rural, with the lowest rate of car ownership in the country, some of the highest unemployment rates and, of course, one of the largest ageing populations because many young people go elsewhere. The welfare assistance that the right reverend Prelate the Bishop of Portsmouth talked about is due to be reduced in Durham by £1.9 million by the end of March this year. Actually, none of us can find it in the allocation; we have been told that it is there but no one can find it, including the chief finance officer.

I simply challenge how the Government acknowledge need and how an authority like Durham can see such large reductions whereas counties like Surrey, with nothing like the level of need experienced in Durham, have seen such a large increase in the money that they are getting. We all have different views of fairness but I do not know of any external commentator who is saying that the Government have put in place a system of fair distribution. It means that inequalities will increase and, as we discussed in the House yesterday, consequences will arise from that, particularly in different parts of the country.

What about the future? I am clear that we need much more devolution, but it must recognise need. We need much more public service reform but that, too, has to be done on the basis of being fair in the end. In the town where I live at the foot of the north Pennines, which has a population of around 12,000 people, we have just lost our only supermarket and, as a result, the post office and the petrol station. I do not believe that anyone living in a town of that size in the south would be able to say that. This is what unfairness brings, and the Government have a responsibility to pay heed.