Local Government Finance Bill

Baroness Hollis of Heigham Excerpts

Wednesday 10th October 2012 Lords Chamber

[Lord Beecham]

My Lords, I shall speak to my noble friend’s amendments, and the amendments in my name and that of my noble friend Lord McKenzie.

My noble friend Lord Smith rightly referred to the concern about the threshold level above which protection would be given. I note that in the debate in Committee, the Minister said that the Government had been carefully considering these issues,

“together with the safety net support threshold in the range of 7.5% to 10% below baseline funding”,

and said that that offered the, “best combination on balance”. She went on to say:

“We will be consulting local government over the summer before any final decisions are taken”.—[Official Report, 5/7/12; col. GC424.]

It would be interesting to know what representations there have been and what progress was made during those consultations because, on the face of it, it looks as though the Government are still on course for that higher figure. My noble friend Lord Smith rightly pointed out the severe financial problems facing local authorities—a combination both of cuts in government grant and the rising demand for and costs of services. Many authorities will find themselves in an unprecedentedly grey financial situation. The noises outside suggest that the heavens appear to echo my sentiments.

The problem is shared by many authorities. I ought to declare an interest as a member of Newcastle City Council and, like others, I am an honorary vice-president of the Local Government Association. In Newcastle, we are contemplating reaching a position whereby we have to find £90 million a year by the end of a three-year period. That is £90 million every year, which is a significant proportion of the budget. Consequently, any diminution of resources from the reduction in business rate income would be a matter of even greater significance.

[Baroness Hollis of Heigham]

Perhaps I may interrupt my noble friend. The staff of the House are getting the engineers to see what is going on. Alas, we do not have any surveyors left.

[Lord Beecham]

I shall endeavour to proceed despite the interesting background noise.

There is a serious question about the extent of the threshold and, as my noble friend rightly pointed out, there is another question about how it is to be financed. The assumption was that the Government would be meeting this cost, and it was a reasonable assumption. Indeed, that was the position put last year by a senior Treasury official in consultation with local government finance officers. We are now faced, apparently, with a safety net cut of £245 million. Originally, it was thought that that would be met from the Government’s AME contingency of around £400 million, topped up with some of the set-aside, which could have provided a potential £700 million. In addition to that source, the Government are, of course, sitting on around £600 million extra in business rates. I slightly anticipate the answer that the Minister may make in response to the question of my noble friend Lord McKenzie: that figure is the extra amount collected by councils for the department last year, and it will probably be more this year.

--- Later in debate ---

[Baroness Hanham]

The noble Lord is absolutely right. I apologise. I thought it sounded a bit funny when I said it.

[Baroness Hollis of Heigham]

It is the fireworks.

[Lord McKenzie of Luton]

Notwithstanding that, these amendments seem straightforward and we are content with them. We have not actually debated pooling much during our deliberations—it is a very important facility under this Bill, which we support—but we certainly accept the amendments on the basis on which the noble Baroness has moved them.