Local Government Finance

Debate between Bob Blackman and Henry Smith

Wednesday 9th February 2011 Commons Chamber

[Bob Blackman]

I thank my hon. Friend for that intervention, which refers to another thing that took place under the Labour Government. In all those organisations, pay is determined from the top, so as chief executive pay has rocketed, so has senior pay, while the large numbers of people who work for local authorities and do a brilliant job are paid relatively small amounts of money. There is no doubt, however, that the pay of middle management and senior management exploded, and I applaud the Secretary of State’s decision to publish the figures so that the public can see what type of jobs are involved.

We also saw an explosion in the creation of non-jobs, each of which required administrative support, departments and offices, all of which are costs to the taxpayer, specifically the council tax payer. We had a multitude of different grant regimes and ring-fencing so that if local authorities wanted to take decisions, they could not. I therefore welcome the merger of the different grant regimes and the removal of ring-fencing, which allows for local decision making at the right sort of level.

What Labour did was not all bad. The decision to tell local authorities what level of funding they were getting for three years was a good thing because it allowed them to plan ahead. I hope that in future times the settlement from the Front Bench will be offered not just for three years but for four or five years so that there is certainty for local government in planning ahead.

[Henry Smith]

Does my hon. Friend think that as well as certainty in terms of the amounts received by local authorities, it is also important that there is transparency as regards the formula for the way that those settlements are decided?

[Bob Blackman]

My hon. Friend anticipates a matter that I was going to come to later. The outdated Barnett formula, which has transferred money to all parts of the country with no transparency whatsoever, must go and be replaced with a formula that delivers money on a fair and transparent basis that we can all see and understand. Even Lord Barnett himself cannot believe that his formula, which has existed for some 40 years, was not removed or transformed under 13 years of Labour Government, but they did not do it. That is one of the things that has to go.

We should deal with issues relating to the front-loading of reductions in expenditure. The reality is that the Government are having to deal with a deficit inherited from the Labour Government. We get maximum benefit from making public expenditure reductions early because we get four or five years-worth of reductions as a result. That is precisely the reason for doing it.