Local Government Finance

Brandon Lewis Excerpts

Wednesday 18th December 2013 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

(Urgent Question): To ask the Secretary of State for Communities and Local Government if he will make a statement on the provisional local government finance settlement.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

My Department has today published the provisional financial settlement for English local authorities for 2014-15 and 2015-16. The technical details are outlined in a written statement, and associated documents have been placed in the Library and in the Vote Office. This is effectively the second year of a settlement announced last year. We have been consulting over the summer on the detail of the statement, so it should not come as a surprise to any local authority.

This year’s settlement is fair to all parts of the country—rural or urban, district or county, city or shire—meaning that councils can deliver sensible savings while protecting front-line services. Every bit of the public sector needs to do its bit to pay off Labour’s deficit, including local government, which, we should remember, accounts for a quarter of all public spending.

Opinion polls clearly suggest that satisfaction with local government is either constant or even improved compared with 2010, despite the need for councils to make savings to tackle that deficit. Today’s fair funding deal arms councils with a significant spending power average of £2,089 per household.

The autumn statement protected local authorities from further spending reductions for 2014-2015 and 2015-16. Overall, the average spending power reduction for councils in 2014-15 is expected to be limited to just 2.9% per household. Extra funding has been provided for sparse rural areas. With English councils spending £117 billion this year, councils must continue to focus on cutting waste and making sensible savings. There is significant scope for councils to merge back-office services or do more joint working: get more for less and they will do better with their £60 billion a year procurement budget; tackle £2 billion of local fraud; reduce the £2 billion of lost money in council tax arrears or use their record £19 billion of reserves; and get better value for money from their billions in property assets.

Local authorities should be looking to protect their residents and give them help with the cost of living. Extra funding is on offer to councils to freeze council tax for a fourth year in a row. The Government have provided up to £550 million for the next two years, which allows for a fourth year of freeze worth up to £718 for the average bill payer, with more savings to come next year. I am proud to be part of a Government that have allowed that freeze in council tax. In contrast, the previous Labour Government doubled council tax for hard-working people.

From April next year, funding for the 2011-12 and 2013-14 freezes will be in the main local government settlement total for future years. Funding for the next two freeze years will also be built into the spending review baseline, which will give maximum possible certainty for councils that the extra funding for freezing council tax will remain available without a cliff-edge effect. The Government are clearing up the mess left by the previous Labour Government, paying off Labour’s deficit and helping hard-working people with the cost of living. Councils are doing well and playing their part.

[Hilary Benn]

Given the scale of the cuts affecting local authorities, the Minister really should have made an oral statement today instead of having to be dragged to the House. Will he explain why the further cut of, supposedly, 10% in real terms—announced by the Chancellor in the spending round for 2015-16—is actually a 15% real cut to the settlement funding assessment? Why are the most disadvantaged communities once again the hardest hit? Will he confirm that by 2017 the city of Liverpool, the most deprived local authority in the country, will have lost 62% of the Government grant it was receiving in 2010? How on earth can he justify that? As the Audit Commission recently reported:

“Councils serving the most deprived areas have seen the largest reductions in funding relative to spending.”

Tough times do indeed require tough decisions, but this Government, as they have shown time and again, from the bedroom tax to the top rate of tax and local government funding, take most from those who have least. That is unfair and unjust.

Despite Government talk of a freeze, many councils, including Tory authority after Tory authority, will increase the council tax next year, including for residents who work but are on the lowest incomes and will lose council tax benefit. Why is the Minister top-slicing money from council funding that is based on need, and putting it into the so-called “new homes bonus” in areas where new homes would have been built anyway? Does he not realise that hundreds of thousands of vulnerable people have already been denied social care due to cuts in council funding, while the Government have wasted money on their expensive and failed reorganisation of the NHS? Is it not the case that even more people will lose out because of what has been announced today?

Another week, another Minister in denial—when will the Government realise that the future set out today means that more and more councils in the years ahead will simply not be able to maintain the services on which so many people rely?

[Brandon Lewis]

I am somewhat surprised; I had been expecting the right hon. Gentleman to outline for the first time these several years exactly where Labour’s promised £52 billion of cuts would come from.

In reality, we have heard nothing new this morning. This statement comes after last year’s statement set out a two-year settlement for local authorities. In fact, whereas more than 3% had been predicted, this year local authorities will get a 2.9% reduction, falling to below 2% next year. So it is a good news day for local government. [Interruption.] The right hon. Gentleman’s comments did not match up with the facts of life. The Audit Commission’s recent report outlined how local authorities were coping well with the changes. [Interruption.]

[Mr Speaker]

Order. Mr Ronnie Campbell—[Interruption.] Order. Your apprenticeship to become a statesman will never be completed at this rate. I know you are a bit over-ebullient, but you must calm yourself. [Interruption.] Calm yourself. I say two things, if I may: first, Members must not shout at the Minister, and secondly, I think the Minister was deploying a rhetorical device, but he will be aware that on these occasions, a question is put to Ministers; it is not an occasion for another party to set out policy. That is not the nature of the urgent question procedure, but I know, from his wry smile, that the Minister is well aware of that important fact.

[Brandon Lewis]

Thank you, Mr Speaker. Your point is well made. I think the hon. Member for Blyth Valley (Mr Campbell) must be excited about the local government settlement, as we all are today—it is an exciting day for local government.

If the right hon. Gentleman looks at the figures, he will see that we have gone even further this year to protect the most difficult areas and those councils left abandoned by the last Labour Government through their reduction in the working neighbourhood fund. I am thinking of councils such as my local authority of Great Yarmouth and others such as Pendle and Hastings, which they left with massive black holes that this Government have filled with the transitional grant. Those councils will be protected even further this year with a reduction of no more than 2.9%, which is good news for local authorities working hard to deliver good front-line services—services that Labour left hanging on a ledge.

The right hon. Gentleman referred to councils such as Liverpool. I gently remind him that Liverpool and Newcastle are similar in being among the best-supported councils in the country and having the highest spending power per dwelling. For example, Newcastle receives £2,400 per dwelling, which is about £900 more than areas such as Windsor and Maidenhead. I think that he and his colleagues should look at the figures. [Interruption.]

[Mr Speaker]

We will get through these matters. I call Mr Philip Hollobone.

[Mr Philip Hollobone (Kettering) (Con)]

Under the leadership of councillor Russell Roberts, Kettering borough council, of which I have the privilege to be a member, has for the past three years offered a policy of “triple zero”: no cuts to front-line services, no cuts to voluntary grants and no increase in council tax. The Minister will know, because he has twice visited Kettering borough council, that it is an exemplary local authority. Does the message not go out that if Kettering can do this, other councils, if they really want to, can also do it?

[Brandon Lewis]

My hon. Friend makes a very good point. Kettering is an excellent example of a good Conservative council managing its finances properly for the benefit of local residents, keeping down the cost of living by keeping council tax frozen and providing excellent front-line services, as good councils all over the country are doing.

[Mr Clive Betts (Sheffield South East) (Lab)]

In the June spending round, the Chancellor stated that in future years local government spending would drop not by the 10% to 15% that the Local Government Association said, but by 2.3%. The Prime Minister has repeated that figure. I wrote to him asking how it was calculated, but got a response from the Chief Secretary to the Treasury that did not do that. Will the Minister now explain where that 2.3% figure is in the document and how it is calculated? If it is not in here now, will he write to me, placing a copy in the Library, showing how it has been calculated?

[Brandon Lewis]

I am happy to write to the Chairman of the Communities and Local Government Committee with the figures. He will find that the gap between some of the points the right hon. Member for Leeds Central (Hilary Benn) made and the real figures is explained by the fact that we are interested in how much local authorities have to spend on their residents, not just what they spend on bureaucracy and red tape, through the Government grant.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I welcome for the second year running the one-off payment to sparse rural areas, but many well-run councils of all political colours are predicting a cliff edge in 2015, when they fear they will have to cut services dramatically. What advice would the Minister give those councils following today’s statement?

[Brandon Lewis]

I am sure my hon. Friend will be pleased to know that the settlement for rural areas will be rolled into the base, giving them a better base going forward, enabling them to continue their good work of sharing services and management and ensuring they are efficient and delivering good front-line services for residents.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I remind the Minister that for many years—in fact, decades—it has been an accepted practice for Ministers to announce the provisional settlement in the House, to allow proper debate and discussion, in good time and preferably around the end of November or early December. I put it to the hon. Gentleman that it does not help local government to have a late—no, very late—provisional settlement put out by written statement, with the Minister subsequently being dragged here to answer an urgent question.

[Brandon Lewis]

Far from being dragged here, I always find it a pleasure to be at the Dispatch Box. The right hon. Gentleman might like to look back at past records and see that his own party regularly made written statements. More importantly, local government has had two years’ notice, as we made an oral statement on a two-year settlement last year.

[Nick de Bois (Enfield North) (Con)]

Does the Minister agree that it is unacceptable that Enfield Labour council has allowed uncollected council tax to increase over the last three years, against the trend for the rest of London, from £6 million to a staggering collective £32 million, particularly given that those figures already discount uncollectable council tax?

[Brandon Lewis]

My hon. Friend makes a good point. There is some £2 billion-worth of uncollected council tax, and councils should be working on the problem. This is not councils’ money, but taxpayers’ money. Whenever there is uncollected council tax, it costs other taxpayers more money. My hon. Friend is absolutely right to highlight this issue; good councils will be working hard on it.

--- Later in debate ---

[Mr Campbell]

Thank you, Mr Speaker, and a merry Christmas to you.

Is the Minister aware that in Northumberland, where I come from, we have had to cut £30 million this year and £60 million last year, and we are sacking workers and cutting social services, while education has been cut right down to the bone—and there is no money left? The Minister is living in cloud cuckoo land.

[Brandon Lewis]

I hope that the hon. Gentleman will go back and convince his local authority, using his great powers of persuasion, to do the right thing by its residents—to cut back-office costs and bureaucracy and perhaps look at our Department’s “50 ways to save” document. That would help the council to protect front-line services rather than try to score political points with people’s everyday lives.

[Mr David Nuttall (Bury North) (Con)]

Last year, hard-working families in my Bury North constituency faced an inflation-busting increase of 3.5% in their council tax, which was put down to the levies imposed by the Greater Manchester joint authorities. Can the Minister assure them that the same thing will not happen again next year?

[Brandon Lewis]

I thank my hon. Friend for his question. It is unacceptable for council tax payers to have to pay that level of increase when there is so much more local authorities can do to save money—and the good ones are already doing it. Yesterday saw the Third Reading of the Local Audit and Accountability Bill, which contains provisions on levies and council tax referendums that will prevent that sort of thing from ever happening again.

[Mr John Denham (Southampton, Itchen) (Lab)]

As the Minister will be aware, it has been said that all the cuts have fallen in the north and not in the south. Does he agree that that is not the case and that the Government have, in fact, been just as vicious in cutting the budgets of the most deprived towns and cities in the south of England as they have in the north, looking after the more prosperous councils wherever they are?

[Brandon Lewis]

Let me tell the right hon. Gentleman that the Government have produced a settlement that we believe is fair to rural and urban areas, north and south. We are having to make tough decisions—difficult, complicated ones—following the complete financial mess left to us by the last Labour Government.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

My hon. Friend will be aware that the Government’s getting rid of many regulations has helped councils with the cost of services. I am keen, however, for the Minister to reinforce the message that district councils should pass on the tax grant to parish councils that have a reduced tax base.

--- Later in debate ---

[Brandon Lewis]

My hon. Friend makes a good point. I am pleased that 98% of authorities are already doing that. As we made clear in today’s statement, we expect local authorities to pass that money on to the parish councils. My hon. Friend was quite right about that.

[Lilian Greenwood (Nottingham South) (Lab)]

Does not the Audit Commission’s finding that the most deprived areas have been hit with the biggest cuts show that this Government are on the side of the rich and are quite happy to balance the books on the backs of the poor?

[Brandon Lewis]

As I have said to other Members, the hon. Lady should look at the total amount. Areas such as Liverpool and Newcastle have a much higher spending power than pretty much anywhere else in the country. Even those areas most affected by the black hole left by the last Labour Government—areas such as Hastings, Great Yarmouth and Pendle, which are doing good work to transform themselves—are being protected with an efficiency support grant, which the last Government never bothered to provide.

[Neil Parish (Tiverton and Honiton) (Con)]

I very much back the rural fair share campaign and I welcome the money that has come forward. Given that it is Christmas, I would have liked it to be a little more generous, but can you outline exactly how much extra you are going to give to rural authorities that you would not have given otherwise?

[Mr Speaker]

I am giving nothing extra at all, but the Minister might do. We will see.

[Brandon Lewis]

My hon. Friend has participated in a strong and ongoing campaign with colleagues across the House—including at least one Opposition Front Bencher—about the gap between rural and urban areas. We listened last year and made a one-off payment. This year we have provided increases, which will be rolled into the baseline. My hon. Friend will see that from the figures in the Library.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

Birmingham city council’s controllable spend has been cut from £1.2 billion to £400 million. We will have to cut services. Will the Minister tell my constituents whether we should cut school patrols, school libraries or public conveniences?

[Brandon Lewis]

I would suggest that the hon. Lady use her powers of persuasion to encourage Birmingham city council to do the right thing and, instead of playing political games with its local taxpayers, be more efficient with its back office, and look at how to use its reserves to invest for the future.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

People living in rural areas earn less on average than people living in urban areas, pay higher council tax and get fewer services, which are more expensive to deliver, yet there is a 50% rural premium or penalty, with 50% more going to urban areas than rural ones. We welcome the rolling of this grant into the general fund, but it will do nothing to close the gap between urban and rural, which cannot be defended.

--- Later in debate ---

[Brandon Lewis]

My hon. Friend has made a passionate and strong case for rural areas throughout the year. That is why we rolled an increased amount into the base. It goes further to narrow the gap. It narrowed last year and narrowed slightly further this year. I am sure that my hon. Friend will be lobbying me on the issue over the next few weeks of consultation procedures.

[Mr Dennis Skinner (Bolsover) (Lab)]

Now that the Minister, like most of his Tory Front-Bench colleagues, has referred to debts being left behind, is he aware that in Derbyshire, where the Tories lost control last May, they have left behind the biggest mess that Derbyshire county council has ever had to deal with—£151 million in cuts? Is not the truth of the matter that this Tory Government, with their coalition allies, are intent on wrecking the public sector and bringing local government to its knees? That is the policy of this Government, whose massive cuts have mostly been in the Labour-controlled areas.

[Brandon Lewis]

If we look at what has happened, we find that even the independent report last year showed that the settlement was fair as between north and south, urban and rural—and we would argue that the same applies this year. It is true that, thanks to the mess created by the last Government, we have had to cut back. Local government accounts for a quarter of all public spending, so it has its part to play. The last Labour Chancellor outlined £52 billion-worth of cuts, which the Opposition have not outlined yet, but they have opposed every single change that this Government have made. That is not a credible position, so I take no lectures from the hon. Gentleman. I suggest that he go back to his now Labour-controlled authority and ask it to do what the last Conservative authority was doing, which was managing better so that local taxpayers do not have to be punished by increased council tax. It should freeze its council tax, as the Conservative-led coalition Government have done, and make things better for its local residents.

[Mr David Heath (Somerton and Frome) (LD)]

A significant group of authorities, mainly in rural areas, have been historically underfunded. The Government have recognised that, but does the Minister understand that improving the distribution formula does no good whatever if a damping mechanism is then imposed, which removes the benefit?

[Brandon Lewis]

I understand the hon. Gentleman’s point. Last year, damping was brought in to avoid volatility in the system. We put in extra grant—the money we are rolling in this year—on top of that, so it is not affected by the issue that the hon. Gentleman raised.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Can the Minister explain exactly how this is good news for people in Hull, which, although one of the most disadvantaged areas in the country, is experiencing far deeper and more savage cuts than other, wealthier areas?

[Brandon Lewis]

This is a good settlement for local government generally. Councils’ spending power is being reduced by just 2.9%, and a reduction of 1.8% is predicted for next year. That will ensure that local authorities can manage. More important, the Government are putting money—taxpayers’ money—into a council tax freeze for the fourth successive year in order to help hard-working people. I hope that all Labour authorities will follow the example of good Conservative and Liberal Democrat authorities and deliver that freeze to their residents.

[Guy Opperman (Hexham) (Con)]

On 25 November, in the House, I raised the issue of the council tax benefit support grant, which is not being passed on to all the parish councils in Northumberland. On that occasion, my hon. Friend responded by saying that local authorities should be ensuring that that was done. Has he made any further progress in forcing them to do so?

[Brandon Lewis]

It is true that a very small number of authorities are not yet passing on the grant, and we are telling them that they should. It is a matter for the authorities themselves, but we made it very clear in today’s written statement that they should be passing the money on to the parish councils.

[Mrs Mary Glindon (North Tyneside) (Lab)]

This morning I received a phone call from a representative of North Tyneside council, who was very anxious because the council had not received any confirmation that the details of the settlement were to be issued today. Why were they not issued to my local authority through the normal channels?

[Brandon Lewis]

Let me gently say to the hon. Lady that they were issued through the normal channels. That is the normal procedure. As for the question of timing, which was raised by the right hon. Member for Greenwich and Woolwich (Mr Raynsford). we are a prudent, sensible, fiscal Government. It would have been imprudent to do anything before the autumn statement. Perhaps we take the finances of the country slightly more seriously than the last Government.

[Justin Tomlinson (North Swindon) (Con)]

Regrettably, some councils are tempted to increase council tax simply to build their base and their reserves. What measures are the Government taking to reward councils that do the right thing and freeze the tax?

[Brandon Lewis]

My hon. Friend has made a very good point. Local authorities should indeed be freezing council tax, and we have now adopted a reward-based system. We reward councils that do good work through the new homes bonus, the business rates retention scheme and the innovation fund. All those measures benefit good councils such as my hon. Friend’s in Swindon, which has done some really good innovatory work. The council tax freeze grant is now in the baseline, and there can be no questions, no ifs and no buts: councils should freeze the tax to help hard-working families.

[Julie Hilling (Bolton West) (Lab)]

Bolton will have lost £100 million since 2010. It is not celebrating, but mourning the services that it is losing, and it is desperately worried about its vulnerable residents. When will the Minister stop blaming the last Government and local authorities, and take responsibility for what he himself is doing?

[Brandon Lewis]

When they say sorry.

[Mark Pawsey (Rugby) (Con)]

Does the Minister agree that enlightened and far-sighted local authorities such as Rugby borough council anticipated several years ago the tough economic environment in which we now find ourselves, and started to put their houses in order at an early stage by taking a hard look at all their items of expenditure?

[Brandon Lewis]

I do agree with my hon. Friend. There are very good councils all over the country which have been streamlining their bureaucracy and administration, sharing management, sharing services, improving their procurement practices, and delivering great front-line services to their residents. They should be warmly thanked for doing great work while also playing an important role in lowering the country’s deficit.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Birmingham is reeling from the biggest cuts in local government history, totalling £840 million, and the other core cities have also been particularly hard hit. Common to all the cuts has been a grotesquely unfair approach. Why has Birmingham been hit twice as hard as the national average, and why is every citizen in high-need, high-unemployment Birmingham losing £149 of local government services while in leafy, low-need, low-unemployment Wokingham the figure is only £19?

[Brandon Lewis]

If the hon. Gentleman looks at the starting model, he will see that Wokingham had rather less spending power per dwelling than Birmingham in the first place.

[Andrew George (St Ives) (LD)]

The Minister accepted in his statement that rural areas were being comparatively underfunded, but I am sorry to say that, once again, the adjustment in the settlement is chicken feed when it comes to addressing the inequality between rural and urban areas. Does the Minister not realise that, at this rate, it will take more than 1,000 years to put that right?

[Brandon Lewis]

We have actually increased last year’s amount. We have put it into the baseline. I appreciate the point made by Members about the need to narrow the gap between rural and urban areas, but they should appreciate that we are acting against the backdrop of the financial mess in which we were left by the last Government and with which we now have to deal. Obviously, that somewhat restricts our room for manoeuvre.

[Sheila Gilmore (Edinburgh East) (Lab)]

Is the Minister aware, or willing to admit, that a council tax freeze is a very regressive measure? Those who did not pay previously receive nothing back, and the higher people’s council tax band, the more they gain. We in Scotland have had a great deal of experience of that regressive tax policy over nearly seven years.

[Brandon Lewis]

I am not sure whether the hon. Lady is arguing that councils should increase the tax, but that is certainly not something that we would support. We think that freezing council tax in order to make families several hundred pounds a year better off is a good thing to do for hard-working families.

[Andrew Stephenson (Pendle) (Con)]

I thank the Minister for taking the time to visit Pendle and meet the council’s leader, Joe Cooney, and its chief executive, and for meeting them again when they came to London recently. Will he join me in congratulating councils such as Pendle, which has already made significant savings by, for instance, reducing by 35% the disgraceful number of properties in the borough that were left empty by the last Labour Government?

[Brandon Lewis]

It was a pleasure to meet Joe, the leader of Pendle borough council, a couple of weeks ago, when I met a number of council leaders. Pendle is a fine example of a small authority that has worked hard to make really good savings while protecting front-line services. I congratulate that council, and other councils that are taking similar measures, on their excellent work.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Plymouth city council has won awards under different administrations. Over the past five years it has cut its back-room staff, innovated, and, sadly, laid off staff. Now it is telling us that it will not have enough money to fulfil its statutory duties over the three-year period, which is not acceptable. Will the Minister please tell us what the council is supposed to do when it is being encouraged to freeze council tax, which is a wholly regressive measure?

[Brandon Lewis]

If the council freezes the tax, which would be good for its residents, it will receive a support grant from the Government. If it is looking for ideas in order to do more than it has already done, I am sure that the Local Government Association will be happy to help. It could probably learn a lesson or two from Hammersmith and Fulham, which has some good ideas that would help it to cut its tax for local residents.

[Several hon. Members]

rose—

[John Stevenson (Carlisle) (Con)]

Cumbria has six district councils and one county council for half a million people. Many Cumbrians believe that the councils should merge in order to save money and improve local services. Were the councils to make such an approach to the Government, would it be favourably received?

[Brandon Lewis]

As my hon. Friend knows, we are not fans of top-down reorganisation in local government, unlike the last Administration. However, I am very supportive of any local authorities that join forces to find new and innovative ways of saving back-office costs, and I shall always be happy to meet their members and discuss what is achievable for them.

[Helen Jones (Warrington North) (Lab)]

If the Minister believes in fairness, can he explain why West Oxfordshire, one of the richest local authorities in the country, will gain from the settlement, while, according to the Audit Commission, the most deprived areas in the country will lose from it? Are not the Government pursuing a systematic policy, in local government, health and taxation, of transferring money from the poorest areas to the richest?

[Brandon Lewis]

The hon. Lady’s argument falls completely flat for a couple of reasons. First, we are helping the hardest-hit councils, such as Pendle, Hastings, Great Yarmouth and Hyndburn, whereas the last Government left them with a black hole to fall into in 2010. Secondly, the hon. Lady is living in the past, because this year the Government adopted a reward-based system that enables local authorities to increase their income through the business rates retention scheme and the new homes bonus. Councils that do good things such as building houses and securing economic growth will experience the benefits of that.

[Stephen Mosley (City of Chester) (Con)]

Like all local authorities, Cheshire West and Chester council has had to tighten its belt in recent years. By cutting waste and sharing services, it has managed to keep council tax increases down while improving local services. Does my hon. Friend agree that if a local authority makes itself more efficient, it can make itself more effective too?

[Brandon Lewis]

My hon. Friend makes a good point in naming one of the local authorities that has done great work in proving that the efficiencies deliver not only savings but, more importantly, better services for their residents. I encourage other authorities to look at those good councils and the great work that they are doing through the community budget programme and the transformation network to become more efficient and effective for their residents.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I am sure that the Minister must have used a public library as a young man. Is he at all worried that community libraries could all but disappear as this squeeze on non-essential council services continues to grow?

[Brandon Lewis]

I suggest that, if the hon. Gentleman looks around the country, he will also find local authorities that are opening new libraries, where they think that they are right for their area. As I have said to other Members, I urge him to use his powers of persuasion to get his authority to make the savings in the most efficient way possible, and to look at back-office functions, at fraud, at its reserves and at its council tax collection procedures in order to protect front-line services, rather than playing politics with people’s money.

[John Pugh (Southport) (LD)]

The Minister says that the average cut in spending power is 2.9%, but spending power is a rather slippery concept. What is the average cut in formula grant, and how does that vary by type of authority?

[Brandon Lewis]

As I said to the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), we use spending power not only because local government has talked to us about using it but because it gives the whole picture of spending power in a local area, rather than just the grant. That is what impacts on the services that residents get, and that is what matters to people.

[Chris Williamson (Derby North) (Lab)]

Derby city council is already reeling from the unprecedented cuts that have been imposed by this Government since they came to power, yet under this settlement it will have to find another £81 million of cuts from its budget, and it will soon be unable to fund even its statutory obligations. Will the Minister advise the council on which statutory services it should cut? Should it cut services for vulnerable children, or services for vulnerable elderly people? It will not have the resources to fulfil all its statutory obligations.

[Brandon Lewis]

The hon. Gentleman highlights part of the problem for some local authorities. First, I want to thank him for being one of the great advocates of spending power, and I am sure that he will thank us for ensuring that we make it clear why that matters to people in terms of the services they get. He was right about that, and we have listened and put that formula forward. I know that, if his local authority is playing political games with people’s money, he will want to fight for his local residents and go back to his authority and tell it to think again. If the councillors and officers cannot make the right decisions to look after their local residents, they should step aside and get somebody in who can.

[Several hon. Members]

rose—

[Mr Rob Wilson (Reading East) (Con)]

Thank you, Mr Speaker. Labour councils such as Reading are again increasing the burden of council tax on families this year. Does the Minister agree that, during these challenging times, any rise in council tax should be put to a local authority referendum?

[Brandon Lewis]

My hon. Friend makes a good point. This Conservative coalition Government have done what they can to ensure that a council tax freeze is available to every resident in the country, and we are proud of that. Any authority that is looking to put up its council tax and to penalise local residents by charging them more should have the courage to hold a referendum and let the public decide.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The Minister knows that quoting spending power levels completely ignores the different challenges that areas such as Newcastle and Liverpool are facing. On the new homes bonus, will he explain the fairness of the north-east contributing £42.3 million to the pot while receiving only £29.3 million in return?

[Brandon Lewis]

Actually, the spending power formula goes in completely the opposite direction, in that it represents exactly what affects residents. Calculating spending power per dwelling takes account of the entire pot of money in a local authority area. The hon. Lady is quite right to say that Newcastle has a spending power of almost £2,500 a head compared with other areas that have closer to £1,500. The formula does reflect need. With the new homes bonus, the more houses people build, the more money they will get.

[Barry Gardiner (Brent North) (Lab)]

The Minister knows that my borough of Brent has one of the highest levels of deprivation. The leader of the council, Muhammed Butt, has engaged with the programme of shared services and sought to drive efficiencies through, despite more than £100 million of cuts, but the time is now fast approaching when the authority will be able to fund only its statutory service obligations. What does that say about the view of the Minister’s Department on localism?

[Brandon Lewis]

I am sure that the hon. Gentleman’s local authority will want to come to talk to me during the consultation process. If it looks at authorities such as Hammersmith and Fulham—and, indeed, the whole tri-borough area—it will see the hundreds of millions of pounds-worth of savings that can be made to ensure that it provides great front-line services.

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is farcical for the Minister to try to spin this as a good day for local government. There will certainly be no parties in the city of Liverpool today. We are struggling to meet our statutory duties, after the 62% cut that this Government have imposed on us, and there are no discretionary pots left. If the Minister and his Secretary of State do not believe me, I will offer them a first-class ticket to come to Liverpool and look at the books, and ask them to tell us where they believe we can cut further.

[Brandon Lewis]

I appreciate the hon. Gentleman’s offer, but we do not tend to travel first class in our Department. We protect the taxpayer’s money. I have met the mayor of Liverpool, and obviously—

[Steve Rotheram]

I will pay for it.

[Mr Speaker]

Order. The financial generosity of the hon. Gentleman is duly noted, but it is somewhat unparliamentary for him to chunter from a sedentary position—[Interruption.] Order. His point has been heard—[Interruption.] Order. I was being good-humoured towards the hon. Gentleman, but I am sorry that he is not showing good humour in the festive season. [Interruption.] Order. I am not debating the point with the hon. Gentleman; I am simply telling him what the situation is. He has asked his question, and he must now have the courtesy to listen to the response. He can make his own evaluation of that response, of course.

[Brandon Lewis]

I am sure that the mayor of Liverpool will want to talk to us and make his case during the consultation procedure. I met representatives of the core cities last year, and I am happy to meet any individuals. I must also point out to the hon. Gentleman that Liverpool gets one of the highest amounts of spending power per dwelling in the country and that, on top of that, it gets regional growth fund money, growing places fund money and a city deal, all of which are helping Liverpool to be the town that it should be.

[Mr Jim Cunningham (Coventry South) (Lab)]

The Minister’s justifications for inflicting cuts on local government sound like something that we would expect to hear from the North Korean regime. When Ministers start talking about cutting back-room staff, we know right away that they have no answers. More importantly, Coventry will have to find between 15% and 20% cuts over the next three years. Translated one way, that means more than 1,000 jobs. Translated another way, it means that we would have to find £48 million.

[Nic Dakin (Scunthorpe) (Lab)]

The Minister says that this is a really good day for local government, following previous good settlements. Will he explain why 64 Conservative councils have refused the offer of a freeze and are putting up their council tax?

[Brandon Lewis]

The hon. Gentleman must be a bit of a mind reader or a fortune teller, because councils will not set their council tax for another month or two. We will have to wait and see what happens. I say to all local authorities, whatever their colour and political party, that they should be freezing their council tax to protect their local residents. If they are not sure where they can find more savings, I suggest that they look at good councils such as Vale of White Horse in Oxfordshire, High Peak and Staffordshire Moorlands, which are saving up to 18% in back-office costs by sharing management and chief executives.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

In his answer to the original question, the Minister expressed pride. In his answer to the hon. Member for City of Chester (Stephen Mosley), he praised that Tory-controlled council. Is he proud of the fact that that council is closing women’s refuges?

[Brandon Lewis]

It is up to local residents to take a view on those local services. I say to the hon. Gentleman and to all Members in that area that, if the local authority is making decisions they do not like, they should lobby the authority to get it to do what they think is the right thing. I have to say that, when I have visited that area, I have found the residents to be very happy with the services. Some great work is being done there on shared services and shared management with Manchester, on freezing the council tax and on troubled families, to ensure that people are getting great services and improved services in that area.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

There is no doubt that, either by accident or design, this Government have redistributed money from poorer areas towards the more affluent ones. Let me give the Minister an example relating to the new homes bonus. The bonus excess each year is financed by the redistribution of the formula grant. Because of the collapse in housing completions that this Government have presided over—in Greater Manchester, that involves about a third of the homes that we had been planning for—there has been a redistributional effect away from areas that really need the funds and towards London and the south-east. That funding imbalance then goes into the local enterprise partnerships and the local growth funds that the Government believe should drive prosperity in local economies. Surely the Minister knows the impact of his own policies on councils up and down the country.

[Brandon Lewis]

The new homes bonus is fairly simple: you build more houses, you get more money.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The Minister must surely be aware that many local authorities have already committed significant reserves to meeting additional equal pay requirements, especially as a result of the Birmingham ruling. That money cannot be spent twice, so will he cover those additional costs, should they arise, if those councils take his advice and spend the reserves on front-line services?

[Brandon Lewis]

If the hon. Gentleman looks at the Birmingham case, he will find that we have been helpful to Birmingham, particularly with capitalisation. It would have been better, however, if that authority had made decisions earlier for good financial planning.

[Mr Steve Reed (Croydon North) (Lab)]

The level of total spending power is central to the local government settlement, so can the Minister explain here and now how the 2.3% cut in local government spending power that the Secretary of State announced in June turned into a 15% cut for most London boroughs once the detail came through?

[Brandon Lewis]

That is simply not true; we have got a protection in there. This year, it is even better than last year, so even the biggest cut in the country is only 6.9%.