Local Government Finance

Daniel Kawczynski Excerpts

Wednesday 12th February 2014 Commons Chamber

[Brandon Lewis]

My hon. Friend tempts me away from the local government finance settlement. The Government look at such things, but the fund currently has a threshold of about £3.7 billion, and the Government would have to pay back the majority of what we got because of the way the mechanism works.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Further to the point made by the hon. Member for St Ives (Andrew George), will the Minister give us a guarantee that in the longer term he will grapple with the issue of funding for rural areas? Shropshire is the largest land-locked county in England, and providing services in such large areas inextricably costs more.

[Brandon Lewis]

My hon. Friend makes his case strongly, as ever.

--- Later in debate ---

[Andy Sawford]

My hon. Friend makes the point powerfully, with all of his experience as Chair of the Select Committee.

Spending power in Leeds will be lower than Wokingham’s in 2014-15, and will fall every year despite higher service pressures. Spending power for my hon. Friend’s own authority of Sheffield and for Newcastle, which has also been mentioned, will broadly match Wokingham’s in 2015-16 and then fall below it in future years despite higher service pressures. The spending pressures that councils face are very different. Newcastle has 101 looked-after children per 10,000 people, whereas Wokingham has 24. Homelessness and supported housing costs are £145 per dwelling in Newcastle and £48 in Wokingham. Statutory concessionary travel costs are £85 per dwelling in Newcastle and £14 in Wokingham. Where is the fairness in a funding system that does not recognise such large differences in need?

The revenue support grant element, which recognises need, will shrink from £15.2 billion in 2013-14 to £9.3 billion by 2015-16. Modelling shows that it could be gone altogether by the end of the next Parliament. The Institute for Fiscal Studies, which the Government are fond of quoting, is clear in its analysis that the poorest areas are feeling the squeeze. Minority communities are particularly affected, too. Of the 30 areas in England with the highest black and minority ethnic populations, 29 face cuts above national average and eight face cuts of double the national average. The Department’s own impact assessment raises concerns about the effect of cuts on BME communities and about services to the very young, the elderly and the disabled. It says it is not possible to make a substantial assessment. I have to ask the Minister why not, given the scale of these cuts? Why has his Department not conducted a full impact assessment, as it was urged to do by the Public Accounts Committee?

[Daniel Kawczynski]

Under 13 years of the Labour Government we saw a huge increase in salaries for officers and chief executives in councils. I would like to have the hon. Gentleman’s views on how that can be controlled going forward, because it accounts for a great deal of money.

[Andy Sawford]

Chief officer pay is something that should, rightly, be determined locally. We would of course want local authorities to be responsible. I urge the hon. Gentleman to recognise, however, that some of the highest paid chief officers were in Conservative local authorities. We will not be taking any lectures on that point.

The Government seem to have introduced the term “spending power” to hide the true scale of the cuts. London Councils says that it is extremely concerned that the spending power calculation is misleading and incorrect. The Government say that spending power is the total amount of money available to a local authority but the LGA tells us that there is double counting, such as with health budgets that are also in the Department of Health’s figures. Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy says that

“these figures demonstrate…statement on the local government settlement this year was by any usual standards an…opaque announcement.”

The Minister says that the change to spending power is a shift in Government policy to reduce dependence. He uses that term about the begging bowl that, frankly, I find offensive. He says that this is about reducing dependence on central Government and freeing councils to encourage local growth. If that is true, we have to ask why it has taken so long for this Government to make a U-turn on business rates, which have risen by £2,000 since May 2010. Why will they not join this side of the House and go further by cutting rates for 1.5 million small and medium businesses? We agree, of course, that councils should not simply be a post-box for the Treasury, and schemes such as the local authority business growth incentive were introduced by the last Labour Government. We will look to reform any so-called incentivisation so that the system works fairly for all areas of the country and is alongside, rather than a replacement for, mechanisms for fair distribution of funding according to need.