Local Government Funding (Hackney)

Lord Johnson of Marylebone Excerpts

Tuesday 21st December 2010 Westminster Hall

[Andrew Stunell]

I understand the point that the hon. Lady is making, and I will come on to the detail of the sums in a minute or two, if I may. However, the Government, the Department and the Secretary of State have made it clear that we are talking about the spending power available to councils, which is what is crucial to the council’s delivery of services and its employment of staff, as I am sure she understands. It is about how much money the local authority has to spend. She is right: the contribution from central Government is reducing and will reduce further over the period of the CSR. However, the capacity of the council to spend money will not fall below the figures we announced.

Even in these difficult financial times, we have protected those in most need of support. We have provided £1 billion of NHS funding to support social care services, which will build up by 2014-15 and is front-loaded, with £800 million of it coming in the next financial year. That includes £650 million paid through PCTs next year, and Hackney will benefit from a share of that money—as will all social services authorities—by receiving approximately £3,700,000. In a throw-away remark, the hon. Lady said that that would be for new duties; it is for managing the junction between health and social services, which service deliverers on both sides understand can make real economies and add common sense to their joint budgets, as well as improve care. In addition, the Department of Health is rolling £2.4 billion of social care funding into the formula grant over the next three years. That is made up of existing social care grants, which will rise in line with inflation and reach £1.4 billion by 2014, and an additional £1 billion, which will come from the funding to the NHS to councils to support social care.

We have protected investment in the homelessness grant and are prioritising services with the Supporting People programme over the spending review period. We are also giving more flexibility to local authorities. We are ending the ring-fencing of all revenue grants from next year, except school grants, and there will be a new public health grant from 2013. We have simplified and streamlined grant funding, and have shifted a wide range of other budgets, including GP and police and crime commissioner budgets, to the local level where they can be pooled and aligned. An important further step will be the creation of community budgets starting in 16 pilot areas next year, but it is possible to extend that to all local authority areas by 2013.

Turning to Hackney, I welcome what the hon. Lady had to say about high-powered salaries in the local government sector. I think that she and I are of the same mind on that. I hope her words will be widely listened to across London and elsewhere. We have produced a settlement that ensures that no council will see its revenue spending power decrease by more than 8.9% either next year or the year after and is progressive in its impact—I will come to that in a moment. It also confirms the transfer of control of finances from Government to local authorities, giving local authorities discretion. It is in that context, and the context of the council tax freeze and next year’s supporting grant, that I want to assure the hon. Lady that we have responded to the pressures that undoubtedly exist in Hackney for public services and for strong local government.

[Joseph Johnson (Orpington) (Con)]

Is there not a danger in the local government settlement that we are inadvertently penalising local councils that are already running a very tight ship? As the Minister may know, Bromley, which includes my constituency of Orpington, receives the second lowest local government formula grant—just £216. That is being cut by 14.3%, even though the council has very little to cut as it is.

[Andrew Stunell]

I can if necessary fight a war on two fronts, but that intervention probably makes the point for me. The settlement that we have produced protects Hackney and, it perhaps could be said, at the expense of Bromley. We have subdivided local authorities, in relation to the allocation of grants, by what we have described as banded floors. There are four bands, based on their dependence on Government grant as a fraction of their total spending.