Local Government: Provisional Finance Settlement

Lord Beecham Excerpts

Wednesday 19th December 2012 Lords Chamber

[Baroness Hanham]

My Lords, I thank my noble friend for his contribution. I also thank him for acknowledging that we recognise that local government is efficient—at least most of it is, although some is not. As regards the 50 areas of good practice that my right honourable friend in the other place has produced, the noble Lord, Lord Tope, is correct: local authorities can learn from each others’ good practice, and there is good practice. There is good practice already across the piece where people are sharing services, chief executives and back office services and are procuring together. However, this applies to by no means all local authorities. This is where they need to learn from each other.

The Local Government Association has in its midst councils that are doing this and organisations within councils that are setting these good examples. I agree that local authorities can do good practice, but what they need to do is to bring it together and work together as much as they can.

The new efficiency support grant affects a very small number of councils above the 8.8%. I will let the noble Lord know the exact amount of it, but it is there to help them bring down their expenditure. Regarding public health announcements, we are still waiting for those but I cannot tell my noble friend when they are going to be announced.

[Lord Beecham]

My Lords, I declare an interest as a member of Newcastle City Council not in receipt of a council pension. I ask the noble Baroness, the Minister to explain the relevance of the comparison of Wokingham to Newcastle, given that, for example, the rate of unemployment in Newcastle is four times that of Wokingham. Does she not consider that there may well be a greater spending need in Newcastle and authorities like it than in councils in the Royal County of Berkshire, such as Wokingham, Windsor and Maidenhead, which has also been adduced in support of the Government’s position?

Secondly, given that the Secretary of State is so exercised about reserves, what are the Government proposing to say to the Greater London Authority which has added 60% to its reserves—£585 million in the past year—while at the same time receiving £27 million of damping grant? What will she say to Surrey County Council, which has received £40 million of damping grant, which it put into its reserves and added further amounts to it? Is this a matter of concern, and if so what will the Government do about it?

I have two other questions, the first of which is: will the Government reconsider their position on the cost of appeals against rating valuations for business rates, which at the moment they propose not to finance, even in respect of appeals relating to the period before the new business rate regime comes in. The Government, having had the money, apparently do not intend to contribute to the cost of any successful appeals. What is the logic behind that?

Finally, in relation to council tax benefit and the grant that is to go to local authorities, why have the Government chosen to ignore the most recent figures of benefit claims for the current year with the result that, in Newcastle for example, an anticipated 10% reduction will probably translate into more than 14% because of the failure to use the most recent figures. If it is too late to alter that figure for this year, and I hope it is not, will the Government at least use the most up-to-date figures for the remaining years of the settlement?

[Baroness Hanham]

My Lords, let us start with the reserves. The Government have a very firm position on this. They recognise that local authorities need reserves; indeed, in the current economic situation, they may have to call on reserves to help them deal with some of their finances. However, there are local authorities that are sitting on enormous unallocated reserves, and those are the ones that the Secretary of State believes ought to be challenged. Where local authorities are sitting on vast sums, they should be looking at how best they can use them to support their expenditure.

Regarding the cost of appeals, within the business rate retention scheme an allowance will be made for appeals that are already in the pipeline. Those that will come subsequently are a different matter and they will have to be dealt with at that time. The 10% reduction in council tax benefit is there to help with efficiency; to ensure that local authorities administer this in the best way that they possibly can; and to ensure that any system they set up can, if necessary, be supported by other reductions within their council tax budgets.