Local Government: Finance

Lord McKenzie of Luton Excerpts

Monday 13th December 2010 Lords Chamber

[Baroness Hanham]

I thank my noble friend for that. He will also recall that thousands of years ago I knew him when he was Minister for local government. I am not quite sure what that says about either of us.

I accept what my noble friend says. First, the Opposition have not offered anything by way of a useful contribution to how this deficit will be dealt with. We have had considerable carping but no ideas have been offered as to what they would have done instead to deal with the deficit that they caused. Of course, the flexibility needed to deal with budgets, policy and organisation is absolutely essential. That will come directly out of the Localism Bill and how we look forward to local government working in the future.

[Lord McKenzie of Luton]

My Lords, in thanking the noble Baroness for repeating the Statement, I deprecate the very last minute at which the data came forward. It is a bit like the late arrival of the Localism Bill; it shows a Government not quite in control of their agenda.

We reject the assertion that these are necessary reductions in public expenditure, just repeated by the noble Lord. Of course, the deficit must be dealt with and, of course, we, as an opposition, have set out credible means of dealing with it. One example is that we would not be spending £2 billion to £3 billion on unnecessary top-down reorganisation of the National Health Service. Even if we were to accept the programme of overall expenditure set out by the Government—which we do not—how do they justify local government having such a savage component to deal with? It is worse than for any other department. What is the justification for that?

The noble Baroness spoke of the focus on the most vulnerable, and I understand that the Government have come up with this revenue spending power comparison—looking at like for like in the current year and next year. I understand that it includes council tax potential and grants. Incidentally, I have a question for the noble Baroness along the way. When is a transfer from central government a grant and when is it a handout—an unfortunate term? To get back to the comparison on revenue spending power between authorities, taken with the assertion that we are focusing on the most deprived, why is it, when comparing the current year with next year, on the Government’s own figures, that Hackney loses 8.9 per cent, or £33 million, and Kensington and Chelsea loses 5.5 per cent, or £11 million? How is it that Tower Hamlets loses 8.9 per cent, or £34 million, but Barnet loses 2.6 per cent at just £7.7 million? How can Hartlepool lose 8.9 per cent, or something like £10 million, and Rutland 2.2 per cent? How does the noble Baroness justify that within the parameters of the settlement?

[Baroness Hanham]

My Lords, first, perhaps I may remind the noble Lord, the former Minister, that I sat on that Front Bench all the way through the previous Government and I always complained about the lack of time that one was given for dealing with a Statement. Never ever did I receive a Statement more than about 40 minutes before I was due to answer it. So there will be no lessons from across there with that complaint.

The necessary reductions come about because of the deficit. I cannot keep on saying that—we must all deal with the deficit and deal with it we will. We will reduce the deficit more quickly than the party opposite ever indicated it would do.

As regards the reductions in grant for Tower Hamlets, Kensington and Chelsea or wherever, their spending power, which is how the Local Government Association wanted to present it, means that reserves and council tax are taken into account. The reductions of 8.9 per cent will depend on how much they can contribute to that, how much council tax they get, how much revenue can come from elsewhere and how much comes from government. The reductions would have been higher all round if extra money had not been made available for the transitional period. However, now no council will lose more than 8.9 per cent. It has been done on a very fair and measured formula to ensure that people do not have big swings within their council tax settlements across the country. They should not be too great.