Local Government: Finance Settlement

Lord McKenzie of Luton Excerpts

Wednesday 23rd January 2013 Lords Chamber

[Baroness Hanham]

My Lords, I know that the right reverend Prelate is very involved in the discussions that are taking place about settlements and the various levels of deprivation. I believe he held a conference last week that addressed this important subject.

However, the methodology that has been used and is set out in the formula funding document, which has been out to consultation several times, takes account of deprivation and the high cost of providing services in areas that have high deprivation, where local authorities have a low ability to raise funding. Such authorities will receive more funding than authorities with a low cost of providing services and a high ability to raise funding locally.

[Lord McKenzie of Luton]

My Lords, under the local government settlement for the two years ending this March, the Audit Commission reported that in the 20 most deprived areas of the country revenue spending had fallen by 14% and in the 20 least deprived by 4.4%. In the most recent settlement, the 20 most deprived authorities will have their spending power cut by an average of 8% and the least deprived by 0.7%. Can the Minister tell me what definition of fairness justifies this distribution?

[Baroness Hanham]

My Lords, the distribution has been carried out, as it always is, against a formula which makes sure that there is fairness of distribution across the piece. As the noble Lord has just suggested, the highest loss of spending power is 8% and the lowest is much less than that. The department has taken a great deal of care to try to ensure that funds are well distributed across the country. Noble Lords will know that what we are dealing with here is, again, one of the difficulties of having a deficit left by the previous Government.