Local Government Finance Settlement

Lord Rooker Excerpts

Thursday 22nd January 2015 Lords Chamber

[Lord Rooker (Lab)]

My Lords, I welcome both the maiden speeches and congratulate both Members. I shall base my account of my concerns on the work of Dr Chris Game of Birmingham University, who recently set out, in thechamberlainfiles.com, a master class in local authority funding. What follows is just a summary of that. Dr Game says that the Minister, on 18 December in the other place, claimed that the,

“settlement leaves councils with considerable … spending power. As planned, we have kept the overall reduction to 1.8%”.—[Official Report, Commons, 18/12/14; col. 1590.]

He said that the reduction could be 1.6% if additional transformation money was taken into account. But, as Dr Game points out, grant funding and spending power are not the same. Revenue spending includes council tax receipts, certain grants, and NHS social care funds. That gives a fuller picture. But income from fees, charges and investments is not included in spending power.

So in this confusing system—which is designed to confuse—total government funding to local authorities is really down 13.7%. Furthermore, if council tax income is excluded from spending power, since it is a different kind of income from government grant, the reduction is not 1.8% but 3.7%. Then, as others have said, if we remove the NHS portion of the £3.5 billion better care fund, and include in spending power only the £2 billion for social care by local government, the reduction becomes 8.8%—nearly five times the figure that Ministers have used. Chris Game has done anybody who reads that piece a great service.

The situation in Birmingham is unfair. The cut in spending power for Birmingham is 6%—very close to the government maximum of 6.4%. If one checks all the London boroughs, the metropolitan districts and the all-purpose authorities, the only ones with a cut of 6% or more are Hackney, Knowsley and Birmingham. Yet the recent Kerslake report, which I very much support, and am pleased to see is being implemented quickly, pointed out that Birmingham has,

“more poor children than anywhere else in England”.

In terms of multiple deprivation, it is the 13th on the list. Things are so bad that the Government have had to send in both a social services commissioner and an education commissioner. It appears that Ministers, on a whim, can choose to define spending power to mean what they say it is, or is not, as in Alice in Wonderland. This is not sensible. It is misleading and unfair to Birmingham.

I declare an interest. I have never been a councillor, although I was a failed candidate twice in 1967. None the less, I have had views for 30 years about the way the city should be governed, and I hope the latest attempt to modernise, as set out in the Kerslake report, will work. In the mean time I hope in a few minutes’ time to hear from the noble Lord, Lord Whitby, who, with his Lib Dem partners, was in charge for more than half a decade, until two years ago, why the city is in the parlous state that it is.

Now I shall say a few words about my adopted local authority—although nothing I say about it is meant as a comparison with Birmingham. Some call it Shropshire, but others call it “Greater Shrewsbury”, as it is a council very much centred on Shrewsbury, where all the bosses live. That is how it looks from Ludlow, a handful of miles from the Herefordshire border. I want to deal with only one Shropshire issue. The budget consultation introduction claims Shropshire as a “hub for creative business”, and says that it is,

“accelerating the move of services online”,

that,

“broadband and mobile internet is of equal value”,

and that the council knows,

“we need to do more”.

In October 2012 the head of finance said in an interview that broadband was a problem. And this the most rural county—a great county.

The Prime Minister has said he is not going to overlook rural issues, rural voters or rural concerns. The Chancellor of the Exchequer has claimed that the Government are paying for the expansion of superfast broadband into more and more rural areas. The Secretary of State for Environment, Food and Rural Affairs has tried to spin that all is well with rural broadband. But the reality is that the coalition bosses are ignoring the really rural areas, which need good broadband far more than others to survive. We are creating a two-speed rural economy by not giving priority to rural areas.

Shropshire—or Greater Shrewsbury—Council is absolutely silent on the issue, which I have raised in this House before. Would that I were joined by the county’s MPs. A recent Shropshire Council cabinet paper said that the council would,

“undertake a fresh competitive procurement; with or without match funding”,

as part of phase 2 of the rollout of broadband. No one knows if this means even partial priority for the rural areas of the county. What is more, no one from the county will say, although councillors were questioned at a public meeting in December. It is all a big secret. We have lost too much time already in Shropshire. Businesses and jobs in the “creative hub” of the county are all the losers in this settlement.