Local Government Funding

Marcus Jones Excerpts

Tuesday 30th November 2010 Westminster Hall

[Mr Watts]

Before it was changed by the new Government, the system of allocating resources was based on deprivation. A number of factors were to be taken into account, and an academic research document indicated where the grant should go. Unfortunately for many authorities, the Labour Government did not introduce all those changes but left money in some of the southern areas that should have been passed to the north. The changes were not fully implemented.

We would have no problem if an academic study was undertaken on the need to spend that took account of deprivation, if that is what the Government wanted to do. However, the Government are not doing that. Instead, they are finding ways to cut budgets for the most deprived councils without an academic study, and with no research documents to back their actions. Frankly, we think they are gerrymandering the system to ensure that their councils are not hit as badly as ours.

[Mr Marcus Jones (Nuneaton) (Con)]

rose—

[Barbara Keeley]

rose—

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[Mr Watts]

My hon. Friend is right. That funding has made a tremendous difference for some of the country’s most deprived communities. The cuts will be a massive loss to them. The Government should be ashamed. If they are going to cut, they should do so in a way that protects the most deprived communities, not doing as they are and making cuts in the most deprived areas.

[Mr Marcus Jones]

Does the hon. Gentleman not accept that areas such as Nuneaton in Warwickshire were particularly underfunded under the Labour Government? He mentioned gerrymandering, but that seems to have been the case for many years when comparing the funding for shire counties such as Warwickshire with that for the Labour heartlands in the north, and particularly those in the north-east.

[Mr Watts]

That argument is put forward by many councils. They say that everyone should get the same; if everyone does not get the same because deprivation is taken into account, they say that that it is unfair. The grant system took account of the ability of local councils to raise local tax and of the deprivation within their communities. The hon. Gentleman suggests that everyone should get the same, regardless of deprivation. As I said before, I would have no problem if the Government were going about the job by doing some academic work and producing a study that people could consult, taking account of existing need and deprivation. That is not happening, and the Government should be ashamed of their proposals.

The Government cuts will go so far as to hit the most deprived communities, and they are front-loaded. We have lost the neighbourhoods fund. As I said before, the south has been protected but not the north. I was saying that the Minister should read the SIGOMA document, which goes into far more detail about the unfairness of the proposed cuts. He should also read “Hard Times”, a document produced two weeks ago by the Industrial Communities Alliance. Hard times is what our communities are in for. That document shows the devastating effect that the cuts in public spending will have on our areas. Anyone who reads it could not help but understand the deprivation that will exist as a result of the cuts.

We fear that the cuts are heading our way. We could lose 33% of our grant in 2010, and a further 22% by 2011. We hope that that is not the case, but we know from what the Government have done so far that that is the likely impact. There is no way in which efficiencies can stop the wholesale closure of libraries, and we will also have fewer policemen and firemen, and fewer social workers, if that level of cuts is introduced in our communities.

On top of that, the Government have top-sliced the council block grant to pay for the freeze on council tax. That will make the situation even worse in communities such as mine, as they will be less able to provide services. Those communities will lose as much as another £500,000 of grant, which they would have received, had the grant not been top-sliced. We understand that SIGOMA authorities may face cuts of up to £44 million over the next few years.

The new homes bonus scheme, which is also hitting local authorities, is intended to provide resources to encourage new homes to be built. Again, I do not think we will do well out of that. It is not that local authorities such as St Helens and the SIGOMA authorities do not want to provide new homes; but given the devastating effect that the Government’s cuts will have in our areas, I do not think there will be much of a market for building new homes. Where we have real deprivation in our housing, we will have fewer resources with which to provide homes for our constituents.

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[Robert Neill]

I have seen those figures. I have also seen the SIGOMA document, which I read with interest. I have met SIGOMA representatives and I am happy to continue to do so. I want to take the hon. Lady to task a little. She referred to the reduction in funding for the working neighbourhoods fund. Yes, absolutely right—and who decided to do that? Her Government. The Labour Government made it clear that the working neighbourhoods fund was a three-year fund due to end in March 2011. The previous Government—the Labour Government—were committed before the general election to cutting it, so I am not taking any lectures from anyone on the impacts of that.

[Mr Marcus Jones]

Will the Minister give way?

[Mr Watts]

Will the Minister give way?

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[Robert Neill]

That is as discredited an alibi as we hear nowadays, but I credit the hon. Gentleman for his loyalty in still trotting it out.

Council tax payers throughout the country know that their council tax doubled during the 13 years or so of the Labour Government. That was not anything to do with the world crisis. It was to do with mismanagement of the economy and, ironically, the sometimes perverse workings of the system of local government finance which that Government put in place.

[Mr Marcus Jones]

We are certainly seeing a lot of synthetic rage from Opposition Members. Does my hon. Friend agree that, under the previous Labour Government—and had they formed this Government—local authorities such as Nuneaton and Bedworth and Warwickshire were looking at 20% cuts in Government funding?

[Robert Neill]

That is entirely right, which is why the rage is synthetic, and why I hope that hon. Members, including Opposition Members, will welcome £650 million of additional money that the Government have put in to support the council tax freeze and which will be embedded in the base budgets of those authorities. I hope that they recognise the steps that we have taken specifically to protect services for the most vulnerable, such as £1 billion of grant funding for social care by 2014-15 within the £2.4 billion that we have rolled into formula grant. By rolling more money into formula grant, we give local authorities more flexibility to reflect their own priorities and demands.