Local Government Funding

Robert Neill Excerpts

Tuesday 30th November 2010 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

It is a pleasure to see you in the Chair, Mr Betts, and a pleasure to respond to this important debate initiated by the hon. Member for St Helens North (Mr Watts), to whom I am sure we are all grateful. It is an important topic. It arises at this time of year every time the local government finance settlement is coming up. Inevitably, there are debates in advance of the settlement and, understandably, hon. Members seek to get the Minister to say things about the detail of the settlement. The Minister, regardless of party, says, “You’ll have to be a bit more patient because the detail as far as it affects local authorities is set out in the settlement itself, which will be laid before the House shortly”. I say that because that is the factual position. I want to respond to some of the matters raised, but I am sure that you, Mr Betts, and hon. Members who have participated in the debate, who are well experienced in local government matters, know that I am not in a position today to set out the individual impacts of the funding settlement on particular local authorities. However, I can make it clear that the provisional settlement will be done in the usual way. It will be announced shortly, and we will provide as much information as we can to enable local authorities to set their budgets.

This debate gives us a chance to look at the overall position. It is a position that arises, first, in relation to the financial situation, but it is actually broader than that. It is unfortunate that the opportunity has not been taken to put what has to be done on local government finance in the context of the Government’s broader agenda of handing more power and flexibility to local authorities. I agree with the hon. Member for St Helens North: the fact is that we need to reduce the deficit. Reductions in spending have to be made, and local government, as a significant part of the public spend, has to play its part. That much is common ground, but we are seeking to reduce spending constructively, and there I have to part company with the hon. Gentleman.

With respect to those on the Opposition Benches who have participated in the debate, there has been almost a competition—dare I say it—to come up with the most overcooked, overheated and exaggerated language possible. Frankly, it does no justice to the seriousness of the subject. Opposition Members have chosen to adopt a regrettable approach. It will make cheap headlines in a press release, but it does not advance the argument.

[Barbara Keeley]

The Minister must know—and if he does not, he should know—that councils in the north-west are now looking at having to make cuts of £35 million, £40 million and £50 million. If he thinks that that is fair and balanced, we will all be very upset next week. Last night, Stockport council, a Lib-Dem council, announced the cutting of 400 jobs, and the Local Government Association has suggested that the number of job cuts will be 140,000.

[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?

[Robert Neill]

I shall make a little progress before I give way. Neither will I take lectures from Opposition Members about the need to reduce the deficit and how we should do it. The simple fact is that, thanks to their Government’s policies, about which I have not heard a word of apology, we are paying £120 million a day just to pay off the interest on their debts. That money is lost for ever to council services on the front line. If we carried on down the Opposition’s route, the pressure on local authorities would be all the greater because we would be paying up to about £100 million more by the end of the Parliament in debt interest. I am not taking lectures from the Labour party about our attempting to balance the nation’s book, when it is its prodigality that has placed local authorities under such pressure.

[Mr Watts]

The Minister must get off the rant that we hear regularly from the Front Bench. There has been a world recession caused not by the Government, but by banks. At a time when the general public face such draconian cuts, they want to know why the Government have given the bankers a £1 billion tax cut, refuse to act on the bonuses and are now refusing to publish the size of the bonuses that bankers are receiving. The real enemy is not the previous Labour Government. They were faced with a meltdown of financial systems in this country and throughout the world, so it is not good enough for the hon. Gentleman to blame the financial crisis on that Government. As he knows, the crisis is worldwide and it is one that has been caused by the bankers, not the Government.

[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.

[Barbara Keeley]

Will the Minister give way?

[Robert Neill]

I shall make a little more progress. An extra £1 billion of extra funding has gone in through the NHS budget to break down the barriers between health and social care. As I said, we are fully funding the council tax freeze and embedding it into the base. We will make £200 million of capitalisation available in 2011-12 to deal with restructuring costs. Those are positive things.

It being Two o’clock, the sitting was adjourned without Question put.