Local Government Finance

Debate between Steve Rotheram and Grant Shapps

Wednesday 8th February 2012 Commons Chamber

[Steve Rotheram (Liverpool, Walton) (Lab)]

The right hon. Gentleman tries to justify the cuts with an argument about fairness, but I am afraid that people who have seen the heat map that has been produced will see right through his smoke and mirrors. The map showing the impact of the cuts reveals that all but two of the 20 worst-hit councils are in the most deprived 20% of councils in England.

[Grant Shapps]

I draw the hon. Gentleman’s attention to research that I think is in the Library, showing that the largest decreases in formula grant in the past year, 2011-12, were in the south-east. The decreases were generally smaller for the most deprived areas and larger for less deprived ones. He can look that research up for himself, along with an interesting recent report by the Joseph Rowntree Foundation, which stated that local authorities were protecting the most vulnerable and making sensible decisions about services.

The picture that the hon. Gentleman paints is inaccurate and ignores the central fact that if we do not take measures to reduce our deficit, we will end up in trouble. Given that local authorities spend a quarter of all Government money, if we do not reduce our deficit they will end up bust. It seems incredible that we have not so far heard a single intervention from an Opposition Member to explain how the Opposition would deal with the reductions that are certainly required but that they never want to face.

Meanwhile, the Localism Act 2011 has put new powers in the hands of local taxpayers. They now have the right to call local referendums if excessive council tax increases are proposed. If any authority decides to increase its council tax by more than a certain level, which we are separately inviting the House to approve, it will need the say-so of its local electorate, which is absolutely right. In most cases in which a council wants to increase council tax by more than 3.5%, local people will have the chance to vote. Let the people decide—that is what localism is all about.

Oral Answers to Questions

Debate between Steve Rotheram and Grant Shapps

Monday 28th February 2011 Commons Chamber

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

5. What assessment he has made of the effects of reductions in formula grant funding on local authorities in the most deprived areas.

[The Minister for Housing and Local Government (Grant Shapps)]

Authorities in the most deprived areas will, thanks to the banded floors, receive a smaller reduction in formula grant than others. We have given greater weight to relative needs in the formula grant, and our new transition grant will make sure that no council has a spending power reduction of more than 8.8%.

[Steve Rotheram]

If fairness is at the heart of this Government’s decision making, as clearly stated in the coalition agreement, why are the most deprived areas being hit the hardest? Given that the Minister wrongly stated that the most deprived area—Liverpool—did not receive a 30% cut to Supporting People funding, when can Liverpool expect to see a recalculation based on the 1% national average, which would result in an £11 million improvement in its settlement?

[Grant Shapps]

Here is something for Labour Members to take into account: one cannot take money away from authorities that are not getting it in the first place. Of course, the biggest spenders, even if we use percentages in the same region, are going to feel the impact in a different way. Liverpool, for example, still receives £764 a head, whereas my authority, by contrast, receives £229 a head.

Local Government Finance

Debate between Steve Rotheram and Grant Shapps

Wednesday 9th February 2011 Commons Chamber

[Steve Rotheram]

If I can prove that it is 30%, will the Minister give us back the other 29% so that we suffer only a 1% cut, which is the national average?

[Grant Shapps]

As the hon. Gentleman knows, the grant formula—[Interruption.] Members would do well to listen to this point because it affects many constituencies. The simple fact is that Supporting People is paid for through the formula grant. Given that we know for a fact that there is not a reduction in spending power of more than 8.8% in his constituency, it cannot be the case that the Supporting People budget has fallen by the claimed 30%, so I take him up on his challenge.

My hon. Friend the Member for Dover (Charlie Elphicke) made the worthwhile point that local authorities have been protected from having to raise council tax by the £650 million from central Government.

The hour is late and I do not want to detain the House. There is a clear division between authorities that have taken the necessary steps and those such as Manchester city council, which yesterday claimed that it has to make a 25% reduction.