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Local Government Finance
7 pm
The Minister for Local Government (Mr. Nick Raynsford): I beg to move,
- That the Local Government Finance Report (England) 2002–03 (HC545), which was laid before this House on 28th January, be approved.
It is Government's job to provide the framework within which councils have the incentives and opportunity to deliver high-quality services and effective community leadership. That is why our White Paper on local government set out our approach to the respective responsibilities of central and local government. We will work with the Local Government Association to clarify what Government can expect from local government, and vice versa.
We will establish a national framework of standards and accountability for the delivery of high-quality services. In some areas, there will need to be agreed national minimum standards, with local flexibility on how those are delivered—and, we hope, exceeded. In other areas, particularly where councils have a proven track record of high-quality performance, we will give them a freer hand to determine and to deliver priorities locally.
We will help all councils by cutting red tape, reducing central prescription and increasing the support that they receive to improve their overall performance. There will be rewards for the best performers and carefully targeted measures to tackle poor performance.
Simon Hughes (Southwark, North and Bermondsey): Can the Minister deal with an issue that follows directly on from the point about performance? My borough, which he knows well, has the largest publicly owned housing stock of any in London—it has about 50,000 properties. A lot of that needs capital investment. How much do the needs criteria—there may, for example, have been a stock assessment—overrule performance criteria? If the treatment of a council is always going to be governed by its performance historically, it may never get the money that it needs.
Mr. Raynsford: The hon. Gentleman raises important issues that go deep into the performance management system that we are introducing. I shall not detain the House too long by describing that because it is only tangential to the report before the House, but may I explain the three main elements of the performance assessment? First, best value performance indicators; secondly, the inspections carried out by the housing inspectorate of the performance of specific elements in the housing service; thirdly, an overall corporate
assessment of the authority's ability to cope with the many corporate pressures that it faces. That will be handled by the Audit Commission, independent of Government. The commission will come to a judgment, based on that basket of indicators, of the overall performance of the authority.The hon. Gentleman specifically raised the subject of housing. He will know that we have made very substantial increases in the capital allocations available to local authorities for the renovation and improvement of existing stock. I appreciate that in an area such as his, which has a huge backlog of poor-condition property, there is a need to look creatively at additional means of attracting finance. I am sorry that, at the Aylesbury estate and elsewhere, opportunities for raising substantial additional sums have not turned out to be feasible because of tenant opposition, but I hope that the authority and tenants in the area will continue to work constructively to find ways of levering in additional finance, on top of that which the Government have already contributed to the authority.
Simon Hughes: That is very helpful. I pick up the last point. We have had a vote on the Aylesbury estate, a very large estate. We are facing decisions on the Tabard Garden estate, another big estate, and possibly others around the Elephant and Castle. Can the Minister give an assurance that, in terms of meeting the need, carrying out the repairs and so on, no disadvantage will follow from a specific decision by tenants either to stay with the local authority or to transfer to another landlord? Will he confirm that there will be no prejudice in terms of money coming in if they decide to remain local authority tenants?
Mr. Raynsford: The hon. Gentleman is tempting both me and the House by moving from the subject of this particular debate—the local government finance report—to the issue of housing finance, which is separate, but clearly if the option of additional private finance to support the public money already offered by the Government—we had made some substantial offers in relation to the Aylesbury estate—were turned down, I could not guarantee that alternative sums would be available for Southwark in addition to the public finance, but we certainly do not wish to penalise areas that choose to retain the housing under local authority control. We have always believed that there should be options for tenants, and that tenants should decide in their best interests, but clearly some of those options will have greater financial potential than others. That is the nature of the operation.
Mrs. Gillian Shephard (South-West Norfolk): I apologise for intervening immediately after the hon. Member for Southwark, North and Bermondsey (Simon Hughes) but the point is pertinent because the Minister is raising the question of performance. I know that he sets great store by the performance of local authorities, as indeed we all do. I am extremely concerned about the position with regard to school places in Norfolk, which has certainly had increases in funding. Of Norfolk's 52 secondary schools, only 22 can take extra pupils at the moment. That has a knock-on effect on every aspect of Norfolk life. I draw that to the Minister's attention and
ask him to look into how that situation, which is unparalleled in my 30 years' experience, could possibly have arisen.
Mr. Raynsford: The specific issue of Norfolk is obviously important. The right hon. Lady will be aware that the grant to Norfolk has increased by 6.8 per cent., which recognises the needs of the area. I have no doubt that my colleagues at the Department for Education and Skills will be only too pleased to deal with the specific point that she has raised. I will ensure that it is passed on to them. She will appreciate that, as it is a specifically educational point, it is ultimately their responsibility. I shall ensure that she receives an answer from them.
Mr. Raynsford: I would like to make a little progress because literally only one sentence of my speech has related to the local government finance report. I have been happy to take questions in relation to education and housing, but I would like to make a little progress and I will then give way.
Over the past five years, we have been tackling a backlog of under-investment and inadequate general revenue funding. For 2002-03, total revenue support from Government will amount to £47.4 billion, an increase of £3.3 billion, or 7.5 per cent. on this year. The general grant formula distributes £40.3 billion of that, including the police grant, which the House has just debated. Excluding police grant, the remaining formula grant for 2002-03 will total £36.5 billion, an increase of £1.8 billion or 5.3 per cent. on the current year. Those are very substantial increases at a time when underlying inflation is running at under 2 per cent.
During consultation, local authorities impressed upon us that they still face financial problems this year, particularly in the case of social services. We considered those points and we will continue to discuss the needs of social services authorities with representatives of local government. We have already demonstrated our willingness to respond to the evidence presented by social services authorities in the initiative agreed late last year by the Secretary of State for Transport, Local Government and the Regions, and the Secretary of State for Health to respond to bed-blocking pressures.
Mrs. Angela Browning (Tiverton and Honiton): On social services, the Minister will be aware of the case made by Devon county council. The high number of retired people in Devon has created a problem with its social services budget. I hope that the formula that the Government intend to change in time for the following year will equalise the per capita allowance for retired people, because there is a considerable differential. Devon receives a much lower rate than other parts of the country, and we are also disadvantaged in terms of sparsity. On sparsity and the way the formula for retired people is calculated, will the Government seek to achieve equalisation?
Mr. Raynsford: I will discuss a little later our proposals for changing the standard spending assessment formula in future years, but the hon. Lady will recognise that we are operating the same methodology this year as in previous years. She will be pleased to learn that Devon
county council has received a 6.6 per cent. increase in Government grant. That is a substantial increase that is well ahead of inflation, and compares favourably with that received by many other county councils, so this year's settlement in no way disadvantages Devon. I accept, however, that there may be issues relating to the construction of the SSA formula—of course, it was devised when the hon. Lady's party was in government—that we will need to address in our review in the coming year. However, as I said, so far as this settlement is concerned, Devon has not been disadvantaged.
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