Local Government Finance (England) Special Grant Report (No. 83) (HC No. 88) On Maintenance of Roads Grants 2001-2002

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Mr. Clifton-Brown: The Minister said that this is the scheme's second year. Can he inform us about notable and successful examples from last year's scheme?

Dr. Whitehead: I cannot answer that question at the moment, but I shall draw attention to it in my concluding remarks.

Mr. Don Foster (Bath): I am grateful to the hon. Member for Cotswold (Mr. Clifton-Brown) for raising that point. Is the Minister aware that there is no information about round 1—the initial phase of the scheme—on the Department's website? It would have been helpful for such information to be provided to people bidding subsequently.

Dr. Whitehead: As far as I understand, the process of the bidding round was fully documented. Therefore, those who bid had a good idea about the invest-to-save schemes, the schemes' parameters and how local authorities that might bid—and be successful—could benefit from the schemes. The people who bid for this round were not disadvantaged in applying for the process, and there is evidence of the high quality and range of bids that were received for this round of invest to save.

Mr. Peter Kilfoyle (Liverpool, Walton): When my hon. Friend sums up, will he give us information about the Liverpool city council bid that appears in the list? I can guess what it is about but, of course, it is the type of information that is not made locally available, given the secrecy of the local Liberal Democrats.

Dr. Whitehead: I shall attempt to satisfy my hon. Friend when I sum up the debate.

Another round of invest to save is already under way and will, again, be open to local authorities. We intend to bring appropriate reports before the House in future years to allow for further grant payments. The scheme provides new money to support local authorities in improving the services that they offer to local people. I commend the report to the Committee.

As hon. Members know, special grant report No. 86 specifies the special grant that will support the costs incurred by local authorities by granting rate relief to small business that are suffering financially because of the outbreak of foot and mouth disease. Local authorities already have discretionary powers under the Local Government Finance Act 1988 to grant rate relief of up to 100 per cent. to any rate payer who is suffering hardship for any reason. It is available to all businesses that have suffered a significant loss of trade because of the foot and mouth outbreak. Farms are already exempt from rates, but many other businesses have been affected, including other agricultural and ancillary businesses, food processors and retailers, hotels and other tourist businesses, restaurants and pubs, and transport and haulage firms. All such businesses are eligible for rate relief, whether they are affected directly or indirectly by the outbreak. That includes businesses in rural areas where there has been little or no incidence of the disease, but which have been affected by precautionary measures or reduced trade, for example in tourism.

Rate relief for hardship is usually 75 per cent. centrally funded, with local authorities meeting 25 per cent. of the cost. However, we recognised that funding even a quarter of the cost of hardship resulting from the foot and mouth outbreak would place a heavy burden on rural local authorities. Under the terms of special grant report No. 80, which was approved by Parliament on 2 April, we increased central funding from 75 per cent. to 95 per cent. of the costs of relief given to small businesses affected by foot and mouth. The extra funding was made available to 151 rural local authorities in England, in respect of businesses with rateable values of up to £12,000. In those areas, councils were left to fund 5 per cent. of the cost of rate relief for the small businesses. The scheme was initially approved for a period of three months, and it expired on 30 June.

When the scheme was introduced, we made clear our intention to keep the arrangements under review and to monitor the effectiveness and take-up of the measures that we introduced. We have now done that and I place on record my appreciation of the Local Government Association and its member authorities for their efforts and help.

It is clear from the discussions that we held with the LGA that, while the situation has improved, and continues to do so, some businesses continue to experience trading difficulties, particularly in rural areas. Therefore, we have concluded that it is right to extend the scheme further, and special grant report No. 86 does that in three important respects.

First, the current funding arrangements will be extended for a further six months so that they apply from 1 April 2001 until 31 December 2001. That continues the increased central Government contribution of 95 per cent. of the cost of giving rate relief to small businesses seriously affected by foot and mouth by the 151 rural authorities listed in special grant report No. 80.

Secondly, we now know that some areas of the country have been much more badly affected by foot and mouth than others. The report therefore provides additional help for 37 authorities in the areas most seriously affected by foot and mouth disease. In the authorities specified in the report, the level of central Government support will increase from 75 per cent. to 95 per cent. in respect of relief granted to larger businesses with rateable values of up to £50,000. That funding will be provided for a period of nine months, applying retrospectively from 1 April 2001 until 31 December 2001. The 37 councils are those from among the 151 rural authorities, which fall in the seven most badly affected counties—Cumbria, Devon, Durham, Gloucestershire, Lancashire, North Yorkshire and Northumberland.

Thirdly, the more hardship applications an authority receives, the more difficult it will be for the authority to fund them, even at the relatively modest level of the 5 per cent. contribution for which this report provides. We shall therefore increase the central Government contribution further—from 95 per cent. to 98 per cent.—for those councils facing the highest costs. If any of the 151 local authorities' grant relief, worth more than 8 per cent. of their annual net budget requirements on hardship relief under the special grant report, is exceeded, central Government will pay at the increased rate of 98 per cent. for any costs above that threshold. That will apply to relief granted from 1 April 2001 to 31 December 2001.

The special grant will continue to assist local authorities and rural areas to provide help to ratepayers who are seriously affected by the foot and mouth outbreak. The scheme will now run continuously, for a further six months, until 31 December—a total of nine months—and the enhancement that we are introducing will provide rural authorities and the businesses that they serve with certainty in the months ahead. I therefore commend special grant report No. 86 to the Committee.

The Chairman: Before we proceed, I should declare an interest, as a Kent Member of Parliament, in special grant reports Nos. 82 and 85 and, as the Member of Parliament for North Thanet, in special grant report No. 86, in which Thanet district council has an interest. I am sure that that will not exercise Committee members too greatly, but it should be a matter of record in case in the future anybody chooses to question the impartiality of my chairmanship.

4.53 pm

Tim Loughton (East Worthing and Shoreham): It is always a pleasure, and is becoming a habit, to serve under your chairmanship in such Committees, Mr. Gale. I fear that I am not as lucky as you appear to have been in enjoying the munificence of the Government. I am not aware that I have any special interest to declare in what we are about to discuss. However, I am grateful for the detail in which the Minister has discussed the four different special grant reports that we are debating. It all amounts, of course, to a creeping centralisation of local government services. As Sir Jeremy Beecham, the Labour chairman of the Local Government Association—whose name featured greatly during the Minister's explanation of the many discussions that the Government had with the LGA—said, the move towards ring-fencing of resources is pushing relentlessly in the direction of greater central control. The four special grant reports under discussion are absolutely typical of that.

Before discussing each of the special grant reports, I should like to ask the Minister to phrase his answers accordingly in the context of how much money is being taken away from discretionary spending by local authorities in relation to specific grants rather than block grants. Is it true that an estimate of between 4 and 10 per cent. has been made for the percentage of local government financing that is now prescribed—for the sake of a better word—by central Government? Is that estimate fair? Would the Minister like to make a more detailed estimate of the figure? Would he also like to estimate where that figure is heading during the lifetime of this Government? What we are discussing links with the Government's insistence on pushing forward best value in the absence of specific evidence about its cost effectiveness. For example, Kent county council says that best value has cost an extra £100,000. Cheshire county council says that setting up best value is costing an extra £670,000, plus the equivalent of another £250,000 for the staff time needed to run it, above and beyond the cost of running all the other services.

The Local Government Association, which is supposed to be a great friend of the Minister, after his deliberations, says that it will cost £175 million to operate best value, yet the Government have allocated only some £40 million. Will the Minister confirm that, whereas the average efficiency savings from compulsory competitive tendering were some 7 per cent., the target for efficiency savings for best value is just 2 per cent.? Perhaps he would consider that question when he returns to the issue of the four specific grants.

I shall take the grants in numerical order, as the Minister cited them. Special grant No. 82 deals with pump priming and the 20 pilot authorities announced in the spending review 2000. Will the Minister tell us how adequate the administration grant of £50,000 per council is? What is his Department's assessment of the cost of administration for the pilot projects, on average, to each of those 20 authorities? Is £50,000 a realistic assessment of what it will cost them?

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