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Delegated Legislation Committee Debates

Local Government (Finance) Special Grant Report (No. 93) (HC 654) on the Neighbourhood Renewal Fund 2002-03

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Third Standing Committee on Delegated Legislation

Tuesday 12 March 2002

[Mr. Joe Benton in the Chair]

Local Government (Finance) Special Grant Report (No. 93) (HC 654) on the Neighbourhood Renewal Fund 2002-03

4.30 pm

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): I beg to move,

    That the Committee has considered the Local Government (Finance) Special Grant Report (No. 93) (HC 654) on the Neighbourhood Renewal Fund 2002-03.

The House recently debated the Government's strategy for tackling the legacy of neglect, deprivation, social division and exclusion that we inherited. In seeking the Committee's approval for our plans for the neighbourhood renewal fund for 2002-03, I must put those into the context of the wider strategy.

The Government came to power at a time when the standards of living of many people in our most deprived neighbourhoods, particularly the children, had reached an alarmingly low level. There was a widening gap between rich and poor people and between rich and poor communities. The poverty endured by individuals and families encompassed the broader community and it created economically and socially isolated pockets of severe deprivation.

To address those problems, the Government proposed the national neighbourhood renewal strategy, of which the funds that we are considering today form a key part. It builds on previous and current measures to help the poorest in society—for instance, sure start and the new deal—but it tries also to avoid repeating past mistakes. Relatively small, short-term initiatives with a limited focus distracted attention and resources from the needs of mainstream programmes such as education and policing and the role of the latter in improving the circumstances of the disadvantaged. Communities were not engaged in the process of change. Too much emphasis was placed on physical regeneration instead of on the broad interests of the communities involved.

It is our commitment that, during the next 10 to 20 years, nobody should be disadvantaged because of where they live. Action to meet the targets for our five key policy areas—education, jobs, crime, health and housing—will ensure that our most deprived neighbourhoods at last enjoy the same decent minimum standards of public services that are enjoyed by the rest of the country.

The neighbourhood renewal fund, the arrangements for which are set out in the report before us, cannot alone fund the changes and improvements needed to meet floor targets and bring about

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neighbourhood renewal. That is why we are giving the mainstream Government programmes the vital boost that they need to make a real and lasting impact.

Sir Paul Beresford (Mole Valley): I apologise for my ignorance, but is the funding allocated for the strategy top-sliced, or is it new?

Ms Keeble: It is a commitment that has been made out of the Government's mainstream funding programmes; it is not, however, taken away from council funding.

We expect central Government, local authorities and other service providers to reallocate substantial resources from their mainstream programmes better to tackle deprivation, with priority being given to the most deprived areas and groups. However, the fund is meant to pump-prime the process of neighbourhood renewal by focusing additional resources on our most deprived areas.

The neighbourhood renewal fund was launched in 2001-02. It will provide a total of £900 million over three years, targeted at the 88 most disadvantaged authorities in England. We allocated £200 million of grant for 2001-02.

Sir Paul Beresford: I do not think that the Minister's answer was the answer to my question. Could she answer it again? Secondly, she spoke about the allocation. Local authorities have to go through a considerable number of hoops to request funding—although they may not receive it. What are the various hoops and stages that the local authorities have to go through when applying?

Ms Keeble: Yes, that is part of the explanation that I shall provide. Analysis of the indices of disadvantage, which feed into the programme, determines how local authorities are funded. We then impose conditions on how they must use that money. If the hon. Gentleman waits a little, he will discover exactly how the formula works. It does not operate in the same way as the local authority funding formula, of which the hon. Gentleman is well aware. He knows about the different criteria.

Sir Paul Beresford: I have been around for a long time.

Ms Keeble: I did not like to say that.

Special grant report No. 93 was laid before Parliament on 27 February to set out the purpose of and conditions for spending £300 million in 2002-03. Some members of the Committee are concerned about the targeting of the fund because it excludes their constituencies. The hon. Member for Mole Valley (Sir P. Beresford) will find that it excludes his constituency. I understand such worries and I am also aware that deprivation is not confined to the 88 target authorities and that that has concerned those who have small pockets of intense deprivation in their area but who none the less do not receive such funding.

The Government used the indices of deprivation 2000 to determine eligibility for the grant and its distribution among the eligible authorities. We decided that the 50 most deprived districts based on

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any of the six district level measures in the indices should be eligible for the neighbourhood renewal fund; 81 local authorities are eligible on that basis. Seven additional local authority areas are also included because they were among the 50 most deprived areas based on any of the four measures under the old index of local deprivation, but which would be omitted under the new indices. We felt that it was important to allow for a transition between the old and the new indices. Otherwise, people who might have qualified under the old index, but not under the new one, might consider that they had been unjustifiably excluded given the level of disadvantage in their areas.

Mr. Malcolm Moss (North-East Cambridgeshire): I am grateful to the Minister for her explanation of how the funds have been allocated. She said that the threshold was the top 50 deprived districts. Why 50? Why not 51 or 49? Was there such a remarkable difference between No. 50 and No. 51 that the line was drawn there, or is the measure cash limited?

Ms Keeble: If we are trying to target the most disadvantaged areas, we clearly have to find a way to ensure that we can identify them. If we had cast our net too wide, we would have ended up with an unworkable formula whereby everyone had an area of disadvantage. The top 50 districts, based on a range of measures, gave us a total of 81 local authorities. By looking at the old index and comparing the two, the extra seven areas gave us 88 local authority areas. A cut-off point had to be chosen and to choose the top 50 areas based on a range of different indicators gave us a more carefully attuned figure than if we had just chosen the top few areas based on one particular measure. The process is more complex than it may have been if we had chosen a more crude measure, but it allowed us to consider more carefully the nature of disadvantage in England today.

Mr. Moss: The Minister runs the risk of not answering the second of two questions that have been put to her. The report states that the

    ''Government decided that those authorities that appear within the top 50 most deprived''

should be chosen. Why did the Government so decide on that basis? The hon. Lady has not explained why the Government chose 50 districts to be the threshold.

Ms Keeble: Because that would give an indication of the most disadvantaged areas. We could have chosen the 60 most deprived districts, but 50 was a good threshold. The point is that they were not chosen because of one particular aspect, but because of a range of different measures. That gave us a composite picture of the nature of disadvantage in the United Kingdom.

The hon. Gentleman said that I did not answer the question—I assume that he meant the previous one. Local government funding and Government grants come from the totality of Government spending. The hon. Gentleman asks if we increased the tax or used a hypothecated tax to pay for it. No, we did not. I made it clear that money had not been raided from another

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kitty to pay for the measure. It is new money from the Government's total tax take. I do not know how much clearer the hon. Gentleman wants my explanation to be.

Mr. Moss: The Minister should not be afraid of using the words ''top sliced''—that is quite simple. The money is part of specific grant. Fifteen per cent. of all grant that is allocated to local authorities is specific and targeted. That must come off the top of the grant before the rest of it is distributed under the standard spending assessment agreement. Why does the Minister not use the words ''top sliced''?

Ms Keeble: Because I do not think that that is necessary in this instance. Let me continue with my explanation.

Prioritising the funding as set out means leaving out some disadvantaged areas. However, we have tried to focus resources where the problems are most severe rather than diluting the impact of funding. If funding is spread too thinly, it simply will not have a tangible impact. The 88 authorities that receive money from the NRF contain 82 per cent. of wards in the worst 10 per cent. nationally, and 89 per cent. of the population who are living in the worst 10 per cent. of wards nationally.

I emphasise that the NRF is not the only—or even the main—measure that we are using to improve services that will help to tackle deprivation. The benefits of our £43 billion increase in public service funding should be felt throughout the whole country, not only in the areas with most severe deprivation. The NRF is a top-up for local authorities in the most deprived areas to help them and their partners to begin to improve public services in the most deprived neighbourhoods.

I shall highlight key points in report No. 93—


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