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

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Sir Paul Beresford: The Minister is probably aware that there is deep concern, especially in London, about the way in which the local authorities have been selected. Prior to this scheme, 19 out of the 52 most deprived boroughs in the country were in London. When one examines the scheme, one must be suspicious that the statistics have been engineered for the benefit of friends.

Ms Keeble: That is a terrible suggestion. It is more a reflection of the allocation of funding under the previous regime than under this Government. A lot of hostility to the scheme centres on the fact that we have targeted areas that are genuinely the most disadvantaged and that we are determined to deal with those areas.

I explained the methodology with great care and pointed out that there had been a change to the indices of deprivation. Therefore, there is a transitional scheme for local authority funding. The hon. Member for Mole Valley and his colleagues must know that because they faced the same situation when they introduced the poll tax. They could not bear to see the shift in funding and the burden of taxation that that would have meant, so they introduced the change to

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value added tax that we have all had to live with. That has totally fouled up our ability to make constructive changes to local government finance.

When we changed from one index to another, it was possible that areas that used to receive money but in which the nature of the local community had changed, although there were still pockets of disadvantage, might not rate as highly on the new index. That was acknowledged and taken into account when deciding which local authorities should receive NRF money. We have looked not at different parts of the country, but at the indices of deprivation, and we have decided which local authorities figured highest under the different indices. We made arrangements for a proper transition between the schemes.

Mr. Moss: While the Minister is dealing with who got what funding, when one looks at the list, one anomaly leaps off the page. I wonder whether she is able to explain it at this juncture. To illustrate it, I offer an example. I should have thought that, judged by whatever measure one chooses, Lambeth is one of most deprived boroughs in London—if not the country. It gets £1.8 million, yet Doncaster gets £6.6 million. The population of Lambeth must be far in excess of that of Doncaster, and the formula allows for a pro rata payment that is based on population. Could we have an explanation of why Doncaster gets something like four times the grant that Lambeth receives?

Ms Keeble: The allocations are judged strictly on the formulae and the locations of different local authorities are not taken into account. There will be changes over time with regard to where there is disadvantage, and there will be changes in relative disadvantage between different parts of the country. However, it is important to apply the formula consistently. It would be wrong to apply it and then to find that the amounts work out in a certain way, and to say, ''Oh dear, Lambeth must be poorer than Doncaster, so let's just blend the figures a bit so that they look better.'' This allocation is done strictly on the formula basis.

It is clear that some areas will say that they are more disadvantaged than others. They frequently say that when they are making a bid for extra money. They say that they are more disadvantaged—or more this, or more that—to try to build up their case to get extra funding. However, it would be wrong to allocate the funding on any basis other than the indices as they stand. The Government have been straightforward in recognising that as the indices of deprivation change, the money that moves with those indices must also change, despite the fact that that can make life a bit uncomfortable, because the areas that perceive that they have lost money will feel somewhat aggrieved.

Sir Paul Beresford rose—

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Ms Keeble: I will give way to the hon. Member for Mole Valley, but then I must move on, because I have a lot more to explain, and I am sure that he will have a trenchant speech to make after I have concluded.

Sir Paul Beresford: That does not sound like me at all.

It is interesting that there is a willingness to shift according to these indices on this grant, and yet on SSA they were frozen for three years, except where it was convenient for the Government to make adjustments, according to data. Could the Minister explain that difference?

Ms Keeble: We are not debating SSAs; we are debating how this money has been provided, and I have carefully explained that. The Government have taken care to look at putting through ID2000 in a range of different measures—despite the fact that, sometimes, concerns have been raised by those areas that have been affected by it.

The protestations of Opposition Members reflect the approach that the previous Conservative Government took towards the allocation of funding and the fact that everything that they are saying seems to suggest that funding schemes should be made to favour particular councils. We do not accept that. We think that if one is addressing disadvantage, one looks at the most disadvantaged areas, and that is where the funding should be applied.

Mr. Moss: Will the Minister give way?

Ms Keeble: No, I will not. I said that I was going to make some progress, and I am going to do that, because other hon. Members want to speak.

I wish to turn to some of the arrangements for the spending of the money, and, in particular, the purpose and role of local strategic partnerships. Although the neighbourhood renewal fund is paid to local authorities, neighbourhood renewal requires new ways of working—in particular, to ensure that services are better co-ordinated, to respond to local needs and priorities and, above all, to involve local people—[Interruption.]

The Chairman: Order. I am sorry to interrupt, but the level of background noise is becoming too high. Out of courtesy to the Minister, we should listen to what she has to say.

Ms Keeble: Local strategic partnerships—LSPs—are central to that process. I know that many hon. Members are still unfamiliar with LSPs. They are being established throughout the country—not just in the 88 NRF areas—to drive forward neighbourhood renewal by reshaping the delivery of core services using the enhanced main programme funding that we are providing.

LSPs bring together the local authority and other statutory service providers, such as the police, health and education authorities, local businesses and chambers of commerce, the voluntary sector and community members. They are best placed to understand the problems facing their local area and to involve fully all the local interest groups in finding

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solutions that respond to their needs. Through the community empowerment fund, we are providing £35 million over three years to help local communities in the 88 NRF areas engage effectively in LSPs.

From the outset, it has been our intention that decisions about the use of neighbourhood renewal funding should reflect a collaborative process between local authorities and LSPs. In report No. 93 we have been able to update the purpose of the NRF—in paragraph 5—to require such collaboration, because of the progress made in the past year in establishing effective and inclusive partnerships in the 88 areas.

As we announced on 28 February, 87 out of 88 local strategic partnerships achieved accreditation, and we are optimistic that the 88th partnership will not be far behind. In guidance on local strategic partnerships, we made clear our intention that receipt of NRF in 2002-03 would depend on progress in establishing and working with LSPs. It is therefore to be a condition of grant—condition 5 in annex C to the report—that NRF will be paid in full only where the local authority is working in partnership with an accredited LSP.

Mr. Moss: On that technical point, is the Minister implying that under annex C some local authorities on the list that are due to receive grant under the formula do not already have local strategic partnerships in place and may not get the money?

Ms Keeble: If the hon. Gentleman had listened to what I said, he would have heard me say that 87 out of the 88 LSPs had achieved accreditation. I was wondering when he would spot that and intervene. One local strategic partnership has not yet achieved accreditation. It is not Doncaster or Lambeth, the hon. Member for Mole Valley will be pleased to hear—it is Walsall. However, we are confident, as I said, that it will achieve its accreditation. There is a further review meeting at the end of this month and meanwhile it will receive two thirds of the funding. It will not receive the increased funding for this year. NRF will be paid in full only when the local authority is working in partnership with an accredited LSP. I hope that I have answered the queries of the hon. Member for North-East Cambridgeshire (Mr. Moss) fully.

Preparing local neighbourhood renewal strategies is a key task for LSPs. As well as articulating how partnerships intend to contribute towards the Government's deprivation-related public service agreement targets—such as on raising educational attainment at GCSE level, or reducing the number of families living in non-decent social housing—they will also contain targets relating to local priorities for neighbourhood renewal. The updated purpose in report No. 93 therefore also draws attention to the role that NRF may have in supporting the delivery of local neighbourhood renewal strategies.

In report No. 78 for 2001-02, we made it a condition of grant that NRF should not be used towards the administration costs of local strategic partnerships without prior written approval from the Secretary of State. We have decided to remove that condition. [Interruption.] No, but there are still some conditions.

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LSPs are advised instead to consult the regional Government offices to ascertain whether particular administrative costs would be acceptable charges to the NRF.

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