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5 Feb 2003 : Column 353—continued

Local Government Finance

[Relevant document: The First Report from the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee, HC 164—1, on Local Government Finance: Formula Grant Distribution.]

5.13 pm

The Minister for Local Government and the Regions (Mr. Nick Raynsford): I beg to move,

Madam Deputy Speaker (Sylvia Heal): With this it will be convenient to discuss the following motion:

Mr. Raynsford: I should like to draw Members' attention at the outset to a typographical error in annexe F, on page 83 of the report. A number of scaling factors are shown in that annexe, but the one for debt charges, which appears about two thirds of the way down the column, should read 0.96345941120985. I should add that that amendment has no effect whatsoever on the grant distribution to any local authority, as the calculations in section 3 of the report are fully consistent with the value that I have just given to the House, as are all the grant figures provided in the supporting documentation. I apologise for bringing this error to Members' attention at this very late stage, but it came to light only this afternoon.

Mr. Edward Garnier (Harborough): I am grateful to the Minister, whom I know to be a man of great integrity. He may like to draw the House's attention to another typographical error. It appears that Leicestershire LEA is to receive the lowest amount of central Government money per pupil of every LEA in the entire country. That is presumably a typing or a printing error, as Leicestershire should not be the bottom county, but well up the list. Can the Minister get the printers to do it again?

Mr. Raynsford: That is a good try, but I have to tell the hon. and learned Gentleman that the only typographical error is the one to which I drew the House's attention. The document sets out the distribution of grants correctly. I shall come in due course to the individual issues, including education elements.

Mr. Gerry Steinberg (City of Durham): The Minister says that the figures are accurate. Durham county council's social services department originally received an awful settlement that was totally inadequate to meet its needs. Now, Durham county council's formula spending share for 2003–04 is to be set at £447.129 million, which is £0.114 million less than the provisional figure. Moreover, rate support grant has been reduced

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by £0.198 million. The end result is that Durham county council has lost £0.198 million just like that. Will the Minister tell us why?

Mr. Raynsford: I have to tell my hon. Friend that he is incorrect. There is no loss. Durham county council has received a 6.8 per cent. increase in its grant, and most people would regard that as a very good settlement by any standards. I shall deal with individual issues in due course, but I should like to make a little progress and to talk about the principles behind the settlement.

On 5 December, I announced to the House our provisional local government settlement, incorporating a series of proposals for changes to the way in which formula grant is distributed. The settlement that we are debating is only part of the wider picture. It is part of a sustained year-on-year increase in funding for local authorities. That sustained core funding provides the base on which councils can build better service delivery. Over the past 18 months, I have heard a good many representations about the pressures that authorities are under and the difficulty of coping with the grant increases that are available. I understand that local authorities must make difficult decisions—it has ever been thus—but I have some difficulty with the proposition that the settlement is inadequate in general or for any particular authority.

Mr. Patrick McLoughlin (West Derbyshire): Will the Minister give way?

Mr. Raynsford: I shall recall a few basic facts, then give way, but it is important that the hon. Gentleman should hear those facts to start with.

First, I am confirming the overall increase in formula grant of 5.9 per cent.—more than double the rate of inflation. That is only part of the picture. The total formula grant for 2003–04 will be £43.9 billion, including police grant, which the House has debated. On top of that, there will be increases in specific grants. Overall, Government grant going to local government will be £51.2 billion, an increase of no less than 8 per cent.

Secondly, that means that for the first time ever, every local authority in England will receive a grant increase that is more than inflation.

Thirdly, that real terms increase for every council contrasts starkly with the position before 1997, when the total amount of formula grant could, and did, decrease from one year to the next. In those days, individual authorities often expected substantial cuts in grant—actual cuts, not the entirely misleading and false cuts claimed by some councils in recent weeks.

Finally, the effect of the settlement, building as it does on what the Government have achieved over the past five years, is that local government in England has benefited from a 25 per cent. real-terms increase since we came to power. That contrasts with a real-terms cut in grant of 7 per cent. over the last four years of the previous Conservative Government. If anyone asks for a single indicator of the difference that this Government have made to local government finance, those figures—a 25 per cent. increase after a 7 per cent. cut—speak volumes.

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On that note, I am happy to give way to the hon. Member for West Derbyshire (Mr. McLoughlin).

Mr. McLoughlin: When the Minister started the consultation process, he said that the Government intended to try to make the new grant formula system more understandable. Will he help me make it more understandable to my constituents? Why will the people in Tansley, part of the area covered by the Derbyshire Dales council, get an increase of £1.91 a head, when the people a mile away in Lea in Amber Valley borough will get an increase of £7.50 a head, and those who live a mile away in the opposite direction, in Ashover, will get an increase of £6.78 a head? There is some confusion about that.

Mr. Raynsford: I notice that the hon. Gentleman did not mention his county council, the body responsible for social services and education. I am happy to tell the hon. Gentleman what his constituents already know—that this Government are giving his county a 7.8 per cent. increase. It is not surprising that he did not want to mention that. All the districts in his area, including the ones that he mentioned, are getting an increase of more than 3 per cent. There will be an above-inflation increase for every person in Derbyshire, and a 7.8 per cent. increase for the county council.

Mr. Julian Brazier (Canterbury): Will the Minister give way?

Mr. Raynsford: Yes, I am very happy to take more interventions from Opposition Members.

Mr. Brazier: Does the Minister accept that, before the changes were introduced, elderly people in homes in Kent were resourced by London to an extent that was up to two and a half times as much as Kent was given to pay for them? Now, however, the settlement being given to Kent is, at 3.9 per cent., one of the lowest in the entire country. The pensioners and schoolchildren of Kent are being robbed by a settlement far below the national average.

Mr. Raynsford: I hope that the hon. Gentleman will return to the real world. He may have heard the radio debate that I had last week with the leader of Kent county council, Sir Sandy Bruce-Lockhart, for whom I have great respect. The impression that Kent is being robbed is complete nonsense. Under this Government, Kent has received an average increase each year of about 5 per cent. This year the increase is slightly lower, at 4 per cent., but it is still well above inflation. In the last four years of the previous Conservative Government's period in office, Kent received grant increases of less than 2 per cent. That is the difference between a Labour Government who resource local government properly, and a Tory Government who cut local government resources in real terms—and, in some cases, in actual terms.

Mr. Roger Gale (North Thanet): Will the Minister give way?

Mr. Raynsford: I give way to another Kent MP.

Mr. Gale: The Minister talks about Conservative Members not living in the real world, but he is living in

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fantasy land. A granny in Kent is worth one third of what a granny in Islington is worth. Our ratepayers must top up the school bill by 2.5 per cent. because the Government have short changed them. That is the reality.

Mr. Raynsford: The reality is that Kent county council has £31 million more this year, as a result of this Government. I am afraid that those Opposition Members who try to pretend that night is day and that an increase in grant is a cut are the ones who are not living in the real world.

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