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First Standing Committee
on Delegated Legislation
Tuesday 6 May 2003
[Miss Anne Begg in the Chair]
Local Government Finance (England)
Special Grant Report (No. 120) (HC 578)
on Grants for Local Authorities
classed as ''Excellent'' under the Comprehensive Performance Assessment
The Chairman: Before I call the Minister to move the motion I must inform hon. Members that there is a correction to the special grant report. It is on the Table and I advise hon. Members to get a copy of it.
The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): I beg to move,
That the Committee has considered the Local Government Finance (England) Special Grant Report (No. 120) (HC 578) on Grants for Local Authorities classed as ''Excellent'' under the Comprehensive Performance Assessment Framework.
At the outset I draw hon. Members' attention to the typographical errors on page 6 of the report: in paragraph 10, for ''column 4'' substitute ''column 5'' and in the last paragraph on the same page, signifying Treasury consent, for ''paragraph 9'' substitute ''paragraph 10''. A correction slip was added to the report before its consideration by the Select Committee, but I am bringing it to Members' attention now to clarify the meaning completely.
I am pleased to introduce in this special grant report another of the freedoms promised in the package of freedoms and flexibilities for local government. That package is part of our drive to free councils to manage their own business in line with the principles of public sector reform. The House has already passed a special grant report enabling the unfenced payment of personal and social services grants. This report removes the spending conditions on five more grants: the waste recycling challenge; the bus challenge; the rural bus subsidy; homelessness; and neighbourhood wardens. On 14 May the House will debate a further report removing conditions on some education grants. Through such unfenced grants the Government are rewarding excellent councils that have demonstrated that they have the capacity to deliver the high quality services that local people demand and expect.
The context for this special grant report is the local government White Paper published in December 2001, which announced plans for the comprehensive performance assessment. The CPA informs local people about the services that they can expect and about how well their council is performing. It also shows which councils are best able to deliver, allowing central Government to step back, so that higher performing councils can receive more freedoms and others an incentive to improve.
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We want to give freedoms to the best performers. Excellent councils will be able to balance local and national priorities to achieve the desired outcomes. Of course we expect that local authorities will continue the schemes and innovative ideas that were previously funded through ring-fenced grants. They will get the same amount of funding as they would have had under the ring-fenced grants, but they will receive it unfenced, encouraging efficiency and allowing adaptability in financial planning.
Those grant freedoms are only part of the package. Less form filling for high performing councils will mean substantial reductions in bureaucracy, and excellent councils will have a three-year inspection holiday. Councils with better CPA results will be exempt from council tax capping, they will have freedom over the use of income from certain civil penalties and they will have new powers to trade. All authorities will have an incentive to improve and to gain the benefits of being categorised ''excellent''.
I shall now give brief details of the five grants in this report that are still going to excellent councils but without strings attached. The first is the waste recycling challenge fund, which in legislation is known as the waste minimisation and recycling fund programme. It is open to all local authorities in England to assist them to set up waste minimisation and recycling initiatives to meet their statutory recycling targets for this and the coming financial year and the UK's wider obligations under the landfill directive.
The second grant is the rural bus subsidy grant. It supports new and improved bus services in rural areas. It is distributed to transport authorities—county councils, passenger transport authorities and unitary authorities—in England according to a formula based on the numbers living outside areas where there are settlements of 3,000 or more people. In this financial year, the allocation for excellent authorities is £9.5 million, which supports 360 services and 4.2 million passenger journeys per annum.
Thirdly, the rural bus challenge is an annual competition in which local authorities bid for funding for projects aimed at stimulating innovation in the provision and promotion of rural public transport, improving quality and choice throughout the country. The special grant report provides for awards to projects that were submitted by excellent authorities in the 2002 competition. Those councils will continue to receive the extra money, but without the central Government conditions attached.
Fourthly, the homelessness grant, which involves the Office of the Deputy Prime Minister, is used to tackle homelessness more effectively. We have embarked on a new agenda aimed at getting to the root causes of homelessness and helping to overcome problems that may result in homelessness. We have introduced legislation to strengthen the safety net for vulnerable people, through the Homelessness Act 2002 and the priority need order last year.
We have backed that up with significant additional resources. All local authorities in England have received additional resources for homelessness from
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the ODPM: £90 million for 2002–03 and £70 million this financial year. A significant proportion of that—£9.5 million—has been allocated to excellent councils. A table in the special grant report details the councils that will receive that. The money will ensure that no homeless family with children has to live in bed-and-breakfast accommodation for longer than six weeks, and that our reduction in the number of people sleeping rough is sustained.
Fifthly, the purpose of the neighbourhood warden grant that the ODPM funds, with more than 240 schemes piloted in some of the most deprived areas in England and Wales, is to improve the quality of people's lives, tackle the fear of crime and contribute to regeneration. A number of authorities are finding ways to fund neighbourhood warden schemes for themselves, independently of central Government. As a result of the removal of the ring fence on wardens grants, the eight excellent local authorities involved will be able to spend the funds over the remainder of the year according to local priorities. I am convinced that where schemes are successful and valued by residents, the local authorities will continue to give them their full support.
To conclude, the package will allow high-performing councils to concentrate on what they do best—serving their local communities. I hope that it will receive universal support from hon. Members present. I am aware that, for a long time, many hon. Members on both sides of the House have been critical of the level of ring-fencing in local authority funding. The removal of ring-fencing is a significant extra freedom. Excellent councils can focus on local outcomes rather than on spending targets set out by central Government. The freedoms associated with the CPA devolve power and encourage improvement by all. The special grant report realises one of those freedoms, and I commend it to the Committee.
Mr. Philip Hammond (Runnymede and Weybridge): It is a pleasure to serve under your chairmanship for the first time, Miss Begg; I am sure that it will not be the last.
When I received notice of this Standing Committee, I was with a group of councillors and council officials. I read out to them the subject of the report: ''grants for local authorities classed as 'excellent' under the comprehensive performance assessment framework''. Their eyes lit up at the thought of additional money for councils classed as excellent, but of course when I got back to base and read the detail of the report, I found that it was not quite so exciting. It is merely an explanation of how the Government will allocate the money that would have gone to those councils anyway, given that they are now to be freed from some of the constraints of ring-fencing.
Some additional money for excellent councils would have been very welcome, as five of the councils classed as excellent received the lowest possible settlement in the last round and only one received the highest. The hon. Member for Kingston and Surbiton (Mr. Davey) would be disappointed if I did not note in passing that more Conservative-controlled councils are classed as
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excellent than those of any other political party, but I shall not dwell on party political issues.
Mr. Desmond Swayne (New Forest, West): My hon. Friend has drawn attention to the excellence of Conservative-controlled councils, and I must point out that there are more Conservative councils than those of any other party.
Mr. Hammond: My hon. Friend is right. I would not want anyone to think that he spent his bank holiday weekend poring over statistics; I know that he is well versed in such matters.
Mr. Edward Davey (Kingston and Surbiton): The hon. Gentleman has tempted me. Will he tell the Committee what the Audit Commission said about the implications that should be drawn from the CPA list, and will he share with the Committee the letter that his right hon. Friend received from the Commission?
Mr. Hammond: I am not the keeper of my right hon. Friend's correspondence. I am not even sure which of my right hon. Friends the hon. Gentleman refers to, but in a few moments we shall be enjoying his speech and we will be given those details.
Clearly we have confidence in what those excellent Conservative councils are doing, as, it would appear, do the electorate. We do not want excellent councils to be hampered by low settlements. As the Minister said, Members from all parties have long been urging the Government to reduce the amount of ring-fencing, and I welcome this reduced ring-fencing for excellent councils, so far as it goes.
We are looking at a special grant to replace ring-fenced funds with a ring-fenced non-ring-fenced grant, which is slightly ironic. Nevertheless, it will work perfectly well for this year, and I have no quibble with the way in which it has been carried out. However, I have some questions for the Minister about the future.
When looking at the list of specific grants that are being transformed into this general non-ring-fenced grant, I find that the only one that appears to have an objective basis of calculation is the rural bus subsidy grant, which is based on a rural population count. The other four grants are calculated in different ways. We are told that the homelessness grant represents a rolling forward based on the level of grant support provided to those authorities in 2002–03. That is clearly a rolling forward of the grant that was awarded last year, or it was at least based on that. What will happen next year and the year after that? Clearly, it will not be appropriate to refer to a ring-fenced grant that is three years old, but there must be some basis on which the underlying calculation of those components of the non-ring-fenced grant should be made.
For other grants—the bus challenge fund is one—the amounts being awarded are based on bids received from what are now excellent authorities which the Government had already decided to accept. That is obviously a relatively straightforward calculation for this year, but will those authorities need to carry on bidding on a shadow basis, even though they will not be subject to ring-fencing, to establish base lines for the calculation of the relevant component of the non-
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ring-fenced grant to be awarded next year and in subsequent years?
We would all be concerned if there was a danger of councils being given perverse incentives against being deemed excellent because the money would not flow through in future years. Of equal concern is the fact that those whose job it is to allocate the funds—those who evaluate bids and who look at the case for awarding different special grants to various authorities on a ring-fenced basis—might be encouraged or even expected to take account in future of the extent to which those un-ring-fenced excellent local authorities spend the un-ring-fenced funds in pursuing the specific objectives that the Government have set down and that, for other authorities, will be ring-fenced. Simply abandoning explicit ring-fencing in favour of implicit ring-fencing—giving councils a pot of money but leading them to understand that unless they spend it in the way in which they would have spent it had they been ring-fenced they cannot expect to see any more next year—will not deliver the intended outcome, which is to give the authorities genuine freedom and flexibility.
I would like to hear from the Minister first how, on a mechanical basis, the grants will be calculated for future years. Secondly, can he give us an assurance that the receipt of appropriate levels of funding for each component in future years will in no sense be conditional upon monitoring of the way in which money has been spent on each of the programme objectives in the current year?