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

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Mr. Davey: I welcome you to the Chair, Miss Begg. It is the first time that I have served under your chairmanship. Like the hon. Member for Runnymede and Weybridge (Mr. Hammond), I have concerns about how the Government's approach will affect the future. Instead of using the hon. Gentleman's tortuous language, let me ask the Minister a straightforward question. Can he guarantee that if the un-ring-fenced funds are not spent under the headings that we see in the report, the councils that receive them will not be punished? We need a very clear answer to that because the councils that receive the money need to know whether there will be a penalty. The answer is implicit in the report, but we need an explicit response.

Many of the hon. Gentleman's questions were valid. Can I add to them by asking how the money that is being given to the local councils will be audited? Will councils be required to report in specific ways? Will the Office of the Deputy Prime Minister monitor how the money is spent? We need clarity on that to ensure that the new notional ring-fencing will work.

My local council, Kingston upon Thames, run by the Liberal Democrats, is mentioned in the report as one of the excellent councils. However, the new freedoms that we are celebrating will give it just £190,300 to spend as it feels fit. It is, of course, good to have extra money—one always welcomes it and will not turn it away—but before we celebrate the new freedoms given to us by the ODPM, let us consider

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them in context. In a budget of over £150 million, £190,300 is not—

Mr. Eric Martlew (Carlisle): Is the hon. Gentleman saying that his local council has only that amount to spend freely? Surely that is not true.

Mr. Davey: I was not alleging that. I am grateful for the chance to clarify the point. The amount of Kingston council's budget that has been ring-fenced—as is the case for many other councils—has more than doubled under this Government. A new type of ring-fencing is referred to in the report: the passporting of money on education. We may all want that money to go to schools, and we may support our councils when they give that money to schools . However, that passporting is like a new type of ring-fencing. I quote—and I am surprised that the hon. Member for Runnymede and Weybridge did not pick this up—from paragraph 7:

    ''The package includes a provision that Government grants to the excellent authorities will no longer be ring-fenced, except for those grants which must be passed to schools.''

The phrase ''which must be passed to schools'' sounds like ring-fencing. It may be called passporting, but it sounds like ring-fencing. In councils such as mine, the education budget is over 50 per cent. of the total, so, to the extent that this is a type of ring-fencing, ring-fencing is on the increase; there is no reduction in it.

The Government are not speaking with one voice. The Department for Education and Skills is pushing the ring-fencing agenda, and I received an e-mail from it today, talking about the various councils that had not passported 100 per cent. of their education budget. According to the DFES, 19 councils had not done so—not Kingston, I hasten to add.

What was interesting about the plethora of attachments to that e-mail was the letter that has been sent out to the local authority in my constituency and to many others. It looks like a standard letter with names and numbers dropped in. The DFES is now asking detailed questions about specific aspects of the education budget in councils throughout the country. If that is Whitehall taking its hands off, and freeing local authorities, those words have a new meaning. I wonder whether the Minister from the ODPM would like to comment on the ring-fencing policy in the DFES.

The Minister has given us a few corrections to the report. It may be my reading of the report, but in paragraph 9 there is a reference to particular grants in paragraph 6, and when I looked for those grants in paragraph 6 I could not see any reference to them. Is that another typographical error, which has not been pointed out to the Committee?

4.51 pm

Mr. Clive Soley (Ealing, Acton and Shepherd's Bush): I shall speak briefly, and I welcome your position as Chairman, Miss Begg.

I wanted to speak because Hammersmith and Fulham is one of the councils on the list. It has also been in my constituency, along with bits of other ones from time to time, for all of the past 23 years, so I have become very familiar with its work.

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I want to welcome the report for two reasons. First, I have argued for many years that we have restricted councils far too much—under Governments of both parties, to be fair. We have prevented local authorities from developing the services that they want to develop, and we have sometimes prevented the electorate from blaming or praising the council appropriately. We need to encourage the local electorate to recognise that councils, not the Government, are responsible for the quality of service delivery, because from time to time people vote on the basis of attributing the responsibility to the Government.

I want to comment also because Hammersmith and Fulham council has been successful in several areas, and the Committee should pay tribute to the way in which a council gets an excellent rating according to the Audit Commission criteria. It is not just a matter of thinking of a good idea. Hammersmith has a number of good ideas; it was the first council in the country to create a parks constabulary. If a council is to get an excellent rating, it must show that it is motivated to look at all areas of its delivery to ensure that it is delivering good quality. It must monitor the quality of its service, and ensure that money gets to the places where it is needed and is spent wisely and well. Hammersmith has gained additional economic freedom in such areas, and its policies on homelessness, waste recycling and the neighbourhood warden scheme deserve particular credit.

The waste recycling scheme is very successful, but the homelessness policy has been profoundly important. For most of my years in Parliament, the council has had people in bed and breakfast—for as long as five years in some cases. That is unacceptable, but it is no longer the case in Hammersmith, where such stays are down to the absolute minimum, which is to the council's credit.

I also want to mention the warden concept because it does a great deal to give people confidence on the streets. Everything that has been achieved by the council to get its excellent rating, along with the other councils listed, enables us to say to local authorities that the more careful they are at targeting money and monitoring how it is spent, the greater the freedom they earn from central Government directives. That is not only a matter for congratulation, but a big step in the right direction.

4.54 pm

Mr. Leslie: First, may I do what I should have done before and welcome you to the Chair of the Committee, Miss Begg? I greatly regret that omission, as I do not think that I have served under your tutelage and leadership before. I add my comments to those of the hon. Member for Runnymede and Weybridge.

The hon. Gentleman asked for additional money to be given, and he bemoaned the fact that excellent authorities were being given only a certain amount of freedom rather than extra resources. He will be aware that the shadow Chief Secretary to the Treasury is very concerned to keep Front-Bench spending commitments to an absolute minimum, but I should

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be happy to pass on the hon. Gentleman's little slip to his Front-Bench colleagues so that they can add it up, and we can add it to their spending commitments for future elections.

The hon. Gentleman made various partisan points about the number of excellent councils that happen to be in the control of one particular party or another. It also happens to be the case that there are fewer Conservative authorities in the larger category of good authorities. However, I do not think it proper to make partisan points at this juncture. I, too, should be interested to see the correspondence of the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), who received a letter from the Audit Commission about that matter. I am not party to that correspondence myself, but no doubt it will all come out in the wash.

May I say how grateful I am that the spokesman for the official Opposition has welcomed this reduction in ring-fencing? There are still specific grant allocations, but those grants do not now have the same strings attached. The grants are made outside the normal funding formula allocation for specific reasons. The hon. Gentleman mentioned worries that only one grant was given on an objective allocation, and sees the rural bus subsidy as objective but the other grants as less so. I feel that all the allocations are perfectly objective and based on good criteria, whether they include the deprivation rate used by the authorities or decisions made in previous years. All those are objective, but we could have debates on the various mechanisms for allocating resources until the cows come home.

The hon. Gentleman asked about the homelessness grant. Extra money for homelessness will continue; we have been very successful in securing extra resources for that in the spending review. Some £60 million has been allocated for 2004–05 and the same amount for 2005–06. We will make decisions about actual allocations to local authorities in future years based on various criteria including homelessness levels and the authorities' delivery of their homelessness strategies. Many—I think all—of those will be published by July, and announcements will be made in due course.

There will be a further round of competition for the rural bus challenge fund, and I am keen to make it clear that we will not have perverse incentives by penalising excellent authorities in that respect. The next round will be this autumn, and the allocation of funding for future years will be announced in due course.

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