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Mr. Michael Jabez Foster: The right hon. Gentleman clearly states that increased pay is an issue for local authorities, but fair pay for local government workers is important. Would he find the answer in restricting that pay, and not providing fair pay to people who work in the public sector?
Mr. Curry: The hon. Gentleman has entirely missed the point. Local authorities depend substantially on Government grant—we know that, although we all wish that it were otherwise and are trying to work to alter the situation. But while that is the case, and while local authorities are therefore subject to national pay
negotiations, the money has to be raised somehow. If it is not raised by grant, it comes from council tax. That is the point. It is a matter of record that public service pay is rising by some 5 per cent. a year, and that that is a significant burden on local authorities.There are also the rising costs of child protection—after the Climbié case—the mounting cost of adoption and fostering, and the rising cost of domiciliary care. I am sure that all hon. Members find that that is another persistent issue in their surgeries. Social services are almost always the main sufferer where education pre-empts other spending in circumstances in which the total grant is inadequate.
Mr. Dennis Turner (Wolverhampton, South-East) (Lab/Co-op): What does the right hon. Gentleman have to say about the excellent revenue support grant settlement that Wolverhampton has had? It will delight the council tax payers, who will be asked to pay only a very reasonable increase. One can think back to the years of the Conservative Government, when council tax increases were much higher. The right hon. Gentleman was partly responsible for that.
Mr. Curry: Some cities have benefited substantially from the reallocation of the formula, and Wolverhampton is perhaps one of them, but many others have not, and still face real difficulties. That is my point. I am not making a crude and universal condemnation. This is a very sophisticated condemnation of the way in which the Government have distributed the funds.
Mr. Raynsford: Given the right hon. Gentleman's very sophisticated analysis of the pressures on local government and the costs, will he now tell the House whether he agrees with the settlement that we propose or whether he would increase it?
Mr. Curry: I have made it absolutely clear that we shall oppose the settlement because of the mess that the Government have got themselves into, the way in which the formula has been applied, the betrayal of the excellent councils, despite a pledge given by the right hon. Gentleman's own boss, and the additional burdens imposed upon local authorities. I have spelt that out for the second time. I would do it again, but I do not think that it is necessary.
We also have the increase in environmental services, in waste collection—
Mr. Steen: I am sorry to stop my right hon. Friend in mid-flow, because we are much enjoying his speech. His colleagues on the Conservative Benches thoroughly agree with what he is saying.
My concern, and that of my hon. Friends in Devon, is the actual cash amount that Devon people have to pay in council tax. They are running out of money, and cannot pay it. Does my right hon. Friend agree that one of the problems is that because council tax has been allowed to run away with itself, and has increased and increased, people can no longer afford the services that the county council says they have to pay for? Does my right hon. Friend also agree that what is important now
is to reduce the staffing levels in councils right across Devon? In this way, council tax could be reduced at a stroke.
Mr. Curry: I agree that if there is clear evidence of waste it should be eliminated, but I do not agree that the council tax has run away with itself. The Government have imposed the increases in council taxes. This is not a self-induced mechanism. The Government have failed to match their requirements by grant.
We have the increases in environmental services, and we are all in favour; we want to see the landfill directive implemented. We want to see the UK get over its catastrophic record in recycling, for example.
There is also simply the business of being in business: pensions, insurance, utility bills, the implementation of single status. Those are all new, major burdens on government. They are not invented. There is remorseless pressure because of increased demand, compounded by inflation.
District councils often get the thin edge of the wedge, because the increase is below or near the level of inflation pretty well across the board, so the services that are often most visible to local people—street cleaning, lighting, local roads—are likely to suffer. They have also been the ones hit by the council tax benefit difficulties.
Sir Paul Beresford: Does my right hon. Friend anticipate that in the winding-up speech the Minister's response will be that every local authority has an inflation increase? But, of course, that is an inflation increase on last year, when many local authorities, particularly in the south and south-east, were savaged, unlike Wolverhampton and other urban Labour boroughs in the north.
Mr. Curry: I do not know what the Minister will say, but clearly we do not have long to wait, so we shall soon discover.
What will happen next year? Is the £340 million extra a one-off or is it a recurrent payment? If it is not a recurrent payment, if it is not in the base for next year—and the Government keep warning of the tight spending round—it must be found locally, and that looks like 2 per cent. on the council tax simply to start from the same place.
So the problem is that this is a dishonest settlement. It pretends to be much better than it is. It is distorted by the ordering of the distribution of school funding by the Government. It will have an inevitable consequence of tightening the squeeze on social services. It is disfigured by the threat of crude and universal capping, because this is a Government back to their bullying, hectoring, prescribing, dictating worst. This settlement must be opposed.
5.13 pm
Mr. Bill O'Brien (Normanton) (Lab): This debate is of paramount importance to local government.
I declare my interest, as the chairman of SIGOMA—the special interest group of municipal authorities—in the House of Commons. Our aim in SIGOMA is to
present to Parliament the interests of municipal authorities, including metropolitan authorities, outside London and the effect of Government policies on the services provided by our authorities affecting our constituents. My right hon. Friend the Minister is aware of our role, and I ask him to take note of the points that I and other members of SIGOMA may put in the debate.Funding is of paramount importance in providing the services that I have mentioned, and the formula for allocating funds is what the local government finance report is about. I shall address some of the areas of concern expressed by members of SIGOMA. The report covers the year 2004–05, and sets out the amount of grant to be paid to each local authority and other specified bodies for the coming year.
First, I record my appreciation of my right hon. Friends the Deputy Prime Minister and the Minister for Local Government, Regional Governance and Fire, for the support given to local government since 1997. Under the Tories, for 18 years, local government suffered tremendously from cuts in finance that reduced services, as has been made clear tonight. The devastation of 18 years left a blight on many local authorities from which they are still recovering. Under the Tories, industries such as mining, steel, glass and railways all suffered, which created vast areas of deprivation. Local government had to address and provide for that deprivation. My right hon. Friend the Chancellor has recognised the problem of deprivation and has helped the local government wards that have been identified as the most seriously deprived. The Government and local government have worked together in delivering improved services to deprived communities, which is appreciated. Revenue funding, however, is still a real issue to be addressed, as the report demonstrates.
The formula spending share, which was introduced in 2003–04, recognised to some degree the need for a new formula, which helped each local authority to assess how the calculation for major services was arrived at. That is addressed in section 4 of the report. What the report does not show is the definition of poverty in the 21st century, and we are requesting that there should be improvements to the weightings given in the deprivation indicators in the formula. The needs in relation to individual problems and circumstances cannot be identified in the formula, so the requirement for freedom for local authorities to deliver those services through targeted grants is the way forward. We are asking for more freedom to be allowed to local authorities to face the way forward in terms of help for individual needs.
To some degree, the delivery of services to the most deprived communities has been successful with the neighbourhood renewal fund—the NRF. My question to my right hon. Friend the Minister is what will happen when the NRF comes to the end of its life? Crucial services will be lost, and much of the progress and improvements in those areas will fade away if funding is not maintained. We need to ensure that adequate resources are provided at the crucial level of funding through the NRF. I ask for that to be addressed in the winding-up speech tonight.
A further concern that I want the Minister to take seriously is population decline. In many metropolitan areas, we have witnessed population movement, which impacts on education, social services and the main, core
services provided by local authorities, which in turn creates deprivation and a vicious circle. Because population decline requires certain services to be maintained, that puts heavy costs on local authorities.In relation to data loss and the census, which was touched on by my right hon. Friend the Minister, SIGOMA estimates that the loss to local authorities owing to data change is £85.6 million—as per the analysis of change data issued by the Office of the Deputy Prime Minister. We accept that there is a loss in that regard, and I hope that it will be addressed. I know that my right hon. Friend referred to that issue, but I consider that it demands more attention.
A further point to which I wish to draw attention is revaluation. The current system has a basic premise that resources are distributed on the basis of need and will provide equal levels of council tax if authorities spend at FSS. Reference to that is made in annexe C. The current system is based on valuations 10 years out of date that bear no relationship to the current position. The relationship between the ability to pay and the level of council tax has diverged over the years, with the perverse result that council taxes are higher in the most deprived areas—the very communities that have a low tax base and cannot raise revenues to fund much-needed services. I ask my right hon. Friend to consider that serious situation. The lack of revaluation penalises SIGOMA authorities to the extent of about £270 million a year. Some compensation should be given for that loss of income.
SIGOMA members welcome the commitment to the introduction of revaluation in 2007 but I reiterate my plea for help for those authorities that will be penalised because of the lack of revaluation.
Block 6 of the report refers to environment, protective and cultural services. Interventions have referred to the effect of that block on services to local authorities. About 21 per cent. of household waste is recycled or composted but that figure must increase significantly to meet the landfill directive targets for 2010—by which year, 30 per cent. of household waste will have to be recycled. By 2015, the figure must increase to 33 per cent.
The Prime Minister's strategy unit report "Waste not, Want not" referred to a 45 per cent. increase in household recycling rates by 2015, with households taking part in kerbside collection programmes. If waste recycling targets are to be met, local authorities must be offered additional resources because while the proposed programme is important, it will cost money. It is vital that there is funding for that that follows the costs incurred as a result of the targets.
The final settlement block does not provide further support for the recycling block, as was requested by SIGOMA members. Pressures on that block will continue to be highlighted by SIGOMA, to achieve recognition within the current spending review. I ask my right hon. Friend, when he winds up, to give some indication of how the Government will address the extra resources needed under the environment, protective and cultural services block.
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