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Sir Nicholas Winterton (Macclesfield) (Con): I am pleased to follow the hon. Member for Leeds, West (Mr. Battle), whose contribution was thoughtful and constructive. His own experience of local government came through very clearly indeed in his proposals. He told the House that he joined local government in the early 1970s. I joined it in the mid-1960s, and would be more complimentary about it than he was. In those days, the relationship between local and central Government was much closer, more constructive and less party political.
I liked the fact that the hon. Gentleman's speech made very little reference to party politics. He made one or two asides about the Conservatives and Liberal Democrats, but most of his speech was about achieving local government that met the needs and expectations of the people whom it serves. I therefore congratulate him on his thoughtful and constructive speech.
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I am sorry that the Minister for Local and Regional Government has left the Chamber. [Interruption.] I am well aware of the reason why he lefthe is, I accept, a busy man. However, my contribution to this debate will also form the basis of a strong case that I shall put to him in a meeting on the allocation of resources to Macclesfield borough council that he has granted my hon. Friend the Member for Tatton (Mr. Osborne) and myself. If he reads my speech in Hansard or if it is reported accurately to him by the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Corby (Phil Hope), he will learn the essence of our case.
Interestinglyand some hon. Members may find this surprisingI oppose my council on the issue of the large-scale voluntary transfer of housing. Local government should give meaningful tasks to elected councillors. In Macclesfield, the council has been forced to transfer its housing stock. The gross revenue from rents in the borough is £14 million a year, but the council has to hand back to the Government £8.5 million in negative housing subsidy. The borough has also been disadvantaged by the Local Government Act 2003, under which capital receipts that debt-free authoritiesMacclesfield is such an authorityare allowed to keep are reduced from 100 per cent. over three years to approximately 30 per cent. As a result, my council does not anticipate having sufficient resources left to maintain to the highest standard the council housing that it owns and administers. It will not be able to improve and refurbish its housing stock to the standard that council tenants expect, so it has been forced to consider a transfer. The Government have accepted its application to transfer, which now depends on whether the council tenants agree with it or not.
I have sought to present the facts to the House, as there should be another way of dealing with the matter. It is wrong that my authority, which is debt free, should have to pass much of its rent revenue to the Government. Financial assistance to maintain, refurbish and improve housing through the use of capital receipts is being cut by the 2003 Act, which reduces the capital receipts that councils can retain from 100 per cent. to 30 per cent, so I hope that the Under-Secretary and the Minister can look at that. It is odd that a Conservative Member of Parliament should be supported by a Labour councillor who stood as my opponent at the last general election, other Labour councillors and a large number of council tenants, who are traditionally considered Labour supporters. The current arrangement is unfair, and the Government should find a way to allow Macclesfield to retain sufficient resources to maintain its council housing stock to an appropriate standard. Incidentally, the decent housing standard set by the Government is far below the standard set by Macclesfield council for the standard and quality of municipal accommodation in the borough. The Government are well aware of that, because I went to see the Minister for Housing and Planning, who kindly said that Macclesfield has a good reputation concerning the standard to which it maintains council property.
Turning to the revenue support grant, the Under-Secretary will know that fundamental changes were introduced to the grant formula in the 200304 settlement, following substantial consultation with local
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authorities. That meaningful and lengthy consultation identified the fact that local authorities throughout the country require stability in the formula so that they can produce a robust medium-term financial strategy and can accurately predict the level of external support required. The new formula was introduced for the financial year 200304, and, I emphasise, we were told that it would be fixed for three years to allow for proper forward planning. It included an element of funding for "staying in business" and had floors and ceilings to dampen the effect of any major changes to individual authority settlements.
The floor was set at 3 per cent.that is, no authority would receive less than 3 per cent. increase. The ceiling at that time was set at 12.5 per cent., so no authority would receive more than 12.5 per cent. There were, as we all know from our experience, winners and losers as a result of the new formula, but all authorities would receive a minimum increase of 3 per cent. on the adjusted base. However, significant changes were introduced in the 200405 settlement. The provisional settlement was announced in November 2003 and an initial examination of the figures revealed a significant reduction in Macclesfield's allocation, from £7.226 million in 200304 to £6.422 million in 200405.
It then became clear that there had been some important changes to the formula, in that rent allowances and council tax benefits would be 100 per cent. funded by direct subsidy, and the national park grantpart of my authority's territory is within the Peak national parkwould be paid directly to the national park authority. The floor was initially set at 2.2 per cent.below the rate of inflationand the ceiling was set at 2.8 per cent., lower than the floor for the previous year, 200304. Macclesfield's settlement was at the floor, giving an increase on a like-for-like basis of £137,000 or, in cash terms, just £18,000, equal to 0.25 per cent.
A further announcement, I am pleased to say, was made in December 2003, increasing the floor to 3 per cent. That resulted in a like-for-like increase of a further £50,000, raising the £137,000 to £187,000 or, in cash terms, £68,000, equal to just 0.9 per cent.less than 1 per cent. For Macclesfield, the result of that poor and unfair settlement is that an increase in expenditure of 6.5 per cent. had to be funded from an 8.4 per cent. increase in the council tax. Savings in the region of £500,000 had been identified by the council from efficiency savings and by redirecting funding from lower priority service areas. The 6.5 per cent. increase in expenditure includes the nationally agreed pay settlement of 3 per cent. and substantial investment to meet the national agenda for recycling and e-government set by the Government. I hope the Minister can see the unfairness faced by Macclesfield borough council.
The external settlement does not even cover the cost of delivering the national agenda. Having regard to the gearing effect, we have little option in Macclesfield but to raise the required revenue through the council tax. My council and the Conservative group that controls it apologise to the residents of the area for having to increase council tax by a greater percentage than they would have wished, but in order to continue to provide the services to the standard that people expect and to meet the additional burdens placed upon local government by central Government, they had no alternative.
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To make matters even worse, the Minister for Local and Regional Government, who has had to leave, announced that he would use his capping powers if council tax increases were excessive, and that capping may be applied even toI use his words"excellent" and "good" authorities. Clearly, the problem facing some authorities is accepted by the Government. I only hope they will look into these unfairnesses and see whether anything can be done to rectify them.
In summary, the overall situation is that the very limited increase in the revenue support grant for Macclesfield borough council does not in any wayI emphasise thatcover the additional cost of maintaining the services currently provided, and at the same time allocate additional resources to deliver what people believe is rightthe national agenda set by the Government. With a cash terms increase in the external settlement of only 0.9 per cent. and an increase in expenditure of 6.5 per cent., we are, in the Macclesfield borough, forced to raise the additional revenue from council tax.
I have sought to present my case factually. I have not sought to score party political points. Every statistic that I have quoted is not selectively chosen by me. It is the reality of the financial situation facing the Macclesfield borough council. Debates such as this are useful for Members of Parliament to advance constituency cases. I am only sorry that some of my colleagues have not chosen this debate to put forward a case. Another colleague plans to speak and will certainly get in. It is the duty of a Government to consider properly and fairly and to respond accordingly to any unfairnesses that are drawn to their attention by constituency Members of Parliament.
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