Richard Burden (Birmingham, Northfield) (Lab): I should like to say one or two things about the impact of the settlement on Birmingham and what it is likely to mean for my constituency, then draw a few conclusions in relation to the national scene.
I welcome the settlement, which is very good for Birmingham. We have received a 6.73 per cent. increase in formula grant, which is generous by any stretch of the imagination, and is one of the better settlements in the country. Like every other town undergoing rapid change, I am sure that we could use more, and I reserve my right to come back in the future and say that we want
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it, but we must recognise what the Government have done for Birmingham on this occasionin fact, not just on this occasion but following year-on-year above-inflation increases.
We wait to see how the Conservative and Liberal Democrat coalition that now runs Birmingham reacts to this settlement. Given what Liberal Democrat Members have said on several occasions, including today, and knowing the views of some Liberal Democrats in Birmingham, I cannot understand how they have accepted the Birmingham leadership taking them into bed with the Tories, but I guess that is up to them. The focus is now on their management of Birmingham city council. They cannot claim that they have had a bad deal from the Government, though perhaps they could explain what over £4 billion of cuts under a Conservative Government would mean for them.
I want to consider youth facilities and play facilities for younger children and the amount of money that is available for them. In my constituency, a recent report was made to the district committeea pioneering new structure that the former Labour administration set up to devolve power and influence in Birmingham. The report highlighted what we already knew: there are not enough play facilities in my constituency. When I talked to residents on estates throughout Northfield, they emphasised the importance of improving provision for young people. We have set up a youth commission locally, with cross-party supportpeople of good will from different parties in Northfield all support thatto ask young people what they want.
The previous Labour administration secured an extra £8 million of Government money for meeting various performance targets, and £7.3 million of that sum was allocated to improving facilities for young people and estate clean-up projects. It worries me that, in the past few weeks, the Tory-Liberal Democrat coalition that now runs Birmingham has decided to cut that £7.3 million from those priorities for my constituents. It claims that it has done that because it has to cope with an overspend in the social services budget.
It is true that social services in Birmingham have longstanding problems. That is not a party issue; even the former Labour administration had a long way still to go to tackle them. However, party is important when it comes to the need to exercise proper financial monitoring and financial control throughout the year and not simply panic half way through or towards the end of the year and end up cutting the money from youth facilities, which the Tory councillors in my areawe have no Liberal Democrat councillorssay that they want to increase. The administration in Birmingham must therefore answer some questions. It cannot complain about lack of money, but it must answer questions about its management of the council.
I want to consider the way in which spending by local authorities, other agencies and the Government translates into, for example, neighbourhood renewal. The first speech that I made in this place many years ago was about the fact that, in my constituency and many others, deprived areas exist alongside areas that are not so deprived. Consequently, when figures for deprivation are compiled at ward level, averaging occurs and so-
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called pockets of deprivation miss out. In Birmingham, where there are wards of 17,000 to 20,000 people, the pockets are pretty large.
I am pleased that, last year, the basis for calculating deprivation changed to become much more local through Government action on what are called "super-output areas". Let me make a plea to my hon. Friend the Under-Secretary: can we think of another name? No one understands what the term means. However, changing the basis for calculation means that issues can be addressed and it is important that they be tackled in the context of local policy. Pockets of deprivation should be identified and their needs met when policy is decided locally. Birmingham is simply too big to try to do everything centrally and dealing with deprivation locally is therefore especially important.
Devolution has made a good start in Birmingham. There are local projects, such as safer neighbourhood projects, in my area that have an impact on tackling crime and antisocial behaviour. However, the money needs to reach local level to back up those good initiatives.
Much estate development work is happening in Northfield. In the medium term, the prospect of that is good. However, in the short term, people cannot get their repairs done. It is galling for someone who sits on the edge of an estate and sees that another person's home is scheduled for redevelopment to know that their home is not and to be unable even to get repairs done. More local control of matters such as repairs budgets is important and of more than academic significance. I ask my hon. Friend to consider what the Government can do to encourage that process locally.
I have written to the city council about all the issues that I have raised but I ask my hon. Friend the Under-Secretary to consider how the Government can encourage such processes. The grant figures that have been announced and that we are debating are good, but the way in which they are used locally is vital. We need to tackle that in Birmingham.
Mr. Hugo Swire (East Devon) (Con): There seems to be a growing consensus, at least on the Government Benches, that this is a fair and generous settlement. Perhaps that is to be expected, but it is not a sentiment that I acknowledge or recognise; nor is it shared by my constituents in East Devon[Interruption.] The Minister says that it is a shame. It is; or perhaps not, if we take into account what many of my councillors and constituents believe: that the settlement is merely the latest instalment in the Government's determination to drive through a regional agenda and to undermine local government infrastructure so that it becomes unpopular. Perhaps they could then replace it with a unitary authority in advance of their regional programme.
East Devon district council has been debt free for many years, with capital reserves of about £20 million. However, it is now being encouraged to spend that money. The Government do not want any council to be debt free, because they could not then insist on that council complying with their ever increasing number of directives.
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We have heard a lot about a replacement for council tax, and that is an entirely legitimate discussion to have. I commend any Government who want value for money. Building on the Gershon report, the James report has also identified great waste. All Governments have a duty to ensure that they deliver value for money to the taxpayer. I have looked into the possibility of a local income tax. On the surface, it would have some attraction in a constituency such as mine with very high property values and a high pensioner population. However, on reflection, and after much study, I have concluded that any fair means of raising local council tax has to retain an element of property valuation.
Over the past seven or eight years, there has undoubtedly been a shift from central Government providing the funding for local government to local government having to find increasingly large amounts for itself. The Government's announcement that they are likely to cap local councils is only to be expected in the run-up to a general election. No Government holding an election in May or even sooner would want to have it on the back of council taxes increasing as they have done in the past few years.
Furthermore, capping involving a blanket figure is manifestly unfair. East Devon is the lowest-charging council in Devon. To apply the same maximum increment to East Devon as to the others will continue to make the gap in its overall receipts much wider, while its statutory responsibilities remain exactly the same as those of any other council. Where would be the incentive to be prudent and to deliver value for money, as East Devon does? It has the lowest council tax in Devon, as I have said: the average charge for a band D property is £102.09, compared with the county average of £124.33. Where would be the incentive for a district council to behave in a manifestly honourable way, and to deliver good value for money? The answer is that there would be none. Nothing in the settlementor nothing that we have heard this eveningwould contribute towards remedying that.
East Devon has been judged by the Audit Commission, and it achieved a good rating while continuing to give the best value for money. However, the council tax now pays for only about 23 per cent. of the £24.5 million needed to provide the necessary services. As the Government have withdrawn their funding, local authorities such as East Devon have been boxed in, in terms of finding the deficit funding. They are faced with a simple equation. In order to keep the increment down, they have to reduce what they do.
This Government over the past few years have increased the statutory requirement on local government year on year. Local government has no option but to perform to those new targets. What does that leave? It leaves a district council faced with having to cut those non-statutory responsibilities. That is what is happening in East Devon: the double whammy of a council tax increase and a cut in services. I do not blame the council for thatit has performed extremely well. It provides good value and has some exciting projects such as the regeneration of Exmouth and Seaton, and bringing its remaining housing stock up to standard to meet the statutory requirement.
All those things are positive, but equally the Government must accept responsibility for the crisis that they find themselves in. I shall use technology as an
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example of the additional work that councils have to do without receiving financial compensation for doing it. The Government require East Devon to invest between £4 million and £5 million by the end of this year, but what is their contribution? It is £1 million, so the deficit in respect of that requirement alone will be £3 million or £4 million. Also, the cost of recycling in East Devon next year will be about £1.5 million. Where will that come from?
On reflection, what do we face? The council has the lowest grant in the country, and 75 per cent. of the council tax money, which we have been using to prop up our precept over the years, is to be confiscated from East Devon and redistributed around the country. That is the crisis we face.
I want quickly to touch again on the Liberal Democrat plan to replace council tax with a local income tax. I was intrigued to see a letter in the Express and Echo of 25 January from Councillor Margaret Rogers, a Liberal Democrat councillor in my constituency, pointing out that I have misunderstood the Liberal Democrat plans for a local income tax and inviting those taking part in the Sidmouth Town ward by-election to
It is worth pointing it out to the Liberal Democrats that they cannot have it all ways. They cannot say they want to abolish council tax and yet vote on two separate occasions to reband houses under the council tax.
There is much that I want to saymuch that I hope to have another opportunity to sayabout the unfair settlement that we face, but other hon. Members wish to speak. I urge the Government, therefore, to look again at those councils that are delivering good value for money, such as East Devon.