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The Minister for Local Government (Mr. Phil Woolas): I congratulate the hon. Member for Southend, West (Mr. Amess). It is traditional to congratulate hon. Members on securing Adjournment debates, but I do so genuinely. He has raised constituency issues and done so in a way that is not partisan, so it behoves me as the Minister to respond properly. I also congratulate him on his doughnut of hon. Friends who have turned up to support him; my doughnut is particularly thin this evening.
I hope that the hon. Gentleman takes my remarks in the spirit in which they are intended. He has raised a constituency matter about which he obviously feels very strongly—looking back through Hansard, I see that he raised it on 12 January 2004 and again on 8 March this year—and I feel an obligation to respond. The best postcard that I could send to him and his hon. Friend the Member for Rochford and Southend, East (James Duddridge), whom we welcome, is one that says that of course we will have a meeting to discuss the matter and his concerns. We shall arrange that with the local authority chief executive, as the hon. Member for Southend, West suggested. He kindly gave me a long timetable, extending to the next census in 2011, so perhaps I should not make commitments so far in advance. Let me explain the policy that has led to the current situation, then I shall reply to some of the points that he has made.
The overall increase in the formula grant for 2005–06 is £2.6 billion. Every council will receive a formula grant increase at least in line with inflation; in addition, councils will receive increases in specific
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grants. The total increase in grant is therefore £3.6 billion, or in percentage terms—although percentages do not always present the right picture—6.3 per cent. The background for Southend and everywhere else is that the Government have been able to give significant increases in grant.
The hon. Gentleman is arguing a constituency point based on the census. I note that he met representatives of the Office for National Statistics last Monday, 9 May. Most of us spent the days after the election sleeping, so he should be commended for his fortitude. The point I make is that the ONS is independent of the Government, and were I to intervene and direct the ONS, he would probably seek another Adjournment debate or take some other opportunity—he assiduously participates in the pre-recess Adjournment debates—to criticise the Government for compromising ONS independence. However, the hon. Gentleman is on the Opposition Benches and he reserves the right to have his cake and eat it. I reserve my right to stick to the facts of the argument.
The £3.6 billion increase builds on a sustained grant increase over the years since 1997. In real terms, the increase has been 33 per cent. in grants to local government since then, compared with the 7 per cent. real-terms cut in the previous four years. That is the context of the debate. Southend has received generous grant settlements—generous is, I think, a fair word in this context—from the Government. It will receive a 4 per cent., or £5.3 million, increase in formula grant from the Government in this financial year 2005–06. This is the third year in a row that Southend has had an above inflation increase, and I hope that the hon. Gentleman acknowledges that that is the position.
Another point to note is that Southend also benefits from the floor system in the local government grant formula to the tune of about £3 million. In addition, it stands to receive about £26.6 million from specific grants on top of the 4 per cent. increase. The hon. Gentleman raises a constituency point using ONS statistics and the flaws that he sees in those statistics. I do not think that he can argue that the formula and the Government's policy have been anything other than generous to his council. I do not think that Southend can reconcile these facts with claims that it has been underfunded.
The hon. Gentleman mentioned some of Southend's budget decisions on service provision taken by the borough council. Those are matters for it and its electorate. It seems that Southend may be misdirecting itself in the way that it considers its total budget. I understand that it has usually been its practice to set its budget in line with a figure that is now known as formula spending share, or FSS, which replaced the earlier standard spending assessment from 2003–04.
I will clarify in the brief time available to me what FSS is, or perhaps clarify what it is not. FSS is not the Government's estimate of the funding's authority's need to provide its services. It is not the Government's view of the level of expenditure that authorities are expected to meet. It is not the Government's calculation of the level of grant that is needed by authorities. FSS is simply part of the mechanism for distributing the pot of funding available to local government. This is well understood by local government throughout the country.
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The main theme of the hon. Gentleman's speech is the population estimate for Southend and his claim that it is inaccurate. When calculating formula grant allocations, the Government use the best and most up-to-date data that are available on a consistent basis throughout all authorities. For population, these are the mid-year estimates produced by the ONS. The calculation of population estimates is a matter for the ONS. Queries on their derivation and accuracy should be raised directly with it. I commend the hon. Gentleman because he has done exactly that.
Revised population estimates were published by the ONS as recently as September 2004. These followed the completion of the 2001 census, which was based on local authority population studies. Southend was one of the authorities that the ONS investigated as part of this work. After consideration of all the analysis, the ONS concluded that no adjustment should be made for Southend. The statistics were based on independent analysis by the ONS. I think that right hon. and hon. Members on both sides of the House would criticise me if I were to deviate from that independent advice.
The hon. Gentleman argued that we should use the most up-to-date data from the 2001 census in the settlement. I sympathise with his point about ensuring that data are up to date, but we faced a dilemma in considering the use of data other than population based on the 2001 census. In proposing not to use that census data in the 2005–06 formula spending share calculations, we had to balance our desire to use the most up-to-date data against our aim of providing stability in local authority funding. Using new census data in the funding formula is not, as the hon. Gentleman has acknowledged, a simple task. The changes needed to incorporate the 2001 census data would break the formula freeze and could cause large changes to the distribution of FSS. We will look at incorporating the 2001 census data in the funding formula once that freeze has ended. That would allow us to use the census data from 2001 in the 2006–07 settlement, assuming that agreement can be reached on an appropriate way of doing so.
The hon. Gentleman cited figures for losses of grant to Southend as a result of not using the 2001 data. However, there is no way to calculate those losses. The figures that he cited today and in previous debates merely resulted from putting the 2001 census data into the existing formula. That would be technically incorrect. We must wait for the new formula options before we can see broadly what effect the 2001 census data will have. We have therefore given Southend generous grant settlements. It has benefited from the floor, but the authority has still set high council tax increases. If that proves anything, it is that Southend does not have a case for its claims that it is poorly funded. Consistently good settlements from the Government ensure that all properly run authorities can provide a high level of service without making excessive demands on the council tax payer.
I am sure that as a matter of policy the hon. Gentleman would agree with those sentiments. In conclusion, I commend him on raising the issue, as he has done in two previous debates. He kindly acknowledged my genuine attempts to answer his questions in Adjournment debates, and I undertake to look at the points that he made and to meet him to
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discuss them. He has raised a constituency issue and I hope that his colleagues will note that Ministers do not respond in a partisan way to such issues. They will try to meet concerns, but the established fact is that there have
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been good grant increases, supplemented by additional grants, which have secured a steady increase in funding for the hon. Gentleman's council in Southend.
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