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Mr. Philip Hollobone (Kettering) (Con): I congratulate my hon. Friend on securing the debate. I know how hard he works on behalf of his constituents, and he is raising an important issue. Has he not just highlighted the fact that one of the big problems with local government finance is that the system is simply not transparent? No one really understands how the Government work out the formula funding.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I must urge hon. Members not to widen the debate, which is quite clearly on local government funding for Poole. If Adjournment debates get extended due to general interventions, the Minister replying to the hon. Member who has secured the debate sometimes ends up with insufficient time to do so.

Mr. Syms: Of course the problem that my hon. Friend highlights applies to Poole. When local authority officers in the borough of Poole examine how the grant is calculated, it is difficult for them to work out why we do so badly. If we had a better idea of how the grant was calculated, perhaps we could more effectively make representations to try to put the situation right.

Let me touch on this year's dedicated schools grant. The Minister's constituency goes across two London boroughs: Tower Hamlets and Newham. The dedicated schools grant for Tower Hamlets is £5,610 a pupil and Newham receives £4,526 a pupil. Poole receives a dedicated schools grants of £3,349 a pupil. A secondary school with 1,600 pupils in Tower Hamlets would thus receive £8.976 million, while such a school in Poole would receive £5.3 million. I know that there are specific problems in Tower Hamlets, such as linguistic problems, and I do not wish to do down the Minister's constituency, but the gap is large and I hope that the Government will start to do something about it.

The precept of Poole borough council is not the only worry. Dorset fire and rescue service has concerns, especially about the way in which the new pension arrangements have been worked out. Although it welcomes the new pension arrangements, it thinks that there is a shortfall of £950,000. I have received a long
 
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letter from Dorset police. It is the second lowest funded authority in the country and has one of the highest precepts. It has real problems and estimates that a £1 million pension shortfall will have to be met by council tax payers. There is pressure from all directions on my constituents.

We in Poole have done our best over the years to make our case. Delegations have been to see Ministers, and Baroness Andrews cordially received me, the hon. Member for Mid-Dorset and North Poole, Dr. Brian Leverett, who is the leader of the council, and Mr. Mike Brooke, who is leader of the Liberal Democrats on the council, when we went to lobby her. We invited her to come to look at Poole so that she could see that we needed more grant. I hope that the Minister or one of his colleagues will come to Poole to see our problems and not only the wealthy parts, but some of the deprived areas, because we do not think that they are being addressed by the grant that we are receiving.

There is a sense of grievance in Poole. What we get puts us very much at the bottom of the league, although that does not mean that all our outputs are bad, as can be seen from our provision for schools and the way in which the council conducts its business. The council has been a good authority for several years and has attracted good officers. However, a council has to work much harder when its funding is low. When Poole's situation is compared with that of Bournemouth and other south-coast authorities with similar problems, one sees that we are badly treated.

I know that the grant is fixed for this year and that nothing can be done about it following last week's votes. However, I hope that the Minister will reflect on what I have said. Poole will come back next year to make further representations to try to improve our support. Poole deserves more support for not only the people who work hard for Poole council, but the services that the council provides.

10.58 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Jim Fitzpatrick): I congratulate the hon. Member for Poole (Mr. Syms) on securing the opportunity to debate local government funding for Poole unitary authority. I agree with the hon. Member for Kettering (Mr. Hollobone) that the hon. Gentleman has a respected reputation for effectively and assiduously representing his constituents. Let me give the hon. Member for Poole the only aspect of my response that might offer him some respite from the rest of my speech: my hon. Friend the Minister for Local Government has accepted an invitation from Poole to meet the authority next month. That will offer local MPs and local authority members an opportunity to make direct representations, in addition to those made between the initial announcement of the local government finance settlement and the most recent announcement.

Mr. Syms: I thank the Minister for that. The Minister of State will get his ear bent, but the visit will be worth it none the less.

Jim Fitzpatrick: Before this debate, having seen that the hon. Gentleman had secured it, my hon. Friend the Minister of State advised me that I ought to offer the
 
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information about his visit in the spirit of solidarity. We are confident in the decisions that we have made, but we want to engage with local authorities to ensure that we explain our decisions and reconcile them with strong local feelings. I am sure that my hon. Friend looks forward to the opportunity to engage with local representatives next month.

The debate provides a useful opportunity to discuss this year's local government finance settlement and to look at the consequences for Poole, but let me start by commenting on our decisions on the funding of local government revenue expenditure for 2006–07 and 2007–08, which were made following consultation. I appreciate that many of the points raised in the debate by the hon. Gentleman and the hon. Member for Mid-Dorset and North Poole (Annette Brooke) were made and reinforced by the delegation from Poole that met Baroness Andrews on 11 January. Let me assure hon. Members that the points raised were taken into account in reaching our final decisions on the settlement.

Total revenue grants to English local authorities will be £62.1 billion in 2006–07 and £65.1 billion in 2007–08. That represents increases over the next two years of 4.5 per cent. and 5 per cent. respectively. Of those totals, £24.8 billion and £25.6 billion will be grant that is distributed as formula grant, which provides above-inflation increases of 3 per cent. and 3.7 per cent. respectively.

To get a fuller picture of the Government grant available to Poole, we should include in the comparison the dedicated schools grant, since funding for schools was included in the formula grant in 2005–06. Including schools funding, Poole will receive grant increases of 5.8 per cent. in 2006–07 and 4.3 per cent. in 2007–08. In total we will provide specific grants amounting to £37.3 billion and £39.4 billion over the next two years. That is a key element of the overall picture, particularly as those specific grant totals include funding for schools—the Government's No.1 priority. We have also been able to provide a two-year settlement for the supporting people grant programme, with £1.685 billion allocated for 2006–07, and we have so far announced allocations of 95 per cent. of the grant for 2007–08.

For the first time, in 2006–07 we have announced two-year grant allocations for every local authority in England. We have put a premium on stability and predictability of funding. That builds upon the work we have been doing over the past few years in freezing grant formulae and allocating specific grants in advance. We have now announced two-year individual allocations of formula grant for every authority; and more than 90 per cent. of all specific grants that can be allocated in advance have been allocated for 2006–07 and 2007–08.

The first full three-year settlement will be introduced alongside the next spending review round, with which all hon. Members are familiar. In the interests of further stability, we have made grant floors a permanent part of the grant distribution system. Floors guarantee a minimum year-on-year grant increase and curb the volatility of grant levels for individual local authorities. Poole has benefited from the grant floor in both 2006–07 and 2007–08, which has ensured that it will receive a reasonable increase in grant in each of these years.
 
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The hon. Gentleman was concerned about the calculation of the formula grant. This year, we have reformed the grant calculation system. The new system has the advantage of removing the old assumptions about spending and tax from the calculation of grant. As a result, it devolves more accountability to local authorities. Many authorities have said that they find the new system difficult to understand. I readily concede that it is still complex. However, in the past we have found that local authorities were concerned that simplifying the grant calculation would, in their view, reduce the fairness and the responsiveness of the system. Our policy therefore is to make the system simpler.

For the present, the new system is simpler in principle. Grant distribution is now determined by four things: a relative needs formula, an amount relative to the resources that can be raised locally based on the property profile, a central allocation per head and grant damping. The relative needs and resource elements should be broadly familiar to the hon. Gentleman, since the system has long contained formulaic estimates of relative need and relative ability to raise council tax.

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