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6 Dec 2007 : Column 987

Several hon. Members rose

Madam Deputy Speaker: Order. A great many hon. Members are hoping to catch my eye. There is business to follow this, so I am minded to ask for a single brief question and a short answer from each of them. More hon. Members may then be successful.

Mr. Frank Field (Birkenhead) (Lab): Do the Government accept that their failure to implement the social services formula fully has resulted in Wirral metropolitan borough council losing £8 million a year? Can the Minister guarantee that despite the other changes that he has announced, Wirral will gain that £8 million in each of the next three years?

John Healey: My right hon. Friend follows these matters in detail, and I am disappointed that he has not recognised and welcomed my announcement that we will fully implement the formula and remove the double damping. He may be interested to know that the formula grant increases for his local authority will be 5.1 per cent., 3.7 per cent. and 3.4 per cent. over the next three years, and that next year alone Wirral will receive £24.5 million extra in central Government grant.

Tom Brake (Carshalton and Wallington) (LD): I start by thanking the Minister for providing a copy of his statement in advance—but I am afraid that that is where the thank yous finish. There were no surprises in the statement, just bad news. Social care, teachers’ salaries and equal pay remain underfunded, while capping and the dreaded council tax remain in place. There was an opportunity to reform the council tax completely and replace it with a tax based on people’s ability to pay, but that opportunity was squandered, and the most unfair tax of all continues to exist. Council tax, which in the past 11 years has increased by 86 per cent. in the Minister’s constituency and by nearly 60 per cent. in that of the Secretary of State, will continue to hit the most vulnerable hardest, and to rise at a rate above the rate of inflation.

I welcome the fact that there has been a start at reversing the trend towards greater ring-fencing, which has accelerated under the Labour Government. I also welcome the cut in performance indicators, and the stability provided by the three-year settlement. That, however, does not outweigh the bad things in the statement.

Let me ask the Minister three specific questions. The Government have at long last recognised that migration is an issue. Can the Minister say when he expects the national statistician to produce proposals that will enable migration figures to be taken into account more rapidly in the allocation of grant? Will he confirm what I think he said—that he will ensure that any funding formula changes take account of the fact that the metropolitan fire and rescue services deal with the most vulnerable and deprived inner-city areas, with all the associated costs? Finally, what real average increase in council tax does he expect in the next financial year?

I regret the fact that the Minister is still observing the pretence that local government Ministers come to the House dressed in Santa costumes to deliver bountiful
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settlements that will pay for the turkey and the trimmings. They do not, and he did not today. This settlement might just about pay for a battery chicken, but it will not even cover the cost of the gas needed to cook it.

John Healey: Where does one begin, Madam Deputy Speaker? The vulnerable in our system are, of course, protected by council tax benefit, whereas the same is not true of the hon. Gentleman’s party’s proposals for a local income tax. The Liberal Democrats will not tell us how they will calculate the local income tax and they will not tell us who it will hit, but the risk is that there will be big increases for the working population, who will not be protected as they are at present. Sir Michael Lyons recognised those flaws, which is why he did not recommend the implementation of a local income tax. I am quite sure that when we see the detail of the Liberal Democrats’ proposals they will not add up, because the Liberal Democrats’ sums never do.

Let me turn to the three questions the hon. Gentleman asked. On migration, I will send him a copy of a relevant report, as he might not have seen it. The national statistician set up and led a taskforce looking into how we can improve the analysis of migration figures, which reported in 2006. She will now lead action, involving local and central Government, on ways to implement those improvements, through, for instance, improving survey data and the greater use of administrative data. On the fire and rescue service, the hon. Gentleman is concerned about inner-urban areas and I hoped he would recognise that my decision not to rebase the formula will be of assistance in that regard, but he did not. On council tax levels, the hon. Gentleman will understand that, quite properly, they are set by local councils: it is for local councils to determine those levels. We expect them to be substantially below 5 per cent., and we will take tough capping action in the new year if that is necessary.

Mr. Neil Turner (Wigan) (Lab): I congratulate my hon. Friend on scrapping the double damping, which was iniquitous, immoral and had no intellectual basis; that is of great benefit to many people in our constituencies. Will he confirm that as Conservative-controlled councils such as Havering and Redbridge in London will benefit from that, this is nothing to do with a north-south divide, but is actually about making sure that the money follows the need, so that councils such as mine will be able to tackle the inequalities that still exist in our country?

John Healey: I welcome my hon. Friend’s comments. He is a former local government finance chief, he chairs the group of SIGOMA—Special Interest Group of Municipal Authorities within the Local Government Association—MPs, and I know how closely he follows these matters. He is absolutely right to say that there is not a north-south divide. It is clear from the figures for this settlement and the total grant that there are bigger variations within regions than there are between regions. He might be interested to know that the increases in formula grant for Wigan are set to be 5.7 per cent., 3.7 per cent. and 3.1 per cent. If Wigan, like other local councils, achieves the efficiency savings that we expect, next year alone it will have an extra £7 million with which either to improve services or to keep council tax pressures under control; I have already stressed that point.

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Sir George Young (North-West Hampshire) (Con): Does the Minister accept that the quotation from the Association of Directors of Social Services that he read out simply does not represent the position in counties such as Hampshire, which are spending much more than their formula grant on adult services? Does he also recognise that because of factors such as demography and the growing cost of care packages, intervention by social services authorities will increasingly be restricted to emergencies and life-threatening situations?

John Healey: We have worked closely with local government over two years to analyse the pressures, and we have identified with them in particular the pressures on adult social care. They are recognised in the level of rises for local government. The right hon. Gentleman will note that authorities with social services and social care responsibilities have relatively higher rises than other types of authority. If he looks at the figures and the small print, he will also note that there is a significant increase in Department of Health funding specifically for adult social care. That will rise on average by up to 10 per cent. across the three-year period. That means that over the spending review period there will be an extra £300 million for adult social care and for addressing some of the problems that authorities such as the right hon. Gentleman’s local one face in dealing with the pressures that undoubtedly exist.

Dr. Brian Iddon (Bolton, South-East) (Lab): Has my hon. Friend looked at the impact on our decent homes policy of the withdrawal of the rental constraint allowance in the housing subsidy draft determination? This morning, Bolton has calculated that its arm’s length management organisation will lose approximately £7 million in the coming years. It was on target to meet its decent homes standard by 2010, but I am afraid that if these calculations are accurate, this announcement will put the decent homes standard in jeopardy.

John Healey: The Government are giving a very high priority to housing—both to building new houses and to improving those that we currently have. I have not looked in detail at the specific formula for Bolton, but now I shall, in view of my hon. Friend’s intervention. I hope he will recognise and welcome the fact that Bolton’s formula grant stands to rise by 5.3 per cent. next year compared with this year’s figures.

Mr. David Curry (Skipton and Ripon) (Con): The Minister spoke of the traditional choreography of these occasions. Last year, the then Minister said that he expected council tax to rise by substantially less than 5 per cent. That meant in practice anything up to 5 per cent. Does the word “substantially” this year mean anything different from what it meant last year? Also, does the Minister realise that there is a problem with the universal bus pass, because the formula by which the fund is being distributed means that some local authorities, such as Harrogate, stand to be very substantially underfunded for that programme, and in order to meet their bus pass obligations they will have to look for resources from other work that might be more important? Will he discuss with the Secretary of State for Transport how that can be avoided for the local authorities on which it might bear particularly heavily?

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John Healey: The right hon. Gentleman is right, in that the council tax rise was 4.2 per cent. last year, 4.5 per cent. the year before, and 4.1 per cent. the year before that. The level of council tax rises will be determined by the decisions that local councils throughout the country take. As for the pressures that he feels exist in his area, let me say again that this is not just a question of the cash that central Government give; it is also a question of the decisions taken, and leadership given, by local councils in managing those pressures over the next three years. If the right hon. Gentleman’s own local county council of North Yorkshire were to achieve the 3 per cent. efficiency savings that we expect, that would give it almost £9 million extra to spend on improving services—or it could, indeed, choose to cut council tax by £39.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab): I welcome many aspects of the overall settlement. Although it is tighter than the settlements in most recent years, it is clearly better than anything local government used to get during the 18 years when the Conservatives were in power. May I ask a specific question about my own city of Sheffield? I understand that its grant increase will be only about half that of neighbouring authorities in South Yorkshire. Sheffield has areas that are just as deprived as those in neighbouring authorities, including places such as Darnall in my constituency. The problem is that we also have areas such as Sheffield, Hallam, whose affluence raises the overall average for Sheffield, so people in the deprived parts of the city do not get the resources needed to meet their specific problems.

John Healey: One of the things that I have learned during my first few months in this job is that every council regards itself as uniquely disadvantaged by central Government funding decisions, and every council has a special case unique to its circumstances. I ask my hon. Friend not to compare the position of Sheffield with that of Rotherham, Doncaster or Barnsley, which in many ways look enviously at Sheffield’s success in the past 10 years—I know that, because one of those is an area that I represent. I ask him instead to look at the extent of the Sheffield increase—at the fact that there is an increase in all grants to Sheffield next year of more than £30 million—and in particular I hope he will work with the Government to make sure that Sheffield city council and others make best use of the new working neighbourhoods fund, which will help to tackle some of the problems that he is concerned about in Darnall.

Mr. John Gummer (Suffolk, Coastal) (Con): Because of Government decisions, Suffolk county council has worked hard and spent a good deal of money on the pathfinder scheme, and Ipswich borough council has spent a good deal of money preparing for unitary authorities. The Government have now changed their mind on that. What resources are they going to pay to those authorities to protect the ordinary council tax payer, who will have to foot the bill for incompetence in the Minister’s Department?

John Healey: I simply do not recognise that description of the announcement I made yesterday about local government restructuring; it is so wide of the mark that it does not do the right hon. Gentleman, with his long experience in local government, sufficient credit. The
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resources that any such councils put into their work with the boundary committee over the next year or so are a matter for those local councils. The right hon. Gentleman is concerned about Suffolk county council, and it is true that his county has done good work in improving the efficiency of its services. It is looking at a formula grant increase over the spending review period of 7.3 per cent., 4.8 per cent. and 4.4 per cent. In total, the grants from central Government mean that Suffolk county council will receive more than £40 million more next year than it will have received this year.

Mr. Kevan Jones (North Durham) (Lab): I welcome my hon. Friend’s announcement of a three-year settlement. On leadership, will he congratulate Durham county council on its successful unitary bid, which will mean that council tax in six of the seven former district authorities in Durham will fall in 2009? The bid continues to be opposed by Durham city council, which is led by the Liberal Democrats.

John Healey: My hon. Friend has been a consistently strong advocate of local government reorganisation in his county, and I pay tribute to his work. I also pay tribute to Durham county council leader Albert Nugent, whom I have met on several occasions. This process is creating new authorities, and it gives the possibility of new leadership, new involvement and empowerment of local people, and a significant improvement in the quality of services in his area in the future.

Andrew George (St. Ives) (LD): I genuinely seek clarification. The Minister announced, with a bit of a flourish, that he proposed to “end the additional damping and fully to implement the social services formulae”. He also said that “this unwinds quite gradually over this and the next spending review periods.” That, of course, equals six years, so the damping will be withdrawn not immediately but in a gradual fashion. The damping mechanism affects Cornish authorities. Cornwall county council has a formula grant of £149 million, but how much will be withdrawn from that council as a result of the damping mechanism? Last year, £10 million was withdrawn.

John Healey: What I announced is what we will do—remove the double damping on the formula in two of the three areas of social services. Floors damping is a general feature of the system—incidentally, it was this Government who introduced it, in 2000, to protect councils year-on-year against the sort of volatility and unpredictability that they used to suffer. That will be removed, but it will unwind over the course of this spending review and the next one. If the hon. Gentleman is concerned about Cornwall, he should note that it will receive an 8.5 per cent. formula grant increase next year. I hope that he puts to its county council that were it to make the efficiency savings that we expect, nearly a further £9.5 million would be available to it, so if it chose to reduce council tax bills, rather than improve services, it could do so by £50.

Lynne Jones (Birmingham, Selly Oak) (Lab): My hon. Friend will be aware that because of double damping Birmingham has experienced a shortfall of about £30 million in its grant allocation compared with
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its assessed need for social services spending. Does his announcement of the withdrawal of double damping mean that that gap will be eliminated, or at least substantially reduced? If so, that is good news, but if not, does he accept that there will continue to be considerable pressure on social care budgets?

John Healey: I have explained, and we have recognised in the settlement, the pressures on social care budgets. I have also explained how in the settlement to local authorities, and through specific grants from the Department of Health, we are trying to support councils in dealing with those. Double damping will unwind, which means that over time any gap will be reduced and then closed.

Mr. Michael Fallon (Sevenoaks) (Con): Is the Minister aware that 10 years ago Sevenoaks district council received roughly exactly the same per head as Sedgefield borough council in the north, whereas this year Sedgefield borough council is getting more than twice as much as Sevenoaks district council? [Hon. Members: “Quite right!”] Why should council tax payers in the south continue to subsidise the friends in the north?

John Healey: The hon. Gentleman is very astute and very well informed about financial matters, so he knows that the formula is applied consistently across the whole of England. When he compares Sedgefield and Sevenoaks, he will surely recognise that Sevenoaks district council’s ability to raise funds from its council tax base is entirely different from that of Sedgefield. He will also recognise that the needs element and the resource element, in which I have announced increases today, are necessary, particularly to ensure proper fairness in the system.

Mr. Mark Todd (South Derbyshire) (Lab): May I ask the Minister about his decisions on floors? I suspect that I shall welcome his decision on floors for district councils, because I would expect it to benefit South Derbyshire district council, but setting a floor of 2.5 per cent. on police authorities indicates extraordinarily slow progress in implementing the formula that would correct the underfunding of Derbyshire police authority in the future.

John Healey: My hon. Friend is right, to the extent that this is always a decision about the balance between wanting to see the changes that should flow from formula calculations come through into the system and the reward of grants, and ensuring year-on-year stability and a degree of predictability for local government. The decision on the floors for the police grant follows exactly the same approach as we took in the current two-year spending settlement. The floor will be 2.5 per cent. in each of the next three years.

Mr. Paul Keetch (Hereford) (LD): The Minister will accept that any settlement is good for the local people of a community only if their council is well run and well led. He knows of the concerns in Herefordshire about its council’s leadership, particularly in relation to information and communications technology projects. He personally endorsed to me the appointment of Mr. Crookall to carry out an independent review. Has he seen the Crookall report? If not, will he get a copy of it? Will he publish it in full, unlike Herefordshire council, which reportedly has published only part of it?

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John Healey: I will ensure that I try to get sight of the Crookall report, as the hon. Gentleman urges me to do. He is right to say that the quality of the management and the ability of councils to lead their organisation, and thus to do their best by local council tax payers, is important; it is a central feature for us. I see no reason why many more councils cannot match the best of the efficiencies that have been gained—Northumberland county council has managed 11.5 per cent. over the current period, Sheffield city council has managed 12 per cent., Hackney borough council has achieved 14.5 per cent., and five district councils have achieved more than 20 per cent. Those councils are setting the standards for others over the next three years.

Mr. George Mudie (Leeds, East) (Lab): The seven metropolitan district fire authorities have genuine concerns about the settlement. The Minister has referred to them, so will he give any assurances that the moves that he has made meet the concerns of the fire authorities? If they think that that is not the case, will he agree to meet them as soon as possible?

John Healey: Specifically, the decisions that I have announced this afternoon for fire and rescue authorities do meet one of the principal points that those authorities were making to me—that basing the formula on the most recent period was uncertain because it was untypical—so I trust that they will welcome my decision. In general terms, my colleagues in the Department for Communities and Local Government and I are ready to meet any local authority leader or any Member of this House who wishes to make representations between today’s announcement and the close of the consultation period, which will be on 8 January.

Justine Greening (Putney) (Con): May I ask the Minister to clarify the decision process on the new working neighbourhoods fund? The previous fund, the deprived areas fund, was set nationally to individual wards and was then largely administered by Jobcentre Plus district managers. That meant that the situation in wards such as Roehampton in my constituency was similar to the one mentioned by the hon. Member for Sheffield, Attercliffe (Mr. Betts), who is no longer in his place. It was difficult to target the fund at areas containing diverse populations where deep areas of deprivation are located cheek by jowl with the most affluent areas in cities, so Roehampton did not qualify for it.

Will the new working neighbourhoods fund be allocated at the local authority level and then distributed by the local authority, or will it still be done at ward level and, therefore, potentially still miss the key areas, such as those in my constituency, that did not manage to benefit from the previous fund?

John Healey: The working neighbourhoods fund will be distributed through the new area-based grant. It will be one of those grants that is totally un-ring-fenced. The hon. Lady may wish to know that her authority, Hammersmith and Fulham—[Hon. Members: “Wandsworth.”] In that case, the point that I was going to make about Hammersmith and Fulham is not relevant.

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