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The settlement puts the emphasis on ensuring that the local authorities with the greatest needs receive the most resources, and I hope my hon. Friend the Minister will ensure that that is continued in the next comprehensive spending round. The Local Government Association called for a three-year settlement which has been agreed to, and I think that all Members welcome that. It gives
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authorities stability, certainty and an opportunity to plan the services that they will provide over those three years.

David Heyes (Ashton-under-Lyne) (Lab): I agree with my hon. Friend in welcoming the three-year settlement; it gives local authorities such as his in Wigan and mine in Oldham and Tameside the ability to plan in a way that has been absent for many years. Does he agree, however, that we still need to press for continued redistribution to the authorities that are most in need, such as his and mine?

Mr. Turner: Yes, I do. We should look at the distance from target—the difference between the amount of money a local authority should be getting in accordance with the formula and the amount it actually receives. Even though both of our authorities have received very generous settlements, over the three-year period my authority will still have had about £25 million less than the formula says it should have had. The settlement is much better than in previous years, but we are still significantly underfunded. That is why I say that the next comprehensive spending review must work towards payment in full according to the formula, so that we can make sure that that direction of travel is continued.

The Government have maintained the mechanism of floors, which I welcome even though my authority suffers from it, as the alternative would be much worse—not only for my authority but, possibly, for all local government. We should look back to what happened in Wigan in the 1990s: in one year, we suffered a loss—a cash reduction—in external support of some £15 million. That has not happened to any local authority in the past 10 years; not one of them has received one penny less in cash terms, let alone £15 million less. Therefore, I hope that the hon. Member for North-East Bedfordshire (Alistair Burt) will give a commitment in his winding-up speech that a future Conservative Government would continue with a floors arrangement. I should add that that cash reduction took place in 1993-94 and we did not manage to receive the same amount of money as before until the first year of the Labour Government.

The formula is complex, as it is difficult to encapsulate in one formula all the different needs throughout the country; nevertheless, the Government and the Local Government Association negotiate on that formula, and the changes are worked in slowly in order to allow time to adjust. I strongly welcome the end to double damping. It is a tremendous achievement that the Minister has agreed to that—double damping was unsustainable and any phasing that was needed because of the changes to the personal and social services element of the formula could have been achieved by single damping.

The needs and resources element in the formula is also welcome. Because an extra 2 per cent. has been shifted into that element, authorities such as mine and that of my hon. Friend the Member for Tyne Bridge (Mr. Clelland)—which face difficulties and have reduced ability to raise money from their councils because of the number of houses in bands A to C—are better able to fund areas of need. That is extremely important when we also take into account the gearing effect that can arise in authorities with a low tax base.

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It has been said—the hon. Member for Bromley and Chislehurst (Robert Neill) intimated as much—that this is somehow a London and the south versus the north and the midlands settlement, or an urban versus shire settlement, or a Tory versus Labour settlement. I do not believe that at all; it is none of those. It is a settlement that is about the haves versus the have-nots—and, quite properly, the have-nots have won. The London and the south versus the north argument is clearly wrong: Torbay has an 8.6 per cent. increase whereas Gateshead has a 2 per cent. increase, and Redbridge has a 5.2 per cent. increase whereas Liverpool’s increase is 2 per cent. On urban areas versus the shires, Reading’s increase is 2 per cent. whereas Lincolnshire’s is 9.8 per cent., and South Tyneside’s increase is 2 per cent. whereas Somerset’s is 9 per cent. On Labour areas versus Conservative or Liberal Democrat areas, Labour Sunderland’s increase is 2.9 per cent. whereas Conservative Rutland’s is 12.7 per cent., Labour Salford’s increase is 3.6 per cent. whereas Conservative Dorset’s is 11.8 per cent., and Labour Wolverhampton’s increase is 3 per cent., whereas Liberal Democrat Cornwall’s is 9 per cent.

I am sure that any hon. Member in this Chamber could produce a different set of statistics. The point I am trying to make is that saying this is north versus south, Labour versus Tory or urban versus shire is not a sustainable argument. The only consistent thing is that authorities whose needs are greatest are getting the greatest sums. That is the only pattern proven valid by the statistics.

The movement on the needs and resources element is greatly to be welcomed, but it could be subverted if the floors were too high. That is why I was pleased when we reduced the floors to 2 per cent., 1.75 per cent. and 1.5 per cent respectively over the next three years. If we are to make the necessary changes and allow those resources to move to the authorities that need them at a rapid and sustainable pace, the floors need to be as low as possible. I hope that that approach will continue into the next comprehensive spending review round.

The change from the neighbourhood renewal fund to the working neighbourhoods fund is equally welcome, and I congratulate the Minister on it. One of the things that this Labour Government have shown over the past 10 years is that ensuring that people get into proper, decent, trained work is the best and most sustainable way to tackle, and make a big difference to, poverty and deprivation in this country. Changing the focus from the broader renewal fund to the working neighbourhoods fund, which will tackle worklessness in areas of severe deprivation, will have a huge impact on those local authorities. Building that into the Department for Work and Pensions and having a single fund will be a major step forward in tackling deprivation in our authorities.

I have always been opposed to capping, which was introduced by the previous Conservative Government. We toyed with getting rid of it, but we have had to go back to it for what are, in my view, slightly questionable reasons. Local authorities are answerable to their constituents, so we should not have capping. It should be up to that local—

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Mr. Ben Wallace (Lancaster and Wyre) (Con): Will the hon. Gentleman give way?

Mr. Turner: Certainly.

Mr. Wallace: I am sorry for intervening having just arrived, but I understand that the hon. Gentleman referred to me at the beginning of his speech, Mr. Deputy Speaker. Given that I was not present then, perhaps it might be in order if he were to repeat what he said.

Mr. Turner: The hon. Gentleman will be able to read my comments in Hansard.

Mr. Wallace: On a point of order, Mr. Deputy Speaker. I understand that it is the custom of the House for an hon. Member to notify another Member should they refer to that Member in a debate or at any time. Given that I have received no such notification, either by e-mail or in writing, from the hon. Member for Wigan (Mr. Turner) following his scandalous accusations against me last week, surely it is in order that he repeat what he said in my absence.

Mr. Deputy Speaker: Obviously, the behaviour of hon. Members is a matter for them. I would just say to the hon. Member for Wigan (Mr. Turner) that in these circumstances it is normal for an hon. Member to advise another hon. Member if they are going to withdraw the kind of remarks that he made. Perhaps, on reflection, he might want to say a brief word about that. If not, the remarks are on record in Hansard and they have been withdrawn. Unless he feels it appropriate to say a word about them, I trust we shall move on.

Mr. Turner: In view of your good offices and good words, Mr. Deputy Speaker, I say to the hon. Member for Lancaster and Wyre (Mr. Wallace) that I was given the information in good faith and I used it in good faith. I did not have the time to check it, but I subsequently checked it and found it to be untrue. I have therefore withdrawn my remarks.

I have always opposed capping. It is right that the people who elect a local authority should be able to make choices about the level of services and the council tax that they want. Some local authorities have enjoyed overfunding for several years. In the past, they will have put that money either into reducing the council tax or into additional services. If we restrict the amount of money that they can raise through the council tax, we are saying that their only option is to reduce services. That is not the right approach, and services—especially those relied on by the poorest and most deprived—should not be cut because the Government have requested that the council tax should be reduced. I urge the Minister to review the situation and consider ways in which floors can be removed, so that local authorities can raise the council tax to preserve their services.

Richard Younger-Ross (Teignbridge) (LD): The hon. Gentleman makes a good point about capping. Does he agree that the situation is even worse in areas where the overspend is not due to decisions by the local authority but to impositions by central Government, such as the concessionary bus pass scheme? In some
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areas, the scheme will cost more than the authorities are being allowed by the Government. In small authorities such as Teignbridge, that can have a significant impact on the council tax and on other services.

Mr. Turner: The hon. Gentleman provides just one example of what can happen, and we could all give other examples of what will happen if council taxes are not increased to the level necessary to preserve services. As I have said, it is important to have the direct relationship between the electorate and the council, and between the services that the council provides and the amount that it charges. That should be the responsibility of the council, not at the behest of the Government. I hope that the Minister will review the situation and allow local authorities to charge above the 5 per cent. level that has been suggested.

The council tax system is a bad system. The bandings favour the rich and the failure to revalue locked in the growing inequities. It was designed to be unfair and it has become even more unfair as the basic band D council tax increases. The Lyons review proposed several good ideas and we should have a national debate on what kind of system we want for local government. The council tax is not sustainable in the longer term, so we need a system that is sustainable not for just 10 or 15 years, but for 30, 40 or even 50 years. We cannot just change the formula, because that will not solve the problem. We need a change in the system.

The settlement is tight, and we always knew that it would be, but it is fair. It gives those authorities with the greatest needs the resources that they need to address the difficulties that their communities face. I congratulate the Secretary of State and the Minister of State on producing a local government settlement that does that.

8.58 pm

Julia Goldsworthy (Falmouth and Camborne) (LD): It is a pleasure to follow the hon. Member for Wigan (Mr. Turner), especially given his closing remarks, which will chime with much of what I have to say. He opened his remarks by saying that he welcomed the settlement; the Liberal Democrats welcome the fact that it is a three-year settlement, but we do not welcome the settlement itself.

I looked back at last year’s Hansard and the then Minister—now the Minister for the Environment—heralded that settlement as nothing short of “revolutionary”, which speaks volumes about the limits of the Government’s ambitions. If the Government had been truly ambitious, we would have had a lot more to welcome today—as the hon. Member for Wigan said.

Instead, we heard the familiar barrage of statistics, with claims and counter-claims about increases and cuts, although the Minister shows an impressive command of the statistics. One of the figures that sticks in my mind was mentioned by the hon. Members for Wigan and for Ealing, Acton and Shepherd’s Bush (Mr. Slaughter): the 40 per cent. real-terms increase in local government funding over the past 10 years. However, neither Member took into account the fact that education is ring-fenced. If we take education funding out of the equation, there is still a real-terms increase of 14 per cent., but it pales into insignificance when compared with things such as health funding.

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Mr. Slaughter: The hon. Lady cannot have it both ways. Is she saying that she opposes the substantial increases in school budgets that are transforming primary and secondary education?

Julia Goldsworthy: Of course I do not oppose those increases. All I am saying is that if we are talking about trying to tackle the pressures on many services, such as adult social care, the headline figures fail to capture the fact that real-terms increases in local government funding have not been as good as they seem when it comes to their capacity to meet additional demands. That fact is clear, and I am not trying to have it both ways at all.

We can compare the local government funding figures with some equally well-known figures, to which the hon. Member for Bromley and Chislehurst (Robert Neill) referred: council tax has doubled over the past 10 years and will be more than doubled when the three-year settlement is taken into account. When we add to that the fact that take-up of council tax benefit is not 100 per cent., we can see that the pockets of many vulnerable people will be hit hard as a result of the settlement.

Today, and in the initial statement in December, the Minister described the settlement as tight but fair and affordable. Our concern is that it will be more than tight for many people; it will be unaffordable for people who are yet again experiencing above-inflation council tax increases.

The real disappointment is that there were huge opportunities for reform. Since the last settlement, the Lyons inquiry has reported to the Government and raised some valid issues, but they were kicked into touch by the Department. The proposals were not the most ambitious, but were simply suggestions about how to tackle some of the difficulties that people on the lowest incomes face in paying their council tax, recognising the fact that the tax consumes an ever-increasing proportion of their disposable income. Lyons proposed extra bands at the top and bottom of the scale, and the automation of the council tax benefit system to end the scandal that millions of pensioners who are entitled to the benefit do not claim it.

Those proposals for interim improvements were rejected; instead we are left with a complex and centralised system. Members on both sides of the House have talked about the complexity of the formula. They have pointed out that central control has been retained and that the threat of capping still hangs over the head of authorities that feel they simply do not have the resources to focus on what they consider their priorities.

Ring-fencing is still in place, although there has been some erosion. More than half the external income of local authorities is still based on ring-fenced grants. All the talk about damping and double damping, and the fact that it will roll into the three-year settlement, means that it has been difficult for many authorities to get to grips with what their situation really is, and it is extremely difficult for members of the public to understand what is going on.

My local authority in Cornwall has been awarded significant increases, but because they are near the ceiling they have been clawed back to meet the damping on the floor; increasing sums of money are
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being clawed back. If everything is supposed to be moving towards convergence I do not understand why those amounts are increasing.

The hon. Member for Bromley and Chislehurst pointed out that control and centralisation are being exercised at a time when the Government’s contribution to local government funding is decreasing. More and more emphasis is being placed on business rates, and direct funding from central taxation is decreasing by 29 per cent. this year. No wonder we face such a difficult settlement. As a result, some areas will find it extremely difficult to cope with its impacts.

My concern is that the settlement leaves many local authorities with a lack of flexibility, especially in terms of dealing with the key issue of demographic change. We welcome the Minister’s announcement of a cross-governmental programme of work on the issue with the Local Government Association and the national statistician. However, I am concerned because the opportunity to predict some of those changes has been missed. We have seen the expansion of the European Union, and perhaps it would have been better if the changes that resulted from it had been predicted.

I wonder whether the Minister will comment on how such things might relate to students. In my constituency, the town of Falmouth has experienced an 80 per cent. increase in the 18-to-24 demographic in the past three years. Clearly, that is very dramatic, and it is happening very quickly. So I very much hope that the cross-departmental review will consider issues such as the allocation of housing in the regional spatial strategy, and other significant projects that will clearly have an impact on populations.

I also have concerns about short-term migrants. In rural areas there is a lot of transitory agricultural labour. As well as the extra work that will be generated—for example, in refuse collection, which my hon. Friend the Member for Cambridge (David Howarth) has referred to—I know from speaking to my local district councils that they have felt the pressure of trying to ensure that a lot of those migrant workers are accessing everything that they are entitled to, and that there is compliance with gangmaster legislation. That has taken up significant resources, which might need to be factored into some of the work that they will do.

Simon Hughes: My hon. Friend is making it clear that migration and population are big issues just as much in counties such as Cornwall as in inner London. Does she agree that until we have annual registration for electoral purposes that really works and is up to date, and possibly five-yearly censuses, as opposed to 10-yearly censuses, we will be always playing catch-up, whatever the best intentions? We need a much more effective census and registration process, both for electors and for the other people who may not have the vote in this country but who are entitled to live here.

Julia Goldsworthy: My hon. Friend makes a very good point.

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