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4 Feb 2009 : Column 909

Mr. Vaizey: It might take me rather more than a day to produce it, but I would happily send the hon. Member for Telford (David Wright) a list of Labour council leaders who have been turfed out by their electorates for consistently raising council tax. We could start with Ken Livingstone, although he is not technically a council leader, and the leader of Hammersmith and Fulham council.

Robert Neill: My hon. Friend is absolutely right. Of course I welcome the Minister’s recognition of the hard work done by local authorities and their efforts to achieve efficiencies, but I am sure that he would want to be as reasonable and generous as he always is by acknowledging that that has happened largely because those authorities are now under Conservative party control. It is thanks to the Conservatives that it is happening.

Mr. Paul Truswell (Pudsey) (Lab) rose—

Robert Neill: Perhaps something I said has made the hon. Gentleman wish to intervene. I happily give way to him.

Mr. Truswell: The hon. Gentleman is most gracious. A recent independent inspection of adult services provided by Leeds city council, which the hon. Gentleman probably knows is now controlled by a coalition of Conservatives and Liberal Democrats, saw those services downgraded to an inadequate one-star rating. Does he understand the concern that this council, under his Conservative colleagues, is now cutting grants to community care schemes for older people—Pudsey Live at Home, Horsforth Live at Home, Farsley Live at Home and Aireborough voluntary services to elderly and disabled people, for example—that are provided by voluntary organisations? Is that the sort of approach locally that the hon. Gentleman and the right hon. Member for Witney (Mr. Cameron) are encouraging Conservative councils to take?

Robert Neill: I am well aware of the financial mess that the joint administration in Leeds inherited from its predecessor; it is endeavouring to sort it out. I suggest to the hon. Gentleman that some restructuring is necessary to take that forward, but it is the people on the ground who are close to their communities that are best able to decide on these issues. It is the local communities that passed judgment on the previous Labour administration, and it was that administration that got us into the situation in the first place. I hear what the hon. Gentleman says, but I will take no lectures from him on that matter.

Alistair Burt: While we are on this point and enjoying this happy interlude, let me say that one figure that my hon. Friend might carry around with him is the number of councils on which the Labour party is simply not represented at all on account of its past conduct. I think that it is more than 100, but my hon. Friend may have the right number. Does that not show what the electorate think of the hon. Member for Pudsey (Mr. Truswell) and his colleagues in respect of local government over recent years?

Robert Neill: I suspect that my hon. Friend is right, although I must confess that I did not have time to look up the exact figure. It tends to change pretty regularly. I am reminded of Western films in which there is a sign
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saying something like “Deadwood Gulch, population 152”, and in which people strike the figure out and write “153” if they hear a baby cry, and if they hear a gunshot they strike it out and write “151”. In much the same way, the figure for the number of Labour councillors is struck out on a fairly regular basis. That is the ultimate passing of judgment.

Mr. Truswell rose—

Robert Neill: Things are becoming very lively. I will happily give way to the hon. Gentleman.

Mr. Truswell: The hon. Gentleman is most entertaining and most gracious, but may I return him to reality? In recent years, when electoral trends have been running against the Labour party nationally and in local government, Labour has made gains in Leeds. The Liberal Democrat-Tory coalition running the city council has made no gains. Does that not prove that what he is saying is nonsense?

Robert Neill: There were times when one of the taunts from the Labour party was that there was no Conservative representation in the big cities of the north. In Leeds, Bradford and other such cities, that is no longer the case. With respect to the hon. Gentleman, he knows how these things ebb and flow—-

Mr. Deputy Speaker: Order. Much as everyone is enjoying this interlude, I think it would be a good idea if we now returned to the matters in hand.

Robert Neill: I am always happy to be guided by you, Mr. Deputy Speaker.

What is apparent from this exchange is Labour Members’ sensitivity on the topic that we are discussing. The simple fact is that it is local government that is the most efficient part of the public sector and local government that is delivering the best to people, and it is central Government who are dealing local government an increasingly tough hand. I am afraid that, with all respect to the Minister, the settlement that he has confirmed today makes that position no better.

The cumulative effect of the increases predicted in the PSBR document, which has not been sufficiently recognised by the public, leads me to revise one of my judgments. In November I said that this was a council tax bombshell, but I was wrong: if the Government were returned at the next general election, it would be a council tax bombardment that would continue for a number of years.

Let me take the Minister up on another point. We have referred to the LGA’s concerns about the settlement. The Minister used a formulation that he has used on a number of other occasions when he said that the grant was being increased by 4.2 per cent. He is clever with words, but—I say this with every respect to him—he will know that that is not quite how it works in practice. The 4.2 per cent. is the figure for all grants, but within that is the dedicated schools grant of about £30 billion, which completely skews the figure. It is a huge sum over which local authorities have no discretion. If we take that figure out and look at the formula grant, which does give local authorities some ability to respond to changing circumstances, we are down to 2.8 per cent. That is why many local authorities are saying that the figure does not reflect the costs being imposed on them, even in the current deflationary environment. They are
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currently tied into contracts and other costs that arose at an earlier stage.

John Healey: The hon. Gentleman has given a figure of 2.8 per cent., but his own party’s commitment—the commitment of its shadow Chancellor and leader—is to a rise of 1 per cent. A gap of £240 million, not at some time far in the future but eight weeks from now, is what councils would be facing if the Conservative party were in power rather than us.

Robert Neill: Not surprisingly, the Minister has not described the Conservative party’s policy accurately. In fact, as he knows, that the Government have been a little economical with the actualité. The 4.2 per cent. figure is the convenient figure that the Minister will always use, but local authorities of all political persuasions, including the cross-party Local Government Association, maintain that 2.8 per cent. is the real figure. They also point out that including the dedicated schools grant is not an accurate means of assessing discretionary spend. The Minister has done that for obvious reasons, given his position, but it does not give us the whole picture.

Can I also just point out to the Minister the second area of concern here? He makes something of having increased the amount of non-ring-fenced grant, but at the end of the day, that is still just a drop in the ocean; some £36 billion of the special grant remains ring-fenced. The bulk of it is still ring-fenced, so the amount of leeway for local authorities has eased a little, but not very much in the overall scheme of things. We are pledged to look at this again. Far too much of the expenditure outside dedicated schools grant is ring-fenced, and that gets in the way of local authorities’ ability to take appropriate decisions for their localities.

Mr. Neil Turner (Wigan) (Lab): I am a little confused, and I wonder whether the hon. Gentleman can shed some light. Would a future Conservative Government give more money to local government in the support grant than the current Government are planning to give? That is a simple question and, despite all that he has said, I am totally at sea as to whether the answer is yes or no.

Robert Neill: I understand the hon. Gentleman’s difficulty; he is probably as shell-shocked as I am that Wigan and West Ham United are in their current positions in the premiership. The Conservative position could not be clearer: we have spelled out that, for the first two full years of a Conservative Government, we will protect the interests of council tax payers by making a commitment that if a local authority is able to get its council tax increase under 2.5 per cent. we will match-fund it. We will, of course, work through the mechanisms by which we get to that, but that is the commitment, and it is plain enough. I will shortly come on to what we might need to do in future about a system that is increasingly creaking at the seams.

Mr. Mark Field: I am glad that my hon. Friend will now move on to addressing the future, as so far there has been a lot of banter, too much of which has looked back to the past. What would an incoming Conservative Government do in relation to the ongoing long-standing concerns that many Members, particularly those representing inner-city seats, have had about population statistics and the great inadequacies that have been built
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into the system in the past 10 years? Does my hon. Friend have some plans for ensuring that that concern is resolved?

Robert Neill: I suggest to my hon. Friend that there are some solutions here. The Minister’s review is welcome in so far as it goes; nobody would dispute that. However, many of us would say that it has been a long time in coming, because these issues have been raised by Members on both sides of the House—the hon. Member for Slough (Fiona Mactaggart) attended an earlier debate, and she has raised it on a number of occasions. We need to bring this matter to a head.

There are things that could be done. There is a broad point about the way in which the formula grant is calculated and distributed. The criteria, the operation and the various indices that give rise to the distribution of the grant, whatever its overall size, to individual local authorities have become so opaque and unreliable that it no longer has credibility either with the professionals or the general public. The persistent use of significantly out-of-date population data is one very glaring example, although it is not the only one; several authorities have raised concerns about the fact that it is possible to interpret the deprivation indices in a number of different ways that produce different outcomes for local authorities.

We ought to be doing two things. First, perhaps we should move to a system in which the criteria for the distribution of the grant are no longer set entirely within the Department without reference to any independent body. Australia has an independent grants commission, which plays a role. Ultimately, there must be parliamentary accountability, of course, but that is an interesting model. It would be perfectly plausible to charge such a body with a statutory duty to review and update the statistical information. Under the current system, the Government could, if they wanted, choose not to rely on the outdated census statistics, but to take on board a vast array of more up-to-date data, such as national insurance registrations and school registrations. Westminster council, in the constituency of my hon. Friend the Member for Cities of London and Westminster (Mr. Field), has collected and put forward such data to Ministers. The Government could change the information, even in the current system, but we could find an even better means of embedding it. The Government could act on those updated figures now, because that would require only a change to the regulatory environment, which could easily be achieved. That is the solution.

Julia Goldsworthy: The hon. Member for Cities of London and Westminster (Mr. Field) raised the problem that this matter poses for inner-city areas. Does the hon. Member for Bromley and Chislehurst (Robert Neill) agree that it also poses problems for more rural areas, which may contain a large number of seasonal migrant workers and so demands may vary within the year? There also is scope for huge demographic change because of other reasons. For example, in my constituency, the growth of a higher education institute has resulted in the 18-to-24 population increasing by 80 per cent. in just three years. The funding formula struggles to deal with all these things.

Robert Neill: The hon. Lady is right, and her point demonstrates the urgency of the situation. I am glad
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that the Minister is taking this point on board, because many of us felt that when the Treasury was leading in this area it had a continuing reluctance to come to grips with the inadequacies of the situation. She is right to say that the problem applies across all types of authority, regardless of political or geographical circumstances. I hope that the Minister will come back urgently with the review. We will be constructive about that, but it may be necessary to go further—

Mr. Turner: Will the hon. Gentleman give way?

Robert Neill: I have been pretty generous so far, so the hon. Gentleman will understand that I now want to make some progress.

All of what I have said comes back to a suggestion that the grant system is creaking to the extent that it is no longer credible. The other evidence of that can be seen in the floor system. The Minister makes the point about the protection of floors, but, in reality, when the floor system reaches a stage when about one third of all the larger authorities are on the floor, when about 24 out of the 33 London boroughs are on the floor, and when a range of types of authorities and about 40 per cent. of district councils are on a worse floor—0.5 per cent., as opposed to 1.75 per cent.—something perverse is happening. It leads me to conclude that the system has gone beyond its useful life and that we need a much more significant and thoroughgoing reform as to how distribution takes place.

I noted, too, what the Minister said about looking at the operation of the area cost adjustments. I would welcome that, and again, I hope that he will use his good offices to inject some urgency into the matter, because it has been raised over a long time. It is not just about the operation of the grants for which his Department is responsible; one of the concerns that he will know has been raised both by the Local Government Association and by London councils is the lack of consistency between various Departments in the application of the ACAs. I hope that he will take that on board as a central point of the review, because I am sure that with political good will, consistency could be achieved swiftly.

My final point about the inadequacies of the grant formula relates to the peculiar results for local authorities of similar size and in similar, neighbouring areas. Let us consider a discrepancy in the formula grant in the west midlands. Solihull has a population of 205,000 and receives £53 million. Walsall has a population of 253,000. I accept that it has some other social problems, so one might expect a difference, but it receives £133 million, so the leap is so great as to be beyond credibility. The same applies closer to home for me, in the London boroughs. Bromley has a population of 300,000 and it receives £64 million. The next-door borough of Croydon has a population of 340,000, so it should get a bit more—but it receives £116 million, so there is a huge difference. Those apparently perverse outcomes cause people to question the way in which this system works in practice. With respect, I must say that those issues have not been addressed by the statement that has been made, because they relate to systemic problems that the Government could have dealt with, but have not dealt with over a period of time. That leads to suggestions
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that there is a degree of unjustified subjectivity in the operation of the system, and that needs to be dealt with if people are to have confidence for the future.

The net result of all that is that burdens on the council tax payers remain. The Minister talks about the desire to reduce them, but we did not go too much into the costs of operating what remains an over-intrusive inspection and targets regime. We are told that we should be grateful that the new regime has reduced the number of national indicator sets to 198 or 195, but that is still a huge amount and far greater than is necessary. That amount still involves real costs for local authorities. The need to tick the boxes still forces distortions on local authorities. If the Minister is serious about giving freedom to local authorities, as I hope he is, he could cut back further on that distorting inspection and targets regime.

If we are to achieve what is required for local authorities and council tax payers, we will need to give them more leeway than the Government have given them. I hope that Ministers consider that point for the remaining year, although I honestly do not think that they will be in a position to do so for the next three-year spending round. The bottom line is that people are now really hard pressed. Local authorities are doing their best, but sadly their job is being made harder by what is happening. I hope that, as a matter of urgency, local authorities will do all that they can to minimise the rise in council tax, despite the rotten hand that they have been dealt. We will work with them constructively. I am sorry that, for all the fine words from the Minister, the settlement will not give local authorities the constructive tools that they need to deliver as they wish for their communities.

4.51 pm

Mr. Neil Turner (Wigan) (Lab): I welcome the settlement—in the circumstances, it is an extremely good settlement for local government. It is as well to put on record the fact that this three-year settlement and the stability it provides are very important to local government. We will look back on it as a major reform by the Government that will continue to work in the future. Personally, I think that it should be a rolling settlement, so that in a three-year block we would have a two-year settlement with indicative figures for the third year, and in the third year the cycle started again. That is a refinement that we can work on in the future.

It is worth recalling that in the years since 1997 every local authority has had a cash increase in the amount they receive from Government. When you remember what was happening in the late 1980s and early 1990s, you see that there is a phenomenal difference. I cannot understand how the Local Government Association can say that this is the worst settlement in decades. It clearly does not remember what happened in the 1980s and 1990s, when my local authority in Wigan experienced cuts not only in real terms—below inflation levels—but in cash terms. The money we received from the Government was cut by £6 million, £7 million or even £10 million year after year under the Conservatives. How the LGA—now Conservative led—can claim that that was better than what we are getting now is beyond me.

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