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I was a bit surprised to hear the right hon. Member for Southampton, Itchen (Mr Denham) attack the Secretary of State, who had taken the trouble to write him a personal note-it was delivered by hand to his office at 11.30 this morning-explaining that he was attending a regional Cabinet meeting in Yorkshire to talk about the announcement that was first made in the Budget statement last week of a £1 billion fund to help the very areas of the country that the right hon. Gentleman has just complained will lose funding.

Stephen Hammond (Wimbledon) (Con): I saw the right hon. Member for Southampton, Itchen (Mr Denham) shake his head. The personal letter was put on the letterboard by me this morning, and my office telephoned his office twice to ensure that it was there.

Grant Shapps: I am grateful to my hon. Friend for clarifying that. I now understand that the note was in the right hon. Gentleman's pigeonhole, and that the telephone call- [Interruption.]

Clive Efford: On a point of order, Mr. Speaker. I am not sure whether I heard it right, but I believe that we have just heard an announcement of a £1 billion fund. I wonder why that was not announced in a statement to the House.

Mr Speaker: Before I respond to the point of order, I shall be happy to hear a statement or clarification from the Minister, from whose lips I think the words came.

Grant Shapps: The fund was announced in the Budget, Mr Speaker. If the hon. Member for Eltham (Clive Efford) was present last week, he will have heard the Chancellor of the Exchequer announce it at this Dispatch Box. Let me clarify another point. My hon. Friend the Member for Wimbledon (Stephen Hammond) also mentioned that he had telephoned the office of the right hon. Member for Southampton, Itchen to check that the letter had been received. I am very surprised by the rather discourteous and disingenuous comments about my right hon. Friend the Secretary of State.

Mr Blunkett: Is this the £1 billion that the Government have just announced that they are withdrawing as a result of the abolition of the regional development agencies, which they promised before and after the election that they would abolish only if there was no support at local level?

Grant Shapps: I will come in a moment to the RDAs that were set up by Lord Prescott. In the meantime, I can tell the right hon. Gentleman that this is a new £1 billion-the regional development fund £1 billion announced in last week's Budget and designed to help-
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[Interruption.] Labour Members do not want to hear about this, but it is designed to help in exactly the kind of constituencies that they have come here today to complain are being underfunded. They do not want to know that this coalition Government are doing something to help those areas. That is the truth.

We live in grave financial times, and the previous Government bequeathed a scorched-earth policy. As Labour's departing Chief Secretary declared, "I'm afraid there's no money left. Good luck." [Interruption.] They do not want to hear that either, but it was what the note said, and it also happened to be true.

We inherited spending commitments funded by a litany of IOUs scrawled on the back of fag packets and a toxic legacy of debt from an Administration who went on a spending spree with the nation's credit card. Our most immediate priority is therefore to reduce the nation's chronic public spending deficit to pave the way for economic recovery.

Alison McGovern (Wirral South) (Lab): The hon. Gentleman describes again this picture of deals scrawled on the back of fag packets. Would he like to make a comment to my constituents in Wirral who work for companies that spent a great deal of time working hand in glove with the RDA and the Government to protect our local economy and have been thrown into disarray by the policy being made on the hoof by the new Government? I will listen to anything the Minister has to say that will help us protect our local economy, and I will be grateful for his comments.

Grant Shapps: I welcome the hon. Lady's intervention. She was not here in the last Parliament, but had she been she might have read our green paper, which describes in detail our plans for the RDAs. Labour Members seem to think that when there is a change of Government, policies should just roll on even if they have not worked. The RDAs were a case in point, of policies that cost a lot of money and got us nowhere.

The prospect of paying £70 billion in debt interest is of deep concern, but apparently not on the Opposition Benches, where it is as if the money has not run out, the party is not over and we can just carry on spending imaginary funds. That £70 billion in debt repayments is more money than the council tax, business rates, stamp duty and the inheritance tax collect put together. That is the size of the deficit we are up against. So we need to tighten our belts. Ministers are cutting their pay, and it is also fair to ask local authorities to pay their part towards the £6.2 billion public sector savings required this year.

Hazel Blears: Does the right hon. Gentleman believe that it will help the nation's finances to cut the future jobs fund and the working neighbourhoods fund and to throw more young people on the dole so that they will not be paying tax and national insurance? Does he really think that that adds up to a credible economic policy?

Grant Shapps: Well, I heard with interest what the right hon. Member for Southampton, Itchen had to say about some of the funds. The truth is that existing commitments are being honoured and a new fund is going to be set up to pull together the many different streams that currently help people get back to work. It seems to me that again Labour Members see any change
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that did not emanate from Labour during the 13 years in which it was in Government as a problem and are willing to attack it.

Chris Leslie (Nottingham East) (Lab/Co-op): Will the Minister give way?

Grant Shapps: I shall give way in a moment after making a little progress.

So the £6.2 billion immediate savings this year are the priority to tackle the inherited £156 billion deficit. It is worth saying it again-£156 billion. [Interruption.] They do not want to hear it, because the figures were in danger of bankrupting this country-of putting us into a Greek-style crash. But to hear the right hon. Member for Southampton, Itchen today from the Dispatch Box, one would not believe that he was speaking for the same party that sat on the Government Benches and took this country to the edge of that fiscal position.

Now with this fiscal challenge we also have an opportunity. Our actions to rebalance the public finances give us a chance to decentralise power, to weaken the command-and-control apparatus of the central state. Devolution is the solution; the centralised state the problem. We need to cut wasteful spending, but let us put local councillors and local people back in the driving seat.

Claire Perry (Devizes) (Con): On that very point, we hear a lot about how we could have saved money from efficiency savings, and that is a laudable thing to talk about, but the Lyons report in 2007 said that targets and inspections inhibited councils' ability to serve their locality. We know that targets and inspections cost more than £2.5 million a year, so if Opposition Members were so anxious to find efficiencies why did they not start by stopping that ridiculous top-down inspection regime?

Grant Shapps: I am very grateful to my hon. Friend for mentioning some of the top-down inspection regimes, such as the comprehensive area assessment, a £39 million programme responsible for-get this-wasting 151,000 days of local government officers' time each year, and for what purpose, what advantage, what great body of knowledge that could somehow be used? The answer is that the previous Government did not know when the money had run out and carried on spending it ad infinitum.

Chris Leslie: Will the right hon. Gentleman scrap the Audit Commission? Will there be no audit or inspection?

Grant Shapps: We certainly will have inspections and a basic template. The question is: how much inspection do we need? I invite any Opposition Member to explain how spending 151,000 days of officer time answering a comprehensive area assessment was of any use to local residents. Opposition Members talk about localism, but they do not get it. They talk about the principles of handing over power, but they do not understand that when-according to 2006 research-officers in town halls spend 80% of their time servicing the needs of Ministers and Whitehall and only 20% of their time looking after local residents, they no longer serve the democratic values of local people. That is not localism; what we are describing today is localism.

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In these tough times it will be our goal to protect those in the greatest need-local residents and, especially, struggling families and pensioners. Under Labour, council tax more than doubled. We will work with local councils to freeze council tax for a year and, if we can afford it, for another one. Scotland has done it, with band D council tax now £290 a year less than the comparative figure south of the border. We want that to happen in England, too.

Angela Smith (Penistone and Stocksbridge) (Lab): The right hon. Gentleman just mentioned the need to protect those most in need. Will he comment on the remarks by Blackpool's Tory council leader, Peter Callow, who said:

Grant Shapps: The hon. Lady will no doubt welcome the £1 billion fund for regional assistance.

Chris Leslie: New money?

Grant Shapps: Which is new money and was announced last week. No doubt the hon. Lady in her next intervention will welcome that money, which would presumably go to areas such as that the one she describes.

Roberta Blackman-Woods (City of Durham) (Lab): Will the right hon. Gentleman confirm that that £1 billion is additional funding-on top of the money that would already have been made available to RDAs and to local councils in order to support regeneration in their areas?

Grant Shapps: I may be living in a parallel universe, but I and Government Members were here last week for the Budget, when all that was described in a great deal of detail, including in the Red Book, which explains that the fund is new and comes out of the total spending envelope. It is fairly straightforward.

Let us make some progress. We will scrap Labour's plans for new bin taxes, which meant even higher tax bills for local families and harmed the environment by encouraging more fly-tipping and more backyard burning. We need to go green, but we cannot have the bin bullies and the town hall Taliban who seemed to look after town halls before. Instead, we are going to embrace opt-in schemes, such as Windsor and Maidenhead's recycle bank initiative, through which families are rewarded for recycling and doing the right thing. We will encourage people to do the right thing, rather than punish them when they do not.

Incentives can work for councils, too. Let us reward local authorities for driving economic performance in their area, and for building new homes. Incentives can work for councils in all sorts of ways.

Caroline Flint (Don Valley) (Lab): On the issue of building new homes, I understand that one of the areas under threat is the Kickstart programme, which was to support private construction by getting sites that had
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fallen during the recession under way again. Does the Minister agree with the chairman of the Home Builders Federation, who said:

Is there not a false economy in the cuts that are going ahead, which put more homes in jeopardy and do not make sense to the business community?

Grant Shapps: The right hon. Lady will share the concern that I had at turning up at a Ministry and being told that the £1.5 billion that had been presented to the Building Britain's Future fund exactly a year ago, in July 2009 when programmes such as Kickstart were announced, just did not exist. We are now having to do what we can to support those important programmes. She can expect to hear further announcements on this front.

Andrea Leadsom (South Northamptonshire) (Con): If all the programmes that the Opposition are concerned that we will cut were so valuable, why were so few houses built under the last Administration? Why are there 1 million people not in education, employment or training-NEETs-in this country if the programmes were working so well?

Grant Shapps: I am grateful to my hon. Friend, not least because of what happened in the debate on housing here just last week. The Opposition claim to be passionately interested in housing, but there was nobody at all on the Opposition Benches then: not a single Opposition Member turned up for a debate on a subject that they claim to care about so passionately.

Perhaps the answer lies in the figures on housing. We have only to look at the figures for house building last year, for example: fewer homes were built than during any peacetime period since 1924. It is not as if the top-down approach was working; the more the previous Government tried to centralise, dictate and impose housing on local communities, the fewer homes were built. That is why we intend to turn their policy on its head and ensure that in future incentives drive house performance and house building in this country.

Mr Betts rose-

Grant Shapps: I give way to the Chair of the Communities and Local Government Committee.

Mr Betts: Will the Minister clearly explain what his targets are for the number of social houses that should be built in this country each year? How will the building of such housing be achieved? What policy mechanisms will he use, and where is the funding to deliver the programme?

Grant Shapps: I am grateful to the hon. Gentleman. We are not going to set targets because they did not work. [Interruption.] There you go-they have heard it. We all remember the target of 3 million homes by 2020. Remember the former Prime Minister standing at this Dispatch Box and announcing that target? We all remember the 240,000 homes that were to be built every year. What is the figure for house building this year? Probably
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about 110,000 to 118,000-something in that region. There is no point in announcing targets that do not happen; all that does is bust aspiration. Instead, we will take a practical approach in which communities are encouraged with powerful financial incentives to build homes. Our matching of council tax revenues for a six-year period will achieve a great deal of that.

Mr Slaughter rose-

Grant Shapps: I want to make a bit of progress, then I shall give way again.

We are going to drive economic growth through local action and initiatives such as the incentive plan, and by replacing Lord Prescott's and Lord Mandelson's regional development agencies with locally led partnerships, based on natural economic areas-not arbitrary Government offices for the regions that happen to suit Ministers. We will also drive growth by giving councils new powers to levy business rate discounts for local shops and firms, by finding practical ways to introduce automatic small business rate relief and by abolishing Labour's unfair ports tax, which threatened to harm the entire manufacturing sector in this country-at least the bit that the party had not already harmed through its economic policies.

We are doing all we can to help local government under difficult and pressing circumstances. No local authority will face a reduction of more than 2% in any revenue grant that has already been allocated.

Tristram Hunt (Stoke-on-Trent Central) (Lab): Why does the council in my constituency face a cut of 1.08%, whereas no Government Member's local authority is facing cuts of anywhere near that? Is that an act of ideology or malice? Or is it that, as the Minister with responsibility for planning said,

Grant Shapps: I am grateful to the hon. Gentleman for that, but district councils all over the place are taking larger cuts. If the Opposition are now going to spend their time looking at random distributions, trying to pick out patterns and then playing them back, I am afraid that that just demonstrates that they really have not got it. They have not understood the financial crisis in which they had taken this country right to the edge, or appreciated the depth of the problems that they had taken the country into. That is clearly demonstrated by their input today.

Andrew Percy: The Minister will recall that a few moments ago, when I tried to raise the issue of school funding, my concerns about deprived areas such as those in Goole that I represent were laughed off with some smugness by Labour Members. Can we have an assurance that unlike the situation under the previous Government, who simply ignored the problem, pupils who live in very deprived areas in Goole will not be penalised for the simple reason that other parts of the East Riding are wealthier?

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