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Lord Filkin: My Lords--

25 Nov 1999 : Column 625

6.1 p.m.

Baroness Farrington of Ribbleton: My Lords, my noble friend is a new Member of the House. The procedure is that I reply to the points raised by the Opposition Front Bench and the Liberal Democrat Front Bench. Then we move to the next stage.

For me, too, it is a surprise and pleasure to face the noble Lord, Lord Dixon-Smith, across the Dispatch Box. With the change of government and change of role, it is sometimes slightly confusing as to which of us has become a poacher and which of us has become a gamekeeper. Our combined recollections of the period under the previous administration are that it was more like musical chairs. We have worked, planned, and given due warning of our proposals. In those days, it felt rather more as though the chairs were being pulled away as one was about to sit down on them.

The noble Lord raised a series of questions in regard to proposals for the coming financial year. His point regarding authorities with low grant increases is covered by two factors. In some authorities there are adverse changes in data to do with population changes and because some authorities are still suffering the dampened effect of changes in SSA methodology in previous years. For example, for some education authorities pupil numbers, income support and jobseeker's allowance payments are the main relevant data changes, and in some cases the relevant changes concern population and traffic flow. Different factors may affect different areas. For the shire districts, population, rent allowance payments and housing benefit claims can affect the position of individual authorities.

We have made absolutely clear that we believe it is important to see this settlement as an extremely good one for local government. There is nothing hidden in our spending plans. We have provided a substantial increase in government grant: up 5.5 per cent compared to the current year. It is right that local taxpayers and central government should each pay a fair proportion of extra local spending; so local taxpayers can be expected to be asked for more council tax. That partly answers a query raised by the noble Baroness, Lady Maddock.

The noble Baroness raised the question of the limitation on housing benefit and the effect on poorer areas. I remind the noble Baroness--

Baroness Maddock: My Lords, I am grateful to the Minister for giving way. My reference was not specifically to housing benefit, but to the limitation on council tax benefit.

Baroness Farrington of Ribbleton: My Lords, the noble Baroness is right. As regards the council tax benefit limitation, we listened carefully in our consultation with the Local Government Association and the Association for London Government. No authority has its benefit limited by greater than the average, so those authorities that have the greatest concentrations are affected only to the extent of the average.

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The noble Baroness also raised the issue of high gearing. There is a point at which the issue of gearing is linked to local choice. Those of us with long memories of local government can remember the point at which governments of both persuasions realised that to continue to pay an equivalent amount of grant however much the local authority chose to pay, was rather like setting open budgets for local authority public sector higher education. It was recognised that they could not go on using the national taxpayer in an open-ended way. The proposals before us make adequate allowance for the role of local choice.

The noble Baroness, Lady Maddock, also referred to the importance of recognising inspection costs. Perhaps I may give one example from the many areas that have been considered. The Government are meeting their commitment in full for the extra £50 million needed for audit and inspection as part of the Best Value project, with £40 million calculated to be the first year costs and additional funding the following year to take account of that.

I was asked by the noble Lord, Lord Dixon-Smith, about recognition of the implications for nursery education. I felt that the noble Lord was critical of its inclusion in the Statement. We are continuing the direct nursery education grant next year, rather than putting it all through SSA from 2000-2001. We should like to continue, in partnership, to develop a full mutual understanding of the different factors that need to be taken into account. We believe it is useful to await the findings of some of the reviews that are taking place in that area.

A sum of £390 million over three years, beginning in April 1999, is available for three year-olds; 57 LEAs with the greatest social need have received £40 million to create £48,000 new free places by March 2000. This is the first time that central government have made money available specifically to cover that issue. A further £350 million will be made available between April 2000 and March 2002 to provide a total of 190,000 places; 66 per cent of all three year-olds will have access.

The noble Lord raised the issue of increasing specific grants at the expense of the block grant. That is a sterile argument. We should focus on the overall increase in grant, which is 5.5 per cent. The increase of 3.7 per cent over £1.2 billion in block grant is one and half times the rate of inflation.

I also point out particularly to Members of your Lordships' House that there is a great deal of interest in and scrutiny of the Government's achievement of policy objectives. I give as an example the need to include funding in a separate crime reduction programme that will, among other things, be used to recruit 5,000 police officers over and above the numbers that forces would have recruited over the next three years. Without a specific grant this kind of money could not be targeted in the way many noble Lords have sought in the past. As noble Lords have a particular interest in the subject of tackling crime in rural areas, I stress that that money is available to police authorities in all areas including rural areas.

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The noble Baroness, Lady Maddock, sounded faintly grudging. She complained that not all was rosy in the garden. We are a realistic Government and believe that it is important to provide stability. We also believe that where increases are made available to improve services they should be built into the system. I am sure that the noble Baroness would not wish to return to the days when this year there was an extra £25 million for one particular scheme and next year it was removed and the money was provided for something else. We believe in building in a logical way in partnership with local government.

I was asked about unfairness being locked into the system of SSAs. We are clear that the current system cannot go on as it is, and local authorities share that view. An opinion survey has made clear that the majority of authorities are unhappy with the current system. In partnership with local government we are looking at the issue. We shall continue to study ways to review grant distribution. We have made clear that we want to consult widely, which we are doing, and shall not reach any conclusions until next summer. We have also made clear that decisions will not be taken until there has been full consultation. Ministers do not yet have firm views on what changes, if any, should take place. We welcome suggestions from all with an interest before any change is considered.

The CSR took account of all the pressures. In reply to the noble Baroness, Lady Maddock, we took account of the pressures which were discussed with the local authority representatives in the new partnership arrangement. There has never been a time when central government have been able to meet in full all the aspirations of local government and fully reflect them in grant distribution.

The noble Lord, Lord Dixon-Smith, said he was concerned about the shift in taxation from central to local government. The previous government clearly planned that that should happen. Under this Government plans provide for local taxpayers to make a fair contribution to the cost of local services. Ultimately, tax increases are for individual authorities. I conclude by reminding the noble Lord that for local government it is a very welcome situation to know what the position will be over a three-year period and that no local authority will receive less grant than before.

Lord Dixon-Smith: My Lords, before the noble Baroness sits down perhaps she will deal with my question relating to the very great increase in the national non-domestic rate.

Baroness Farrington of Ribbleton: My Lords, 5 per cent is the cap set on increases in bills for smaller properties. The cap for larger properties will be higher. The increase in the distributable amount from £13.6 billion to £15.4 billion is not surprising in the first year of the new rating period. Among other things, an adjustment must be made to allow for anticipated losses on appeal. The amount of rates paid nationally over the five-year period is expected to

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remain broadly the same in real terms as in the 1999/2000 year. It is a complex area, and if I have failed to answer the noble Lord's question fully I shall write to him.

6.15 p.m.

Lord Filkin: My Lords, this is incontestably a good settlement for local government despite vigorous attempts to find minor faults with it. But in practice I do not believe that that is the true significance of the Statement. The true significance is that it is not news at all. Most local authorities have been well aware since July 1998 of the amount of grant that they will get for next year as a result of the decision taken by the Government to fix and forecast the amount of grant for the next three years and to state that they will not change the distribution formula. That may sound technical but it is of great importance to local authorities and local politicians.

For years we argued with the Treasury that we should get away from annuality whereby we had to wait until about December before we knew what we would get. That led to frequent budget crises of which many noble Lords are aware from previous experience. As a result of that change, local authorities knew what their budgets and grant would be and so could avoid those crises and set clearer medium-term strategies. That has been a direct consequence of the success of the Government's economic policy. Because the Treasury no longer needs to fiddle with short-term economic management the Government have been able to make this kind of statement to local government with some certainty. As a result, good local authorities have the opportunity to deliver greater benefits from the resources at their disposal. Knowing the budgets that they will have, they have been able to squeeze them to deliver more value to the public. I believe that that is of benefit to local government generally.

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