In respect of balance sheet issues concerning enterprise zones, the policy to allow rates to be retained within the zones will lead to an increase in the local authority self-financed expenditure forecasts and will be scored as public expenditure. As the business rates retention system does not start until April 2013, no costs have yet been accrued. The Government are working with local enterprise partnerships on forecasting these costs and will be discussing the detail with the Office for Budget Responsibility ahead of the Autumn Statement. That may give some substance for the noble Lord, Lord Beecham, who says I have not answered any of his questions. Given this, it is not possible to take TIF 2 schemes off the balance sheet, as the amendment seeks.

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Amendments 52 and 53 would not only remove important controls from the system—I have already explained the importance of maintaining the Government’s fiscal deficit policy—but would add further layers of complexity to the operation of the scheme. That would potentially impact on all the calculations of central shares and precepting authorities, removing the certainty that precepting authorities would have about the income they were to receive in that year. Noble Lords will not be surprised when I say that I cannot accept their amendments. I will not be surprised if they say they are going to return to this at a later stage.

Baroness Donaghy: Can the noble Baroness clarify whether, when the Office for Budget Responsibility made clear that this could not be off-budget, it gave a full explanation as to why it said this, and whether the Government have to accept what the Office for Budget Responsibility says? I wonder if it is a swing of the pendulum against the outcome of PFI. Having a fuller picture of why that independent body said this might give us the opportunity to explore the subject further rather than just accept that it is closed.

Baroness Hanham: With regard to the point about whether we have to accept what it says, the answer is yes. The OBR advises the Treasury, but what it says pretty well has to be taken on board and dealt with in the way it says. I do not think I have a note at the moment of the reasons behind what it said. If they are in the public arena, I will make sure the noble Baroness knows what they are.

Baroness Donaghy: Does that mean that, on all subjects, every statement made by the Office for Budget Responsibility will be accepted by the Government?

Baroness Hanham: Sorry, I have to keep looking over my shoulder for. It would be better for me to quit looking over my shoulder and say that I will answer with detail in writing.

Baroness Kramer: My Lords, I am absolutely fascinated by the comments on the Office for Budget Responsibility. It is incumbent on the Government to provide us with the analysis or the statement that it made that requires this from its perspective to be on books because it would be very interesting and beneficial to everybody to get the comments of the accounting community and some of the various international standards boards. It would mean that we could have a fully constructive discussion. I cannot think that any of that could possibly be confidential. In fact it would be perfectly odd if it was confidential to explain why one made a decision that something needed to be allocated to one particular set of accounts or another. That would be exceedingly helpful.

It would also provide us with the criteria, because obviously there are many different ways to structure TIF projects. If various poor cities are bringing forward their proposals in such a way that they have inadvertently set them up so that they fall on books when, with

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some further thought and different structuring, they could be off books, that would be extremely sensible for everyone to know. That surely must be in the public arena, so I look forward to that.

Having heard the tone of this meeting, the Minister is exactly right to understand that this is an area that we would wish to pursue. I so much appreciate all of the various speeches and analysis that have happened from the noble Lords, Lord Jenkin and Lord Best, and others. It underscores the importance to local authorities up and down the country who are trying to drive forward economic growth in their communities and see TIF as a very significant tool with which to be able to achieve it.

I thank the Minister for her explanation, but she is exactly right: we will continue to push and I hope that she will take the issues back.

Amendment 50 withdrawn.

Amendments 51 to 53 not moved.

Amendment 54

Moved by Lord McKenzie of Luton

54: Schedule 1, page 46, line 12, at end insert—

“Publication of Impacts and ResetsCalculation and supply of information on the impact on total resources available for Local Authorities

39A (1) The Secretary of State must for each year and in relation to each billing authority in England identify—

(a) the total level of resources available for each billing authority in the preceding year including—

(i) the local share of an authority’s non-domestic rating income;

(ii) the total of any top up or tariff;

(iii) the total of any levy paid to the Government;

(iv) the total of any safety net paid by the Government;

(v) the total amount of resources raised through council tax;

(vi) the total of any homes bonus paid by the Government;

(vii) any other payments made by the Government considered appropriate to be included by the Government following consultation with local government;

(b) an estimate of the total level of resources available for each billing authority in the forthcoming year including—

(i) the local share of an authority’s non-domestic rating income;

(ii) the total of any top up or tariff;

(iii) the total of any levy paid to the Government;

(iv) the total of any safety net paid by the Government;

(v) the total amount of resources raised through council tax;

(vi) the total of any homes bonus paid by the Government;

(vii) any other payments made by the Government considered appropriate to be included by the Government following consultation with local government.

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39B (1) The information under paragraph 40A must be set out in a report, to be called an “Impact of Business Rates Retention Report”.

(2) The Secretary of State must for each year, alongside the local government finance report, lay or make arrangements for laying, the Impact of Business Rates Retention Report before the House of Commons.

(3) As soon as is reasonably practicable after an Impact of Business Rate Retention Report is laid before the House of Commons, the Secretary of State must send a copy of the report to each relevant authority.

Resets of the Business Rates Retention System

39C (1) The Secretary of State shall be required to make arrangements for a ‘reset’ of the Business Retention System every 3 years to coincide with each spending review period.

(2) The reset is to take on board a reassessment for each authority of—

(a) relative spending needs;

(b) relative resources available through council tax income;

(c) relative resources available through business rates.

(3) The assessment of relative need is to be determined in full consultation with local government.

Designation of tax increment financing schemes

39D (1) The Secretary of State may by regulation—

(a) designate one or more tax increment financing schemes;

(b) provide for the calculation in accordance with the regulations, for each year for which the designation has effect and in relation to the billing authority of the amount mentioned in sub-paragraph (2);

(c) provide for that amount to be disregarded for the purpose of the calculation under paragraph 39C(2).

(2) The amount referred to in sub-paragraph (1)(b) is the total amount which, if the authority acted diligently, would be payable to it for the year under section 43 or 45 in respect of the hereditaments in the tax increment financing scheme.”

Lord McKenzie of Luton: My Lords, I beg to move Amendment 54 in the name of my noble friend Lord Smith, who is unable to be with us today. The thrust of the amendment is to cause a report, termed an,

“Impact of Business Rates Retention Report”.

It calls for the report to be laid before the House of Commons alongside the local government finance report. I believe that the intention is that the report would cover the current and upcoming year. It further calls for the Secretary of State to make arrangements for a reset of the system every three years, which we have debated already, to coincide with each spending review period. We have not particularly touched upon that issue. The amendment also requires the Secretary of State to designate one or more TIF scheme and for the revenues to be disregarded in assessing the reset of the business rate retention scheme; a matter which we have just debated at some length.

The thrust of this amendment is a reminder of the complexity of the new system and the difficulty which will confront local authorities in setting their budgets, especially in the early years of implementation. I note in passing that the proposed report is focussed on billing authorities, but it would seem logical to extend it to major precepting authorities. In any event, the report should include payments to major precepting authorities. It would also be appropriate for such a report specifically to identify revenue support or Section 31 grants payable to local authorities and also the central share of business rates aid to central government.

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My noble friend’s amendment, however, raises the issue of what the local government finance report will look like in the future. No doubt thousands of councillors will miss ploughing through the intricacies of the formula grant, although this will have to be covered at the outset to set tariffs and top-ups. Under this Bill, the local government finance report must precede the specifying of central and local shares, the basis of calculation of tariffs and top-ups and the amounts to be credited to the levy account. However, what will happen routinely to the relative needs formula after the initial calculation of these matters? Will this still feature as part of the annual local government finance report? If not, on what basis will the Government be able to assess need for determining whether there should be an early reset or an in-year safety-net payment—indeed, for the distribution of revenue support grant itself? It would be helpful if the Minister at least outlined these and perhaps arranged to write in detail.

5.30 pm

We have already debated resetting and the potential conflict between the benefit of a longer period to enhance the incentive and a shorter period to be able to react to divergences of resources and needs. My noble friend’s amendment touches upon another point. Resetting is not just about recalibrating tariffs and top-ups, as we discussed; surely it is also about central and local shares, a matter that we are certain to return to on Report. However, if the Government’s principal argument to justify the central share is the need to control local authorities’ spend, surely the dawn of a new spending review period should at least trigger a review of relative shares, undertaken, as the amendment suggests, in consultation with local government.

As for TIF, my noble friend’s amendment goes with the grain of the Government’s approach, even if only a tiny grain, and we covered that territory in our earlier debate. I beg to move.

Baroness Hanham: My Lords, as the noble Lord has acknowledged, we discussed in earlier amendments a number of the things that he has raised, focusing too on the case for requiring the Secretary of State to undertake reviews of resources and need, and for the Secretary of State to take account of changes in relative needs and resources in resets of the system. Given those exchanges, I will not rehearse all the arguments again as they will be on record.

However, it will not surprise the Committee that I cannot support the amendment, as it would fundamentally undermine the purpose of our changes to the funding of local government. There are two key principles at the core of those changes. The first is to deliver a powerful incentive for local authorities to drive growth in their area, and to benefit from that growth. I remind the Committee that such authorities are all around the country; growth is not a southern phenomenon.

Secondly, we are clear that the arrangements should deliver strong protections to those areas that are less able to generate growth or where the business rates are less than the needs of that area. That takes in tariffs, top-ups and levies. We have made clear that baseline funding levels will be equivalent to what councils

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would have received under the formula grant. As a result, each local authority’s baseline funding level, and therefore the calculation of its tariff or top-up, will be based on figures that take account of the different needs of each area, so our changes will recognise relative needs.

Having established the baselines, an integral part of our proposals is to provide certainty and predictability to councils. Those authorities that have a lower business rates base need to have certainty that their top-up payments will remain fixed, subject to being uprated by RPI annually. Those authorities that, at the beginning of the scheme, have spending needs in excess of their business rates need to have confidence that any tariff that they are paying is fixed—again, subject to being uprated by RPI.

That level of stability in the scheme is crucial to enabling local authorities to carry out their budget planning. At the heart of our arrangements is enabling local councils to benefit from growth. To maximise that incentive effect, we have set out an aspiration to allow 10 years before resetting tariffs and top-ups. At the start of the scheme, the statement of intent that we published in May confirmed that we would not expect a reset to take place before 2020—and I have acknowledged that that is eight years, not 10.

The use of a lengthy period between resets was also strongly supported by respondents to the consultation that we undertook last year on the parameters of the proposals. However, we have also been clear that in exceptional circumstances we could consider the need for a reset to be undertaken on a different timescale. This could reflect on significant changes in need and resources. Noble Lords can be reassured that we are not blind to such possibilities.

Noble Lords will also appreciate that each year we will publish a draft local government finance report which will be subject to consultation and approval in the other place. I am sure that authorities will use the opportunity provided by the provisional settlement, as they always have done, to make their views known on the resources available to them. As always, we will listen carefully to any such representations.

However, at this stage we are confident that we have developed the right balance between providing an appropriate timeframe for councils to benefit from the incentive effect while also providing stability and security for councils. A period of only three years between resets would not achieve that balance and would, in my view, undermine the incentive effect.

The amendment also proposes text on the designation of tax increment finance schemes. As we discussed, TIF is very firmly part of our proposals, and paragraph 37 already provides the appropriate powers to facilitate such schemes and to ensure that the business rates from such schemes are disregarded for the purposes of setting top-ups, tariff and levy amounts. With those explanations, I hope that the noble Lord will be able to withdraw the amendment.

Lord McKenzie of Luton: I thank the Minister for her response. I think that we have aired issues of reset and TIF enough for today. However, I want to return

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to the first part of my noble friend’s amendment. I did not have the chance to discuss the background with him so I am interpretingwhat he may have intended, but it gives rise to an issue about what that local government finance report will routinely look like in the future.

Obviously, the first year will have particular features, but if we look at current local government finance reports, there is a whole raft of information and regression analysis that drives the formula grant and helps establish need right across the country. What will happen to that in the future? Presumably, the information will not routinely need to be available on the Government’s proposition in that report, so what will it look like? What will it contain? It will clearly have to contain certain information that has to precede the decisions and payments and so forth that flow from the Bill, but what will be the core of that and will it have details about the revenue support grant and the basis on which it might be distributed?

Baroness Hanham: I am not going to detain the Committee tonight. We have the details and I will make sure that the noble Lord has them. The ingredients of the local government finance report, which will be annual, will probably change from time to time, but if I may, I will write to the noble Lord with the details.

Lord McKenzie of Luton: I am grateful to the Minister and beg leave to withdraw the amendment.

Amendment 54 withdrawn.

Schedule 1 agreed.

Clause 2 : Revenue support grant

Amendment 55 not moved.

Amendment 56

Moved by Lord Warner

56: Clause 2, page 2, line 21, at end insert—

“( ) In making any change to revenue support grant arising from introduction of any part of this Act, the Secretary of State will ensure that no council with responsibilities for adult social care services is required to reduce their funding of those services in real terms until legislation has been introduced that provides a comprehensive and sustainable solution for the funding of those services.”

Lord Warner: My Lords, this amendment is in my name and that of the noble Lord, Lord Best. I tabled this amendment to probe the Government further because of the unsatisfactory response to my questions that I received at Second Reading. It is to the issues that I raised then concerning the parlous state of funding for adult social care that I wish to return this afternoon with this amendment. I do so because of the implications for that situation of this Bill. While it gives more local discretion to local authorities, it takes further resources away from local government overall when many authorities are in dire straits over the funding of adult social care, which in some authorities can account for 60% of their expenditure.

The desperate situation that has arisen over the funding of adult social care arises to a great extent because the Government have totally failed to come

5 July 2012 : Column GC449

forward with any response to the funding proposals made a year ago in the report of the Dilnot commission, of which I acknowledge I was a member, or indeed with any alternative proposals if they did not like what the commission suggested. The signals that they have consistently given out are that they will not produce any clear funding reform proposals when they publish their White Paper and draft Bill on adult social care, which the Whitehall rumour mill suggests may be next week. Any light that the Minister can throw this afternoon on what the Government’s policy is on funding adult social care would be more than welcome. I wish to encourage some indiscretion on the part of the Minister.

The amendment is intended to prevent a bad situation getting worse. It will have no impact whatever if the Government get their act together and come forward with proposals that can be implemented to place the funding of adult social care on a sound and sustainable basis. Much of that soundness and sustainability would come from service users paying more if they had the resources to do so, as the Dilnot commission proposed, so this is not simply a matter of ratcheting up public expenditure. The amendment would prevent making any changes to the revenue support grant arising from measures in the Bill for those local authorities with responsibilities for adult social care if that would mean a real-terms decrease in funding to those services before the Government have introduced legislation that provides a comprehensive and sustainable solution for funding those adult social care services.

The solution to whether the amendment has real impact is totally in the hands of the Government. All it does is give them a pause for thought before services for the poorest, vulnerable, elderly and disabled people and their carers are reduced further. Let me briefly say why this pause is necessary. I am relying to some extent on figures produced from a parliamentary Answer on local government expenditure provided by the Minister’s own department. I have to say that the information was not provided in the most helpful format, which is hardly surprising given the story that the data tell. However, with the help of the Library I have managed to explore the data in a way that is reasonably intelligible.

The data establish the rapid decrease in adult social care expenditure by local authorities under this Government, even though service demand is going up rapidly because of demography and local authorities are doing their utmost to protect adult social care services by cutting other services. I pay tribute to them, across the political spectrum, for their political courage on this issue.

The data show that at constant 2011 prices, local authority expenditure on adult social care went up from £15.46 billion to £16.4 billion between 2008-09 and 2009-10. Noble Lords will recognise that 2009-10 was the expenditure for the last year of the previous Government. It then fell back to £15.54 billion in 2010-11, declining again in 2011-12 by another £0.5 billion, although there are some technical changes that slightly confuse the picture. The evidence available to me and other noble Lords who are close to local government suggests that expenditure will fall again significantly in real terms in the current year.

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There is the very real possibility that expenditure on adult social care will be some £2 billion less in real terms when the Bill takes effect next year compared with 2009-10, despite the best efforts of local government to make amends and try to cope with that set of problems. The knock-on effect of this for the NHS is considerable. When I was a Minister, the Department of Health formula was that for every pound you cut from adult social care, you spent £1.30 on the NHS. You can do the arithmetic for the implications of all this for the NHS as well as for users of adult social care services.

5.45 pm

The financial pain is significant when you realise that eight out of 10 local authorities provide services only to people who have substantial or critical needs. The latter often means that they have needs in the last few weeks before death. Increasingly, residential and nursing homes are declining to accept local authority-funded clients because the fees do not meet the service costs of an increasingly dependent group of people. Those fees have to be subsidised by people who pay their own fees, rather than being state-funded. Even if you are assessed as having substantial or critical needs, the support that you or your carers receive is often inadequate to meet the assessed needs, especially in relation to domiciliary care.

This is a very serious situation and the Government should take account of that in the speed with which and the way in which they implement this legislation. The adult social care funding system is bust. Until the Government grasp the nettle of repairing it quickly, we should not use this Bill to make a bad situation worse. I beg to move.

The Deputy Chairman of Committees (Lord Brougham and Vaux): I must advise the Committee that, following a printing error, Amendments 54A and 54B should be numbered Amendments 56A and 56B to Schedule 2.

Lord Best: My Lords, I shall be brief in supporting the amendment of the noble Lord, Lord Warner. We all owe him a debt of gratitude. He was one of the three Dilnot commissioners, along with Dame Jo Williams and Andrew Dilnot. Their report remains the key piece of policy guidance to which we all look to reform the system fundamentally.

I have declared my interest as president of the Local Government Association, which is right behind this amendment. The LGA has made adult social care its highest priority. It is the issue about which it is most concerned at the moment. If we take out the dedicated schools grant, social care is already much the largest area of local government spending. The 28% cut to central government support for local authorities over the current spending review period has not, I am glad to say, led to a 28% reduction in social care services for older people, adults with learning difficulties and others in need of care. Local authorities have absorbed some 85% of those cuts through service redesign and efficiency savings. However, this can go on for only so long before very painful results become apparent.

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The cost of adult social care services is now set to rise, on a trajectory that the LGA has calculated, from some £14.4 billion to £26.7 billion over 18 years. That is an increase of 85%. By the time we get 18 years down the road, we very much hope that a series of measures will be in place to head this off before we get to the point at which virtually all local government expenditure must be on social care. However, there is the period in between in which things may get worse and we do not want this legislation to heighten those dangers.

It seems unlikely that a Bill could be introduced before the next election. If something came forward in 2015, it would probably be enacted in 2016 and become effective in 2017-18. We would already be several years down the road. The King’s Fund has estimated that by 2014-15 the gap in social care provision will already have reached £1.2 billion a year. Central government support needs to be in place now. We will get a reset in 2020 but in the intervening period funding for social care is a really important consideration for the Government. Although there may not be an expectation of the noble Lord’s amendment being accepted in its entirety, the sentiment behind it is strongly supported by the Local Government Association.

Baroness Hollis of Heigham: I support my noble friend’s amendment. I am confident that the Minister will not reproduce the rather unwise remarks that we sometimes get on the Floor of the House that in seeking to cut the deficit you cannot afford to spend money on social care. There are sources of finance that could be available to government—any Government, including mine, which could and perhaps should have done this as well so I am not making a partisan point—which would adequately fund the Dilnot proposals on pension tax relief, about which some of us know something and others know relatively little. I may be in the second group.

At the moment pension tax relief is £30 billion and the difference between the standard rate and the higher rate is £7 billion. In the past we weaned the country off mortgage tax relief, first by bringing it down from higher rate to standard rate—that was done by a Conservative Government; the noble Lord, Lord Lamont, I think, but it may have been the noble Lord, Lord Lawson—and subsequently it was abolished altogether. The point about this is that in all our thinking about funding people’s long-term savings and their ability to cope with long-term care and so on, we think there is something called work and something called retirement, and that you should save from the one and transfer it to the other. We have to start thinking much more about people’s longevity, which is a good sign, and moving money from work to early retirement and from early retirement to later retirement; there are three categories.

If you were to ring-fence the money that is currently spent on higher rate tax relief down to lower rate tax relief, which is enjoyed by higher rate taxpayers on their way in, even though they pay only lower rate tax on the way out, it would be redistributed within the pensioner community from younger pensioners in their 60s and 70s to that same group of pensioners as they

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age into their 80s and 90s. For what it is worth, it would also redistribute, to some degree, from the better off to the poorer. As far as I am concerned, it would hit every winning duck that we want to hit: we would make pension tax relief fair; we would redistribute within the pension community in a ring-fenced way; we would redistribute from the better off to the poorer; and we would, I am sure, be able to commend it to the public in terms of fairness, because most people will be postponing income they might have got in their 60s and 70s to be able to have it in their 80s and 90s.

Before the Minister says that we cannot possibly do anything about this given the deficit—and I realise that this is for HMRC and the Chief Secretary and so on to think about—I would like to put this into play because I would be very sorry indeed if the proposal coming out next week was put into the long grass on the grounds that there can be no funding available and therefore we have to struggle on from an interim ad hoc base, as we are doing at the moment. There is a way if there is political will, and I am quite sure it is the sort of proposition that could command support right around the House and from all political parties. It would be fair, decent and affordable and it would give people security.

Lord True: My Lords, are the policy prescriptions just put forward by the noble Baroness supported by her Front Bench?

Baroness Hollis of Heigham: My Lords, I am giving only my own views at the moment. I have not sought the views of my Front Bench on this. I am coming out of the pensions world on this and my concern about the unfairness in pension tax relief and the way that we could link this to the funding for long-term care that my noble friend has mentioned. But certainly not; they are my views.

Lord True: My Lords, I am aware of the noble Baroness’s views and, for the enlightenment of the Committee, I thought it might be interesting to know whether they were the views of the Labour Party Front Bench as well.

Baroness Hollis of Heigham: I have not put them to the Labour Party Front Bench.

Lord Warner: It might just help the Committee to say that there are plenty of suggestions around, which the Government are well aware of, that enable you to implement the Dilnot proposals without any increase in public expenditure. What you are required to do, though, is reprioritise, which the Government are unwilling to do, as far as I can see. Starters for 10 would be not just the creative proposal of my noble friend but means-testing generous winter fuel payments, free TV licences and bus passes for people who are higher rate taxpayers. Plenty of proposals have been put forward for using inheritance tax to pay for that. All these proposals could be put into play if the Government were prepared to enter objectively into a discussion with the Labour Front Bench in the other

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place, with whom they are having so-called cross-party talks, but very little creativity seems to be coming from the government side.

Lord Beecham: My Lords, I am not empowered to commit the Labour Party to a particular policy stance on this, although I find some of the arguments and options advanced by my noble friends quite interesting. What I do know is that the Conservative Front Bench walked away from joint-party discussions two and a half years ago, have done nothing so far about Dilnot and, by all the auguries that we are hearing, do not propose to do very much about it. We will see in due course, if and when we get some proposals that may come before the Recess.

In what has been a long—perhaps inordinately long—municipal career, my most rewarding period was when I served as chairman of the social services committee of my council for four years in the 1970s. We managed to transform the provision of social services, at that time including children’s social services, since hived off—in my view, perhaps rather unfortunately —in a way that would now be impossible, given the financial situation. This is therefore a matter that is very close to my heart and, of course, to the hearts of many others.

It is disturbing that, as we have heard from my noble friend Lord Warner and the noble Lord, Lord Best, the financial situation is deteriorating really quite rapidly in the face of substantially rising demand, produced in part by demographic change, and in part by the advance of medicine and care. Younger people with physical and learning disabilities are living longer and elderly people are living longer, and we must be glad of that but, as we have heard, it imposes considerable pressures on services and budgets. We have heard some of the data on that this afternoon.

It is often assumed that we are talking largely about the older population. That is not the case because younger people with learning disabilities are growing fastest in terms of numbers and in terms of the costs that have to be met to care for them. The Local Government Association’s projections are that the percentage of expenditure on younger people will rise substantially—indeed, more than for the elderly. The cost of care for that particular group is expected to rise by 42% by the end of this decade. As the noble Lord, Lord Best, has pointed out, that ultimately could lead to virtually the entirety of local authority budgets being devoted to adult social care of all kinds. In any event, the LGA estimates that if current demand, which is likely to develop, were to be met in full, funding for all other services would drop in cash terms, assuming a level playing field, by 66% or 80% over that period, so we are talking about a very large potential gap. The consequences of some of the savings that have been referred to by my noble friend and the noble Lord, Lord Best, are rather worrying. The financial pressures on providers of residential care are causing considerable difficulties.

6 pm

That is partly a function of what I think was a strategic mistake in the 1980s, when the Government of the day effectively pushed local government out of

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the direct provision of residential care for the elderly and, because of a differential funding system, local authorities became very dependent on private sector providers, many of which have since disappeared. Of course, the problems that we had with Southern Cross were of a rather different kind. However, in fairness, with the fees that councils feel able to pay, many private providers are now finding it very difficult to provide a good level of care. This is potentially a scandal in the making. I am aware that there are now a number of cases pending where judicial review is being sought about the decisions of local authorities in terms of the fee levels that they are offering. Therefore, this is in many ways a crisis that is almost upon us.

The noble Lord made a particularly telling point when he referred to the relationship of all this to the health service. We are still looking at these provisions in separate silos but it is high time that there was an across-the-board look at them. The previous Government, rightly, invested very considerable sums of money in the health service but, by a factor of many fold, much less in local authority social services provision. That balance needs to be rethought in the interests of the health service as much as in the interests of local government. If, as the noble Lord pointed out, local authorities are unable to sustain people in the community, inevitably there will be far higher costs for an overstretched health service.

That raises the issue of what is now called community budgeting and what was, under the previous Government, called Total Place. There is a need to get budgets and services together. This may be something that the forthcoming government response to Dilnot will touch upon. However, whatever happens, there has to be a reasonable funding system so that the pathway of care from within the community to, if necessary, residential care and ultimately healthcare—and indeed, with healthcare alongside, supporting people in the community —is sustainably funded throughout. The present indications are that that is simply unlikely to happen—hence the relevance of my noble friend’s amendment. We cannot allow the situation to develop in which, because of budget pressures, the already restricted level of provision of care, now confined very largely to substantial critical elements, particularly for the elderly, continues. There has to be an assurance that authorities, and indeed those who work with authorities and supply services for them, can rely on medium and long-term planning of resources, particularly, although not exclusively, in residential care. We also need to see investment in community care with extra care, housing provision and the like. Unless there is that assurance, which the amendment seeks to bring about, it is difficult to see how it can properly be planned for.

The Minister is obviously not in a position to commit the Government to great expenditure or to commit other departments to such expenditure. However, it would be helpful to have an assurance that her department is in discussion with other, relevant departments—notably, although not exclusively, the Department of Health—about coming to a coherent cross-governmental view about the policy objectives and how they might be fulfilled, particularly in partnership with local government, and about securing a long-term, workable financial

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basis. Otherwise, not only will people suffer in this context but the impact on other local services will potentially be very severe. All the talk of localism will disappear because there will be no scope for any decisions other than those required to support social care provision. That is not an acceptable outcome for the people who need that help or, indeed, for the rest of the community.

Baroness Hanham: My Lords, the problem of adult social care does not rest with the local authorities alone. The noble Lord, Lord Beecham, has already pointed out that there is a similar responsibility on the National Health Service. If this problem had been capable of being resolved, it would have been by now. I recognise the noble Lord’s frustration coming to this Bill as a result of his work on the Dilnot commission, and I understand it fully. However, everybody here will be aware of the ongoing discussions every time you turn on the radio or television. There was another discussion last night on “Newsnight” on these serious problems, which are, at the moment, more or less intractable. The last thing I want to do is to try a light touch on this. I appreciate fully that this is a very serious matter, but so do the Government. The Government are wrestling with this, like previous Governments did. If the noble Lord was dealing with social services in 1970 and was then leader of a council, he and I at both stages were dealing with having to reduce expenditure and increase and toughen criteria.

This has long been a problem and it has gradually got worse because of the demographics and the general increase in costs. We are now against the background of an enormous deficit—which was not the responsibility of this Government but which we are having to deal with—which is not helping the situation either. As I said at Second Reading when the noble Lord, Lord Warner, brought this up, the Government—as he and others know—are committed to publishing a White Paper shortly that goes across both departments. I confirm that my department is in regular touch with the Department of Health about it. The White Paper will set out the plans to transform care and support. I recognise very clearly that this is beginning to absorb an enormous amount of public funding.

Clearly, the battle is to decide whether any personal contributions have to be made or whether there are other routes. If you are forcing people to sell their houses, you are in very difficult territory. I understand the reason the noble Lord, Lord Warner, brought this up. I am not going to accept the amendments for the reason that this is not solely a part of local government and it is certainly not a part of what we are discussing at the moment. I only add that the Government have already allocated an additional £7.2 billion over four years to adult social care, so we are not pulling back on our commitment to it. We are very much committed. We now have to wait for the White Paper. I very much hope that the noble Lord will not return to this at a further stage.

Lord Warner: Well, my Lords, that was all very interesting from the Minister. I suppose I thank her for it. I am not sure that I was very convinced by any

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of it. To get it on the record, this Government set up the Dilnot commission. They encouraged us to produce a report within 12 months, which we dutifully did. It is now 12 months since we reported, and there has not been a peep out of the Government about what they want to do. I do not mind if they do not like it, but they might have had the decency to suggest another approach that they would like. However, what we have had is silence and all the signals—from the cross-party talks and elsewhere—are that what we will get next week is a White Paper and a draft Bill that will be extraordinarily silent on the subject of money. I am a very patient sort of chap. I am very happy to wait until I see this document and what the arguments are and to consider it over the Summer Recess. I do not approach that with any great optimism. I am happy to withdraw the amendment on this particular occasion but I do not give any assurances to the Minister that I will not come back to this on Report, refreshed after the Summer Recess.

Amendment 56 withdrawn.

Clause 2 agreed.

Schedule 2 : Amendment of provisions about revenue support grant

Amendment 56A

Moved by Lord McKenzie of Luton

56A: Schedule 2, page 47, line 35, at beginning insert “Subject to subsection (1A),”

Lord McKenzie of Luton: My Lords—

Earl Attlee: My Lords, the Committee has made very good progress but I would be extremely grateful if we could consider this amendment. I do not think it will take very long and it would be advisable to take it.

Baroness Hollis of Heigham: Why?

Earl Attlee: My Lords, I have agreed with the usual channels that we would do so.

Lord McKenzie of Luton: My Lords, I am happy with that and do not think it is going to take very long. I start with an apology for tabling these amendments just yesterday, but they arose out of the debate we had on Tuesday and I make no apology for returning to the issue of the local and central share, and what this entails. We accept entirely that the Government intend to use the central share for the purpose of local government in England, although, as defined, this does not have to mean actually paying it to local government. This is what the statement of intent promises. It is also clear that for the first two years of the scheme, revenue support grant will be made available to local authorities to keep them whole, because their local share of business rates will be below the control total set by the 2010 spending review.

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This amendment looks beyond these years and requires revenue support grant to be paid in any year when the central share is positive. It is of course at this stage just by way of a probe, because it begs a lot of questions and we need a lot more detail to make it secure. However, it is designed to give the Government the chance to say how they are going to use the central share and on what basis. They must have some notion. What principles will be applied after 2014-15? Will its use be driven by a needs/resources approach or on some other basis? What is that basis?

I was going to have another go at a question I posed previously. I think it may have been dealt with in the letter I received from the noble Baroness—for which I thank her—just before Committee started. I have not yet had a chance to absorb it. I will perhaps reserve my powder on that particular issue but the substantive issue remains as to what that central share will be used for after those initial two years and on what basis will any use of it be determined.

Baroness Hanham: My Lords, I thank the noble Lord for dealing with the amendment briefly. I think that other members of the Committee, who look like they are gathering their papers together, will be grateful if I can be equally brief. As the noble Lord said, we have covered quite a bit in previous amendments and I hope that my letter to all members of the Committee will deal with some of those issues. We know, and I have explained, that the central share will be repaid in total to local government. I acknowledge that it will come back in a way that is not in the control of local government but it will come back in the form of specific grants, initially with the revenue support grant part of that. The revenue support grant might reduce in due course, but, if it does, the local share will increase. It will be a balancing act between one and the other. Because of the relationship between the central share and fiscal control, it is conceivable that there could be a situation where no revenue support grant was paid but the Government would still be collecting some small amount of central share that they would again return to local government via specific grants.

In general, the proposition is that everything that goes to government by central share would go back to

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local government by other specific grants, some of which are laid out. We have had some discussion about that. I have had discussions elsewhere on what the specific grants would be and I hope we may be able to throw more light on that in the not-too-distant future. I hope that the noble Lord will withdraw the amendment.

6.15 pm

Lord McKenzie of Luton: I thank the Minister for her reply, which has taken us a little further forward. We well understand that, one way or another, the central share will be used in its entirety for local government in England. Knowing what that means in more detail, particularly its distributional effect, still eludes us. It certainly eludes me. It would be helpful if more information on that could be forthcoming between now and Report. I know we will want to return to this issue. For this evening’s purposes, I am happy to beg leave to withdraw the amendment.

Amendment 56A withdrawn.

Amendment 56B not moved.

Schedule 2 agreed.

Clause 3 : Additional grant

Amendment 57 not moved.

Clause 3 agreed.

Clause 4 : General GLA grant

Amendment 58 not moved.

Clause 4 agreed.

Earl Attlee: My Lords, I am extremely grateful for the forbearance of the Committee. This may be a convenient moment to adjourn until 3.30 pm on Tuesday 10 July.

Committee adjourned at 6.16 pm.