Local Government Finance

One of the delightful things about this debate was that the Secretary of State launched it, which is a little unusual. He gave a premier performance. He managed to present figures by using percentages where they were appropriate and actual figures where they were not—it was the performance of a magician, and I look forward to Debbie McGee following it up at the end of the debate to solve the whole thing for us. I suppose, as it has been put to me, I am speaking from a position of poacher turned gamekeeper, or watching from the sidelines. Today's debate has been intriguing. We have wandered round all over the place before eventually coming back to the subject, which I intend to keep to. The Minister said that the Government gave a generous cash increase of 4 per cent. to local government. In those broad terms, as a headline, that is correct, but as with all local government announcements, those that gain are silent, with one or two exceptions, such as the hon. Member for Wigan (Mr. Turner), and those that lose complain. In London and the south-east, local authorities have had plenty of opportunity to complain and plenty of reasons to do so. In a way, it is fortunate that they have recognised that we are at the end of the three-year cycle and that they are looking for post-election changes, whoever the Government will be. They have knuckled down to produce savings, to ensure that they provide better services at a lower cost, so they do not hit their local citizens with high charges. What has happened under the 4 per cent. increase has varied. The Chairman of the Select Committee touched on this but skidded off it almost immediately. A recent Committee report, "The Balance of Power: Central and Local Government", reflected on local government expenditure and local council tax. Successive Ministers, some of whom have attended the debate, would tell us that the ties, targets and bureaucracy for local government have diminished, which they have. However, one must recognise that they have diminished from the enormous high that this Labour Government introduced. There has been a knock-on effect on expenditure and, because of gearing, a massive effect on council tax. The cry from local government, which is still valid, is that it wants the bureaucracy, auditing, ties and so forth removed, and local councillors, who have been elected by local people, to be given the opportunity to get on with the job with the minimum of direction from above. The implications of that include considerable savings for both central and local government—an easy example is the Audit Commission, which is five times the size it was in 1997. As a response to that reaction by local government, the Local Government Association recently produced a paper that said it could cut the total bill for local government by £4.5 billion, with a positive knock-on effect for central Government. If that were extended to the structure of local government finance, there could be large reductions in council tax, because there is reverse gearing. Gearing was mentioned earlier, but if savings were made in the right sort of areas, there would be reverse gearing, so council tax would go down. Perhaps the Government will heed those points. After the election, whoever wins, I hope to have the opportunity to take the new Secretary of State to some local councils—I am thinking in particular of one that my hon. Friend the Member for Putney (Justine Greening) knows. I want to have people explain to him or her in no uncertain terms just how damaging the current Government have been to local government, regarding not financing, but the burdens they have placed on it. Of course, the behind-the-scenes selective local government funding cuts have not come up in the debate. As I said, we are at the end of the three-year cycle and there are going to be changes. One problem with a set three-year cycle is that the Government are inflexible. In the current financial situation, it would be risky for them to be too dogmatically tied to a three-year spending cycle. Over the next three years, flexibility will be required. Local government claims that its cost inflation is running at approximately 3 per cent. In the light of that, the 4 per cent. is generous, but the distribution, even under this Government—or perhaps particularly under this Government—is slanted. For example, it has not been mentioned tonight, but for most authorities in London the grant increase is only 1.5 per cent. Many of those authorities, especially in inner London, face the sort of dire problems that the hon. Member for Wigan raised. Those authorities are struggling with those problems, although hon. Members have failed to recognise that and, indeed, have criticised the funding for two inner-London authorities, one of which I know quite well. It would benefit those complaining to take a tour of those local authorities to see what has been done with much less money than in other local authorities around the country. There will be the threat of capping, but those London authorities will probably look for, and find, efficiency savings so as not to pass excessive costs on to their council tax payers. The same applies in many south-east authorities. My constituency receives services from Mole Valley district council, Guildford council and of course Surrey county council. All are Conservative controlled and all would have been delighted to have received a 4 per cent. increase in grant. In fact, going by trends over many years, they would have been utterly amazed. Guildford's formula grant increased by 1.45 per cent.—not by 4 per cent. This 1.4 per cent. increases Guildford's grant to approximately £62 per head. The average for English district councils is approximately £79 per head. Mole Valley district council would have been delighted with Guildford council's increase, let alone the 4 per cent. Government headline, because it received a 0.5 per cent. Government grant increase. Following the same trend, Surrey county council's grant increase was 1.5 per cent., which follows on last year's 1.75 per cent. and the year before, which was 2 per cent.