Clause 24
Local Government and Public Involvement in Health Bill
6:00 pm
Robert Syms (Shadow Minister (Local Government), Communities and Local Government; Poole, Conservative)
I beg to move amendment No. 52, in clause 24, page 15, line 28, at end insert—
‘(5) Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes’.
This is a very good amendment. We have started to test some of the propositions to do with the financial implications of dealing with the winding up and merging of authorities. I have a few general questions on the matter, and I tabled the amendment because I am sure that the Minister has a very good explanation to offer to the Committee.
Some authorities will have large reserves, and some will have small reserves. There is an argument that large reserves are inefficient because they result from overtaxing people. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) told the House about the reserves of the authority in his area on Second Reading. What will be the practice when an authority with large reserves comes together with an authority with small reserves? Will a number be put together by simple aggregate? Will an attempt be made to return what some might argue to be the proceeds of overtaxing to the people whose council holds large reserves? There are other issues: some authorities have large insurance funds, others may not. In other words, there will be financial imbalances when two authorities meet. How does one deal with those imbalances?
The Minister did not have the opportunity the other day—one talks about staffing—to address the single status issue, which some authorities have dealt with more speedily than others. If two authorities are put together, that will lead to financial imbalances. Under clause 24, we are trying to find out how we will proceed in dealing with financial imbalances between authorities. Will it just be a case of hard luck? An area comes together, everything is aggregated and, as the Minister said, people go for the lowest common denominator in terms of council tax.
Amendment No. 52 is concerned about financially irresponsible authorities doing what I suggested a moment ago. We were thinking of a situation in which an authority has reserves and just returns the money in the last year before it is merged with another authority. That is why we tabled the amendment, which states:
“Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes.”
That would deal with the Shrewsbury issue. It would allow Shrewsbury simply to give the money back, if it wished to do that, before it was merged against its will with another authority.
We have discussed staff imbalances. We want the Government to say what happens with financial imbalances. As part of the overall submission, have authorities to discuss how they will deal with such imbalances in arriving at the new arrangements with the consent of the people?