Local Government Services (Leicester)

Part of the debate – in the House of Commons at 10:13 pm on 20th February 1997.

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Photo of Paul Beresford Paul Beresford Parliamentary Under-Secretary (Department of Environment) 10:13 pm, 20th February 1997

It is an unusual debate that contains a swan song, and the hon. and learned Member for Leicester, West (Mr. Janner) gave an interesting speech. I know that he is as grateful as I am to the hon. Member for Leicester, South (Mr. Marshall) for this opportunity to discuss the problem that Leicester is experiencing. I am sorry that, with his intellect and ability, and as a member of the Labour party in Leicester, he was unable to help the council to straighten out its finances. As I think he suspected I would explain to him—and as I suspect, in his heart, he knows—that is where the incompetence lies.

Leicester's circumstances should first be considered in the context of the local government financial settlement as a whole. The settlement was tight; last year's was tight. Next year, with a new Conservative Government, again it will be tight—and that is the way it should be. Local government expenditure is about 24 per cent. of central Government expenditure; it needs to be tight for the sake of the economy of a competitive United Kingdom, and it must continue to be tight.

Forward-thinking councils throughout the country have recognised the importance of that, and have sought efficiency savings year after year. Year after year, Leicester obviously has not. It is murally dyslexic—unable to read the writing on the wall.

Although the settlement was tight, it provides all local authorities with sufficient resources to provide good-quality services at affordable cost to council tax payers. In taking our decisions, the Government took account of all the pressures on local authorities, as well as the potential to make savings.

The House should be aware that Leicester's standard spending assessment is the second highest of all unitary authorities, at more than £255 million. Its population is comparatively high, but its SSA in pounds per head of population is the highest in its class. We know that Leicester will make spending plans for provision of new services in its first year as a unitary authority, but the standard spending assessment takes that into account.

The SSA system, used in distribution of revenue support grant for authorities in an area that is subject to local government structural changes, simply reflects the change in circumstances. The same methodology is used for all authorities with the same service responsibilities, and is, of course, based on the relevant data for each authority's area. Reorganising authorities are therefore treated fairly, both individually and relative to other authorities.

As it is a new unitary authority, one of the other influences on Leicester's spending next year is the notional amount calculated to act as a base budget for capping purposes. I know that Leicester had wisely worked very closely with the county to agree disaggregation of the county's budget as part of the notional amounts process. That has ensured that Leicester will be able to budget to spend at least as much in its area next year as was spent this year, if it chooses.

As with many Labour authorities, Leicester considers that it needs an increased share of resources, and that its provisional capping is too low. The permitted increase is a direct reflection of the level of the settlement. Capping is an essential tool to require authorities to play their part in restraining local government expenditure, which accounts for about a quarter of public spending. Its other purpose is to protect council tax payers from higher than necessary council taxes, which would result from excessive increases in local government budgets.

Leicester has a 1 per cent. permitted increase under the provisional capping limits, which is the class permitted increase for those unitary authorities. It therefore needs to consider its performance, which has been studied by the Audit Commission. If we consider the percentage of council tax collected of the amount payable, we find that the average for Conservative authorities is 96, and that for Labour authorities is 92, but for Leicester it is 89.83.

If we consider housing benefit applications processed in 14 days—helping people in need—we find that, for Conservative authorities, the average is 87 per cent., for Labour authorities 81 per cent., and for Leicester 72.7 per cent. If we consider council tax benefit claims processed within 14 days, we find that, for Conservative authorities, the average is 84 per cent. and for Labour authorities 77 per cent., but Leicester collapsed again, to 73 per cent.

If we consider the source of business—development—and measure that by the percentage of planning applications decided within eight weeks, we find that the Conservative average is 79 per cent., the Labour average 76 per cent., but Leicester barely makes it over 52 per cent. If we consider the percentage of rent allowances worked out within 14 days—also helping the poorer people in the area—we find that the Conservative average is 83; the Labour average 72. What is Leicester's average? Less than 63.

It behoves the local authority to get its act together. It has had the opportunity; it has been pointed out before.

The capping principles will not be confirmed until after authorities have set their budgets. If Leicester wishes to budget above its provisional cap, it is, of course, free to do so. We shall take into account all the circumstances of an authority before deciding on a final cap that is reasonable, appropriate and achievable, and I think that we have set that.

Additional resources have been made available to Leicester under a scheme allowing reorganising authorities to bid for supplementary credit approvals to meet the one-off indirect costs of reorganisation. The arrangements for the scheme mean that, in general, authorities will not be required to meet borrowing or interest costs for at least three years, by which time savings should have been realised. I know from my experience in local government that that is an opportunity to make savings instantly, and it appears to have been lost.

Leicester has so far received £6.2 million from the scheme. That includes the allocation made just before Christmas for 1997–98, when Leicester was awarded an SCA maximum amount of £3.1 million.

While we are considering this matter, we should look at some of the local media reports on Leicester councillors. At the beginning of this year and the tail end of last year, Labour councillors in Leicester awarded their leader a £22,145 special responsibility allowance, in addition to his £4,000 allowance. I understand from the local papers that for themselves they adopted a scheme that will result in a massive rise in councillor allowances. Their basic allowances will increase by 606 per cent. As in Doncaster, they have gone wandering off elsewhere.