Local Government Finance

Oral Answers to Questions — Deputy Prime Minister – in the House of Commons at 11:30 am on 29th January 2003.

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Photo of Dave Watts Dave Watts Labour, St Helens North 11:30 am, 29th January 2003

If he will make a statement on the future of floors and ceilings in the proposed new local government funding system.

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister)

The Government expect the mechanism known as floors and ceilings to be part of the local government funding system for the foreseeable future.

Photo of Dave Watts Dave Watts Labour, St Helens North

Although many Labour Members believe that the new system being introduced is far fairer, we are concerned that the floors and ceilings mechanism will result in Westminster council continuing to receive £30 million more than it should, while deprived local authorities such as St. Helens receive £2 million less than they should. Will the Minister re-examine that aspect of the changes?

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister)

I hear what my hon. Friend says, but floors and ceilings provide a necessary degree of stability and security for all councils. They ensure that everyone receives a real-terms grant increase and they are an integral part of the grant distribution system. Last year, we promised to protect against rapid reductions in population and the like, and it is right and fair that we honour that commitment.

Photo of Simon Burns Simon Burns Shadow Spokesperson (Health)

Is the Minister aware that as a result of the proposed changes, Essex county council will get one of the three worst settlements, with an increase that is £40 million less than it would be if it received the average percentage increase? Will he reflect on his meeting with the leaders of Essex county council and try, before the final decision is taken, to persuade his right hon. Friend the Deputy Prime Minister to come up with a system that is fairer to Essex and does not mean that Essex has to pay for his party's heartlands in the midlands and the north? [Interruption.]

Mr. Deputy Speaker:

Order. I say again to the House that there is far too much noise. We should be able to hear both the hon. Member putting the question and the Minister replying.

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Office of the Deputy Prime Minister)

Mr. Burns seems to think that there is a north-south divide in this respect. Members from the south think that the north is gaining, and Members from the north think that the south is gaining. In reality, all councils, including Essex, will get a real-terms increase in grant. I have met councillors and officers from Essex, which is to receive a 3.7 per cent. increase in grant, above inflation.