Local Government Finance

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 5:45 pm on 8th February 2012.

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Photo of Annette Brooke Annette Brooke Liberal Democrat, Mid Dorset and North Poole 5:45 pm, 8th February 2012

I will not, because I want to make it clear that it is not correct to switch from numbers to percentages and to try to blur the picture. We know that the percentage cuts are large, averaging 3.3% but varying across the country. In fact, in my part of the country the percentages are towards the higher end.

One of the councils in my area, Dorset county council, is particularly concerned about the funding lost through the current formula damping. We can ask ourselves where that money goes, and we find that, probably quite rightly, it goes to more deprived areas. However, I am told that Dorset has lost a greater proportion of its grant entitlement through that formula—the Labour Government’s formula, I might add—than any authority in recent years. It will lose more than £7.4 million in 2012-13. There is great concern that the damping mechanism will become locked into the baseline for future years. I want to flag up that point as we move to a new system.

We must accept that the Government amended the funding formula to take greater account of councils’ need. Extra funding is available, for example to support adult social care, but I represent an area where the demand for social care is great in relation to resources. All Departments must give a great deal of thought to the funding of social care while we wait for the White Paper and for anything new to kick in, because here and now, councils across the country have enormous problems in ensuring that the most vulnerable people get enough support. That same situation applies throughout the country. There are pressures on that funding.

The new homes bonus is a plus, bringing in extra funding, and on balance, the council tax freeze for this year is a plus. I well remember being on the council under Labour, when the average increase in council tax in England was something like 10.4%, which enormously affected people who were just above the level of qualifying for any benefit. When I reflect back to that time, I recall that I was blamed as a councillor for that increase in council tax, which was because of Government funding. We come back to that point over and over.

In these difficult times, a council tax freeze is very good, but every council in the country is worried because of that one-off payment, as a number of hon. Members have pointed out. How do councils adapt to the situation in subsequent years? It would be wrong not to point out that that is a big concern.

A further concern that I have picked up from my local councils is that they feel they have coped with planning for the cuts that they have had to impose so far, but the uncertainty of next year gives them much less lead-in time for future planning. The Government must take on board the problems that councils face.

Like the Chairman of the Communities and Local Government Committee, I believe that ending ring-fencing is a good move. It is quite painful for local councils, but if we believe in localism, it must be the right thing. Moving towards the new system is right. We surely cannot defend the old system. Nobody understood the formula and it failed the test of time.

I hope that Communities and Local Government Ministers monitor the costs that are shunted on to local councils from other Departments. Examples include the 50% cut in community safety grant; the youth justice proposal that local authorities take youth offenders into care; and full recovery for court proceedings under the Children Act 2004. I could go on, but I shall conclude exactly on time.