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Local Government: Finance Settlement 2007-08

– in the House of Lords at 3:56 pm on 28th November 2006.

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Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government) 3:56 pm, 28th November 2006

My Lords, with the leave of the House, I shall now repeat a Statement made earlier in another place by my right honourable friend the Minister for Local Government about local authority revenue finance for England in 2007-08. The Statement is as follows:

"Sensible planning for service delivery needs a stable and predictable funding environment. The quality of councils' forward budget plans, their relations with stakeholders whose budgets they support, and their ability to set low and sustainable council taxes, will all be promoted by predictable funding."As I told the House last January, we were then setting out firm proposals for forward financial allocations on a two-year basis, including the use of projected data for population and council tax base. As 2007-08 is the second year of a multi-year settlement, my policy is not to change the settlement, including the data used in the grant calculations, from that previously announced, other than in exceptional circumstances."This year's announcement therefore contains no surprises for local authorities. I make a virtue of that, because I am convinced of the advantages of multi-year financial planning and most of what I hear from councils and their delivery partners, such as those in the third sector, supports that view. Today's announcement launches a period of statutory consultation and I will fully consider any representations made during the consultation period in the light of my policy in relation to multi-year settlements. "Within the framework of stability, I am able to provide adjustments to grant allocations for the voluntary merger of the fire services of Devon and Somerset under a new single combined authority, should that go ahead for 2007-08."I am also updating today details of individual specific grant allocations to local authorities for 2007-08. "With the next spending review period we will move to give three years of grant allocations to local government; that is, for 2008-09, 2009-10 and 2010-11. The stability provided by multi-year settlements will allow local government to publish three-year council tax figures and we would expect it to take up this opportunity."More widely, this security on funding will enable councils to move forward on providing the more flexible, efficient and responsive services to their communities as set out in our October 2006 White Paper, Strong and prosperous communities. It will facilitate the move towards new, more inclusive local area agreements, tailored to meet the needs of the individual area and drawing together different stakeholders to provide better, more cost-effective services that seamlessly meet the needs of clients."Total revenue grants to English authorities will be £65.7 billion in 2007-08, an increase over 2006-07 of £3.1 billion or 4.9 per cent. Part of that increase is in specific grants and it includes dedicated funding for schools and a further £525 million in Neighbourhood Renewal Fund, allocating extra help to the 86 most deprived local authority areas in England. Within that total, formula grant will total £25.6 billion in 2007-08, an increase of 3.7 per cent."This means that, by 2007-08, the increase in government grant for local services since taking office will be 39 per cent in real terms. The provisional standard multiplier for national non-domestic rates in 2007-08 will be 44.4 pence in the pound; and the small business non-domestic rating multiplier will be 44.1 pence. This means that once again business and other non-domestic users can look forward to predictable and stable rates. "Grant floors, the minimum guaranteed increase from one year to the next, are a permanent part of the system. I need to strike a balance between funding stability and the cost of the floor. I am able this year to improve floor protection for fire and rescue authorities, while easing the impact of floors on upper tier and shire district authorities. I can therefore today confirm my proposal that, for 2007-08, the floors will be: for authorities with education and social services responsibilities, 2.7 per cent; for police authorities, 3.6 per cent; for fire and rescue authorities, 2.7 per cent; and for shire district authorities, 2.7 per cent. Within each group of authorities, those above the floor will have their grant increase scaled back to pay for the floor. "We have provided a stable and predictable funding basis for local services. We expect local government to respond positively as far as council tax is concerned. Therefore we expect to see an average council tax increase in England in 2007-08 of less than 5 per cent. We will not allow excessive council tax increases. We have used our reserve capping powers in previous years to deal with excessive increases and will not hesitate to do so again if that proves necessary. "I am also announcing consultation on alternative notional amounts for Devon and Somerset Fire and Rescue Authority and Somerset County Council. That will help enable like-for-like comparisons between 2006-07 and 2007-08 budget requirements for capping purposes. This is being issued today for consultation to ensure that, should the proposed merger go ahead for 2007-08, the relevant authorities will know, in advance of setting their budgets, the budget requirement figure for 2006-07 that the Government will use when considering using their capping powers. "I would now like to turn to the Supporting People programme. Supporting People has proved to be a highly successful programme providing support to more than 1 million vulnerable people each year. In July I announced almost £1.7 billion investment in supporting people and am pleased to now confirm these grant allocations for 2007-08. Additionally, I can announce a further £40 million of administration grant for authorities in 2007-08 to help them manage this important programme. I am also pleased to announce that where authorities have generated savings in the programme through their careful management they will be able to roll forward these savings from 2006-07 to 2007-08 in order to re-invest in the programme. "The Government have provided another significant boost to local authorities with a financial package that is stable, predictable, and adequate to meet the pressures local authorities face while keeping council tax increases down to acceptable levels. I have placed copies of tables giving grant allocations and supporting documentation in the Vote Office and the Library and full details are being made available for local authorities on our website. I look forward to receiving consultation responses and commend these proposals to the House".

My Lords, that concludes the Statement.

Photo of Baroness Hanham Baroness Hanham Deputy Chief Whip, Whips, Shadow Minister, Scotland, Shadow Minister, Transport, Shadow Minister, Communities and Local Government 4:03 pm, 28th November 2006

My Lords, I thank the Minister for repeating the Statement made in the other place earlier today. In replying to the Statement, I declare my interest as an elected member of a local authority.

I agree that sensible planning for service delivery needs predictable funding. The possibility of being able to plan ahead over a three-year period would be welcome if there was a stable framework in which to do so. Sadly, there never is, and something always comes out of the woodwork that is underfunded or unfunded. The last time a Statement on local government revenue was made before the Chancellor's autumn Financial Statement to the House, it ended in chaos, with the Chancellor being forced to provide some extra money. So is this Statement a prequel to the real Financial Statement next month or is it part 1 of the settlement? What representations will the Minister be making to the Chancellor on the many new burdens facing local government?

There is a worrying element of wilful blindness about this Statement, which ignores the reality on the ground. One of the key drivers for soaring council tax is the failure of the Government to finance fully the burdens that they impose on local government from Whitehall. This year, we have seen the additional burdens of the Licensing Act, the electrical waste directive and the landfill allowance scheme, as well as new measures on children in care, concessionary bus travel and school meal standards. Next year, on top of those, we will see the implementation of the Gambling Act, the Electoral Administration Act, the information-sharing index and the public smoking ban.

The Government should either finance those transparently and admit the implications for national spending or allow discretion on local priorities with regard to what is implemented—and at what stage—and what is not, and allow local government to have a say in that. None of these regulatory impositions, many of which are worthy, has so far been backed up with proper funds, and it is not clear from the Statement or the papers that we have before us where they are now.

Each year, the financial settlement fails to address the challenges faced by local authorities, and so, to the Government's amazement, council tax rises by above the rate of inflation. Since 1997, council tax bills have rocketed by 84 per cent, taking the average bill in 2006-07 to £1,268 for band D properties. The Government say that they expect rises this year to be limited to 5 per cent. That would mean an extra £63 on a band D bill. It does not sound much, but that is the mean average and the increase will be considerably higher in many authorities. In many cases, it will hit very hard those who can least afford it.

In addition to the council tax rises, have the Government calculated the effects of rising water bills, gas bills and electricity bills on those struggling to make ends meet? What is the estimate of the extra burden on the vulnerable—particularly elderly people, who sometimes live in a home which they do not want to leave and which is larger than they may require but whose bills rise remorselessly and well in excess of their increases in pension? If council tax bills rise yearly by 5 per cent, by the end of this Parliament the average council tax bill will be almost £1,500 for a band D bill.

Year on year, a greater burden of tax has been shifted on to local tax payers. There has been no amelioration in their tax elsewhere, and it is as plain as a pikestaff that there will be no help in the future. Further tax rises are part of the Chancellor's plans, whether through higher council tax bands, an oppressive revaluation based on the amenities in or improvements to a property, or a Northern Ireland-style house price tax.

Will not residents in London expect even higher bills, thanks to the possibility of a new parish council tax—yet another tier of administration—and especially given the blank cheque for the Olympics, as well as the ever-increasing levy imposed by the Mayor of London? Will the Minister confirm to the House that, under the Memorandum of Understanding between the Government and the Mayor of London, London council tax payers are expected to foot one-third of the bill of any shortfall between Olympic costs and revenues? How does that square with the assurance given by the Mayor of London that he will not allow the burden on Londoners to increase? What assurance is the Minister prepared to give today that his view will prevail? Londoners are delighted that the Olympics are to be in this city, but they will become jaundiced about that if the remorseless rise in costs, which is already becoming apparent, falls on them and is well in excess of the levy that they are already facing.

We have been waiting and waiting for Sir Michael Lyons's report, which we were all assured would form the basis for any review of council tax and which was delayed because the Government wanted him to take into account councils' powers and responsibilities. The report now seems to be going further and further into the long grass. It is reported in this week's MJ—the Minister may like to comment on this—that the Government have never made a commitment to publish the report at all. So what are the Government doing? Why are they wasting the time of a man of Sir Michael's calibre if the work that he is doing is not going to play into the improvement of local government? Or is it just that the Government have been so involved in what he is doing that his recommendations will not require legislation? Are the Government afraid of the impact of what he is putting forward? Will the Minister give a clear undertaking that the Government will publish Sir Michael's recommendations well in advance of the debate on this year's settlement and well in advance of its completion?

In the area of the environment, many burdens are increasing. For example, the Chancellor has set in place a landfill tax escalator, making municipal waste collection ever more expensive. Rather than funding the costs, however, the Government are putting them on to local tax payers. What is the landfill tax escalator this year and how much more of the burden is meant to fall on council tax payers?

The Local Government Association and the National Health Service Confederation have published new research revealing that seven out of 10 local authorities have been hit by cost-cutting pressures from NHS trusts, including the withdrawal of funding from jointly funded projects and a sharp increase in the referral of patients, who would normally be cared for by the NHS, to local communities. We shall debate those costs later this month, but I cannot finish without drawing attention to the fact that it is beginning to look as though there is a shift in burden from the NHS to local tax payers.

Soothing words about forward allocations and three-year settlements are useless if the burden of taxation increases remorselessly. This is the end of a two-year settlement. In view of the Government's proposals in the new Local Government Bill and whether they pay any attention to Sir Michael Lyons, a lot of water has to pass under the bridge before we get to a three-year settlement. I look forward to future debates on this subject.

Photo of Baroness Scott of Needham Market Baroness Scott of Needham Market Spokesperson in the Lords, Department for Communities and Local Government 4:12 pm, 28th November 2006

My Lords, I thank the Minister for repeating the Statement. I note that the contents of the Statement prompt the start of a period of consultation. Not many days ago, the Local Government Association produced a document outlining its view of the future; the response from the Minister in another place was to tell the LGA to stop whingeing and to go away and take another look. If that is the level of the dialogue between central government and the Local Government Association, frankly, I despair. I would like an assurance from the noble Baroness that the Government will consider very carefully and seriously the issues that the Local Government Association has raised on behalf of its local authority members. If the dialogue between central and local government descends into Punch and Judy, the losers will be the citizens in our local areas.

I have heard Ministers repeat over and over again that local authorities have been given a 39 per cent increase in funding in the past 10 years. The fact is that most of that cash has gone straight into schools. Although that investment is welcome, it is disingenuous to suggest that it has gone to local councils for local services. When we take into account other ring-fenced funds, such as this year's investment in neighbourhood renewal, which applies only to certain areas, the actual increase in funds available for councils to spend in the past 10 years has been 14 per cent, which is a much more modest figure than the 90 per cent increase for the National Health Service. This has primarily been achieved though a largely hidden transfer of taxation from central government to the local council tax payer.

The Statement referred to the capping regime. Will the Government reconsider the crude application of a 5 per cent capping limit? That is a particular problem for small local authorities that have traditionally set a low council tax, because they have much less scope in real terms than those councils that have a high base.

As we have heard, there are some serious pressures on local authorities. Changing demography means that, this year, an additional 390,000 people aged over 65 will potentially come under the auspices of social services departments. In addition, the financial collapse of some primary care and hospital trusts, alongside hospital closures in some areas, is putting a huge strain on councils' social services departments. These have not come out of the blue sky—the warnings have been there for about the past two years.

For a variety of reasons, cost inflation is far outstripping the base rate in some sectors. The cost of social care contracts is increasing by about 7 per cent a year and the cost of tendered bus contracts is increasing by 4.5 per cent. I make special mention of the landfill tax, declaring an interest as a board member of Entrust, the regulator. Landfill tax is increasing by about 15 per cent per year, which is a huge burden on waste disposal authorities. Last year, £780 million pounds were collected in landfill tax; £53 million went to approved environmental schemes, while the rest—£733 million—went straight to the Exchequer. Councils are having to increase council tax in order to pay this. Appropriately, since we are talking about waste, the money is recycled straight back into Gordon Brown's coffers.

Local government has undertaken all the improvement challenges set by central government. It has absorbed the costs of the targets regime. Its contribution to the Gershon efficiency programme has saved £3 billion a year before the savings were due, and has far outstripped the performance of government departments. We, too, look forward to hearing the results of Sir Michael Lyons's report and fervently hope that an end to the practice of funding national burdens through local taxation—the hard-pressed council tax payer—comes out of it.

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government) 4:17 pm, 28th November 2006

My Lords, I am grateful for the contribution of both noble Baronesses and will try to answer as many questions as possible.

I reiterate what I said at the beginning of the Statement: we are committed to stable and predictable funding. A 39 per cent increase in real terms over the past 10 years is a serious undertaking, which has had to drive the many improvements that the noble Baroness, Lady Scott, mentioned. I pay tribute to the hard work of local authorities. We have seen that they have achieved efficiencies and improved the quality of services.

I start with the issues raised by the noble Baroness, Lady Hanham. The Government are fully committed to meeting the net additional costs of new burdens. For example, over the past two years we have put in an extra £250 million for concessionary fares. We have said that licensing fees will be set at a level to recover the justifiable costs of local authority functions under the Licensing Act 2003. We have established an independent fees panel to consider the legitimate costs; the panel will report to the Secretary of State shortly, and we would not want to pre-empt that. The DTI is fully committed to funding the additional costs of the WEEE directive and has already transferred an additional £12.3 million into the 2006-07 RSG settlement. We are working with the LGA to agree what further costs are being incurred and whether funding beyond this period is required before full producer responsibility is implemented.

The noble Baroness mentioned smoke-free places. Health Ministers have made clear their commitment to ensuring that authorities are funded for their enforcement role. The Department of Health is discussing costs with the LGA and reasserting those commitments. We will be making an announcement on that shortly. The noble Baroness talked about increases of 5 per cent in council tax. One of the virtues of a two-year settlement is that one can look back. Indeed, not every local authority raised their council tax by 5 per cent last year and we do not expect that to happen this year.

The noble Baroness mentioned the possibility that Northern Ireland will be used as a precedent for whatever changes Sir Michael Lyons proposes in his report. I have said in this House at least twice that Northern Ireland does not offer us a precedent, because it is starting from a different base and has a different system.

The noble Baroness then asked about pensioners. I take her point about vulnerable people and council tax. One of the things that she and I agree on is that we must try to make sure that the 40 per cent of pensioners who do not claim their council tax benefit do so. That is why we are putting great emphasis on automaticity of benefit, which is where we would like to be. In the mean time, the Pension Service is doing a great deal of work to make sure that people are picked up, but it has some way to go. In that context, although I cannot answer her question about individual bills, I can say that the Government are spending £10.5 billion more on pensioners in 2006-07 than we would have done if we had stuck with the 1997 policies.

The noble Baroness, Lady Hanham, raised the question of the Olympics and the role of the London council tax payer. As she will know, the Government and the mayor have agreed that what the London council tax payer will contribute to the Games can be changed only with the agreement of the mayor and the London Assembly. That is where we stand on that. Discussions to determine how additional costs are to be funded are ongoing, and the Secretary of State for Culture, Media and Sport will report to Parliament when a resolution has been reached.

The noble Baroness asked about the publication of the Lyons report. Lyons is and always has been central to our ambition for the improvement of local authority services. There is no question but that what Sir Michael comes up with will be fed into CSR07. The review is a report to Ministers; Sir Michael will report by the end of the year and, at that point, Ministers will take the decision about publication.

The noble Baroness also asked about the landfill tax. I am afraid that I do not have that figure in my enormous briefing, but I shall write to her about it.

The noble Baroness concluded by talking about the shift into social care. There is no question but that this is an area where we are fully aware of the pressures of demography. In partnership with the Local Government Association, we have set up three area working parties to look into the demands and pressures on the system and into how, in the context of CSR07, we can prepare to develop our polices in respect of them. As she said, we will have an opportunity next week to discuss that at some length.

The noble Baroness, Lady Scott of Needham Market, started by talking about the LGA document Meeting the Challenges Ahead. We are very pleased that the LGA is engaged in the process of making its case for CSR07. There is no doubt that we are having a serious dialogue with the Local Government Association; we have done so with local authorities through the Central and Local Government Information Partnership for many years. Three areas of work are being developed at the moment: social care, waste and pay. That is how we want to take the process forward. There is no question but that it is a serious dialogue and that the 39 per cent cash figure that we often discuss in this House is real. I know that we reiterate it, but that does not make it any less real.

We are a bit puzzled by the 14 per cent figure, because it is difficult to compare the situation in 1996 with now—in 1996, we did not have a hypothecated education tax or a dedicated schools budget, for example. But the noble Baroness is wrong to say that there is no extra money going into different services. For example, we made specific grants totalling £1.6 billion for adult social care. Huge amounts of money are going in through specific grants, and the Local Government Association has not mentioned that in its paper. There are some other peculiarities about the way in which some of the assessments have been made.

I can tell the noble Baroness that no decisions have been taken on capping principles yet. A crude universal capping is certainly not our policy. But, as I say, no decisions on principles have been taken.

The noble Baroness referred to the pressures on social services. Social care grants have increased by 2.7 per cent this year. In our discussions with local authorities, this is a serious area. It is extremely important that we are sensible and straight about what we understand are the pressures in the system and how they can best be met. The local government White Paper, with the new local area agreements, represents a way forward in effective joint working, which can bring all sorts of energies and synergies between health and social services. That is our ambition on that.

On landfill, the Local Government Association made a strong case on waste, in that it is clearly a pressure in the system. The amount of household waste over the past couple of years has decreased. Enormous strides have been made in recycling by local authorities. We are conscious that this is a challenge, and we want to work with local authorities to help to meet that challenge in the future.

I was glad that the noble Baroness, Lady Scott, referred to improvement targets. It is important to put on record the extraordinary things that local authorities have achieved over the past few years. We commend them and support them in that.

Photo of Lord Smith of Leigh Lord Smith of Leigh Labour 4:26 pm, 28th November 2006

My Lords, I declare an interest as the leader of a local council. I thank my noble friend for the Statement she repeated. As she said, there are no surprises in it; it is based very much on the Statement given last year. Is she aware that stability of funding has both advantages and disadvantages? The advantage is in predictability. I suppose that in some ways we had predictability under the previous Government's financial settlements—we could always predict we would have less money year on year and would have to make significant cuts in spending.

The disadvantages are that the provisions cannot take account of the pressures that noble Lords have already stated. Many of these pressures are demand-led. They are not based on simply wanting to grow services. For example, in my own authority I am looking at the budget monetary statement for a meeting this week. Since the beginning of term we have placed two additional children in looked-after care, which will cost my authority £130,000 just in the current year, and costs of over £100,000 per pupil per year—significant amounts of money. We require this mature debate. It should be the beginning of a debate between local authorities and government on how we are going to cope with the pressures on us so that we can provide the services that people need.

On the consultation, I am sure that my noble friend is aware that we also need to be consulted about the damping mechanism. Last year we assessed the needs of local authorities and then proceeded to damp that down because we did not want significant movements of money. I hope that we can also get that into the debate.

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

My Lords, I am very grateful to my noble friend for that contribution. He speaks with enormous experience. He is right; you cannot predict in a forward-looking settlement whether you are going to have two extra children or three extra adults with learning disabilities, or whatever it is. It is a great credit to the medical profession that such young people are living longer and so on, but we have to base our estimates on the best information we have. That is why we have used the 2003 projections, underpinned by notions of trends based on the 2004 figures. In the next settlement we will have an opportunity to bring those figures up to date and to look at the formula. On that basis the response to stable funding is more positive and the benefits outweigh the difficulties that it may seem to create sometimes.

Photo of Lord Rix Lord Rix Crossbench

My Lords, the Minister touched on the question of social care in her response. According to the Local Government Association, 80 per cent of local authorities have tightened their eligibility criteria, and 70 per cent will now provide services only for those who are judged to have either critical or substantial need. Therefore, people with a learning disability with parents—many of whom are over 70 years of age—and those with a moderate learning disability will miss out. Mencap has had letters from all over the country from parents expressing their grave concern. Can the Minister hazard an educated guess on how much extra in percentage terms will go into social care to meet the extra demand resulting from demographic changes?

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

My Lords, as I said, all local authorities with social care responsibilities will get an increase this year of 2.7 per cent. Within that, we have programmes such as Supporting People, which heavily target vulnerable people, including people with learning disability. As the noble Lord has raised a specific point, I would prefer to write to him to give him additional detail.

Photo of Viscount Tenby Viscount Tenby Crossbench

My Lords, perhaps I could tease out a little more from the Minister on the subject raised by my noble friend Lord Rix. As it happens, we are having Second Reading of the Mental Health Bill this afternoon. Of course, the people involved in those services are supported by the NHS; but the people to whom my noble friend specifically referred, those with learning disabilities, are not. They are funded either in residential homes through county councils or in supported living. Even the most efficient county councils are now completely strapped for cash, so it is very difficult to get adequate support for all those vulnerable people. Would the Minister kindly take that point on board when she discusses the matter with her friends in the Government?

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

Yes, I will, my Lords. It is worth reflecting that the changes in the formula that we introduced to bring the statistical base up to date revealed huge changes in the population—the sort of people and families to whom both noble Lords referred. We introduced the damping mechanism, to use a technicality, to ensure that there were not huge and unfair variations in what was available. As I said, we will have an opportunity to consider that formula flow again. We are very conscious that this is a challenge to local authorities because the needs of those young people are expensive but deserve to be met.

Photo of Lord Greaves Lord Greaves Spokesperson in the Lords, Environment, Food & Rural Affairs

My Lords, last year, the Government introduced a system throughout the country in which people over 60 got free bus travel within their districts or boroughs, which was obviously very welcome. The additional money that that cost district or borough councils was, as I understand it, provided through the revenue support grant. Earlier this year, the Chancellor announced that the scheme would be extended to the whole of England, which will obviously cost more money.

Has that been taken account of in the revenue support grant settlement? How does that fit with the Government's recent announcement that they have not yet decided whether the new system will be administered nationally or locally and, if it is administered locally, whether it will be funded nationally or locally? Does the settlement as set out here include the extra costs for passes for people over 60, which will now be usable across the whole country rather than simply in their own districts?

G

How about exending it to cover UK citizens living abroad in any of those places where local arrangements apply later in life or not at all?

Submitted by Gerard Mulholland

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

Yes, my Lords, to the best of my understanding. We have made available a further £250 million to fund the extension of the scheme that we announced recently. No decisions have yet been taken on how it will be delivered. The Department for Transport has set up a working group with stakeholders to consider the best framework, but it is for local authorities to come forward with their best and most affordable proposals to ensure that the scheme works, consistent with their responsibilities, and reaches the people whom we want it to reach.

Photo of Baroness Carnegy of Lour Baroness Carnegy of Lour Conservative

My Lords, that was a very interesting reply. Can the Minister explain how, if the Government have not decided how this wonderful scheme is to be delivered, they know how much it will cost?

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

We know, my Lords, because it is a national scheme. The previous scheme involved local buses in local areas providing concessionary schemes. This is a national scheme, which means that people can move out of areas using local buses. It is actually quite complicated. The best judgment was that it was important to get everyone from across the country around the table to see how this would work best in practice. It is not that we are trying to delay the scheme: we have a very strict timetable for it.

Photo of Baroness Byford Baroness Byford Shadow Minister (Food & Rural Affairs), Environment, Food & Rural Affairs

My Lords, will the Minister tell us a little more about the consultation? She said quite rightly that there is further consultation on this. I want to focus on two issues. The first, to which other noble Lords have referred, is the whole question of the population growing older. Obviously, more care will be needed in the longer term, unless we are lucky enough to live very healthy lives and not need that sort of care. My first question is therefore whether the responsibilities will fall to the social services rather than to the health service. Clearly, in the past, quite a lot of elderly people have had longer stays in hospital. If the responsibilities will fall to the social services, will the money that would have gone to the hospitals be freed up for local government? What happens to that money?

My second question relates to the provision of services in rural areas. The Minister will know very well that I regularly ask this question in the House. In very sparsely populated rural areas, it costs a lot more money to deliver services for children, old people or whomever. I have a particular example. Schools in inner cities receive more money per child to educate each child, but a county such as Lincolnshire, which has an enormous influx of migrant workers who are there permanently, clearly has needs that will be nearly as great as those of some inner-city schools as a result of having many more cultures to teach across the board. I wonder whether that will also be part of the equation. My husband is a governor of an inner-city school in Leicester, which receives more money per capita because of its multi-cultural needs and the resulting extra demands on teaching staff. I am sorry that those examples are slightly specific, but I would be grateful for clarification.

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

My Lords, we have no intention of robbing the NHS budget to pay for social care because that budget has a very important job to do. It obviously works alongside the social care budget. One thinks, for example, of the delayed discharge of patients and the number of people leaving hospital and entering residential or intermediate care, which is a great improvement on recent years, and of the money that social care puts into supporting people in their own homes. These are separate budgets. The important point to make is that we understand the full implications of an ageing society and the numbers of those over 85, not only those over 65. We plan properly not only to meet our acute needs, but to put programmes in place that will prevent people becoming acutely ill and having to go into hospital. These things must be seen as seamless, which is one reason why, in the local government White Paper, we put such emphasis on better and stronger local area agreements. Through such agreements, partners can place statutory duties on local strategic partnerships so that they can work together effectively.

On the rural issue, the grant distribution formula takes relative circumstances into account when calculating a grant, so sparsity—rural proofing—is taken into account in that way. As I said earlier, however, there will be an opportunity in the coming year for a further review of that formula before we make the next three-year settlement. SPARSE, the group that represents the most sparsely populated rural authorities, is very welcome to contribute to that.

On the point about the children of migrant workers coming into schools, that is a matter for each school's dedicated grant. One reason for having a ring-fenced grant for schools is to enable them to have money that takes their circumstances into account.

Photo of Baroness Maddock Baroness Maddock Liberal Democrat

My Lords, I apologise for not being here at the beginning of the Statement. I declare an interest as a county councillor in Northumberland, which is also a very sparsely populated area. The Minister has said that there was a 2.7 per cent increase in the social care budget. I concur with the noble Baroness, Lady Byford, that that is a real problem in rural areas. The amount of money paid to people who give social care does not compensate for the large distances that some of them have to travel. I hope that that will be looked at very carefully in the review. Sometimes it is almost impossible to get people to do the job in rural areas, so we certainly need more incentive.

The noble Baroness talked about the 2.7 per cent increase in the social care grant. She also talked about the Supporting People programme. I had assumed that these were different budgets. If they are not, some of that increase is for the Supporting People budget. At paragraph 19 of the Statement, the Minister in another place said that he was,

"pleased to announce that where authorities have generated savings in the programme through their careful management they will be able to roll forward".

Is the noble Baroness satisfied that these savings in careful management are not made through not providing the same level of care as before? My mother lives in sheltered accommodation. Since Supporting People, her level of care is nothing like it was previously. Although this is not necessarily to do with the Statement, I am concerned that people are now so risk-averse that wardens are being told that they cannot give some of the services which were provided for elderly people in sheltered accommodation because we are terrified of them being sued. That is also an important point.

Photo of Baroness Andrews Baroness Andrews Parliamentary Under-Secretary, Department for Communities and Local Government, Parliamentary Under-Secretary (Department for Communities and Local Government)

My Lords, a large number of issues and elements go into formulas used for assessing the needs of older people, not just age and so on. For example, recently we surveyed 17 local authorities, some of which I am sure were rural authorities, where transport costs are more expensive and where it is always more difficult to recruit people.

Supporting People is a separate budget, and I am sorry to have confused that. Following consultation on Supporting People, we want to take forward how we can distribute future funding based on need. We are still working through how we can do that. The specific instance that the noble Baroness raised about the failure of Supporting People is of interest. Perhaps she will write to me, because I am interested in the relationship between the various services that clearly are supposed to be providing a seamless service.

Photo of Lord Greaves Lord Greaves Spokesperson in the Lords, Environment, Food & Rural Affairs

My Lords, I am sorry that I forgot to remind the House that I am an elected councillor.