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Local Government Finance Settlement — Motion to Take Note

Part of the debate – in the House of Lords at 4:56 pm on 9th January 2014.

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Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston The Parliamentary Under-Secretary of State for Communities and Local Government 4:56 pm, 9th January 2014

As the noble Lord knows, while we remain having to bring down the deficit, we still have to pay off debt but we are having to deal with less debt than we might otherwise have done had we not taken the measures that we have.

I shall return now to what we have done in terms of the changes we have made and people’s reaction to them. It is worth reminding your Lordships that, as regards the changes we have made to the way in which councils are funded, a recent survey showed that public satisfaction with council services has stayed the same or actually improved in 90% of cases. That is a real credit to local authorities. We are making progress but in order to continue to do so it is vital that we stick to the disciplined course that has been set. Like every part of the public sector, councils have had to shoulder their fair share of the responsibility to pay down the deficit and get the nation’s finances back on a stable footing. The noble Lord, Lord Liddle, acknowledged that the right honourable Alistair Darling, when Chancellor, said in 2010 that cuts would be necessary if the Labour Government were re-elected at that time. However, it is worth noting that the Labour Opposition have opposed all of this Government’s cuts to local government. My noble friend Lord Shipley was right to ask what the noble Lord, Lord McKenzie, would do if Labour were elected. I noted that he did not provide us with much information on that in his winding-up speech today.

Much of the comment today has focused on reductions in central government grant. However, concentrating on those grants misses the bigger picture. It is far more accurate to look at the overall spending power that councils have. Contrary to what has been said, spending power is the best available measure of resources available to councils. We have published the methodology and the data in full on our website. Spending power includes the money the councils raise through council tax, business rates and financial incentives. I am sure noble Lords will welcome being reminded that local authorities now retain 50% of those business rates, which is not something they were able to do previously.

This debate illustrates some stark contrasts between this Government’s approach and philosophy and those of the Opposition. The previous system made councils dependent on central government for their income. Councils got more money by painting the blackest possible picture of their area. Indeed, Andy Sawford, the opposition spokesman in the other place, said only this week that the Labour Party would return to this approach if it succeeded in winning the general election next year. The Opposition talk about so-called fair funding but what they do not say is which councils they would cut if they were to introduce their preferred approach.

In contrast, we have set up a system which inspires ambition and aspiration and rewards councils which go for growth, support businesses, attract investment, help create jobs, and which are absolutely focused on transforming their services to deliver the best possible outcomes. By that I mean the most effective and most efficient public services which best support local residents. Our system means that councils which respond to new opportunities see the benefits of their efforts. I remind noble Lords what my noble friend Lady Hanham said when she spoke powerfully about the flexibility that local authorities now enjoy. I give way to the noble Baroness.