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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

The noble Lord knows very well that we are ensuring that councils can freeze council tax. We think that it is important that that can be delivered as a way to support families who struggle with the cost of living. The noble Lord, as concerned as he is about the cost of living, should support councils in freezing their council tax.

I do not agree with the noble Lord, Lord Liddle, that my right honourable friend the Secretary of State has not paid tribute to what many councils have done to try to transform services. We acknowledge that many councils have taken steps to make savings through common-sense measures, but much more could still be done. I also do not agree with the noble Lord, Lord

Smith of Leigh, that nothing more can be done because only low-hanging fruit was available to them. We are not talking small change here. It is estimated that some £2 billion a year is lost through local fraud. Local authorities spend £60 billion a year on procurement. There remains plenty of room for councils to save significant sums through more joint working, sharing back-office functions and using smarter procurement practice. Council tax payers rightly expect to see councils tackle these issues before they start putting up bills or cutting back on services. As has already been mentioned, the Government published

Fifty Ways To Save

. I will not accept any cynicism about this because no council is yet fully realising the potential set out in that document. As one example, there are only around 20 shared chief executive posts in the country. There are plenty of other examples where local authorities have made significant strides forward in this area and demonstrated what is possible.

Councils also have more than £19 billion in reserves. People would be surprised to hear that that is increasing while at the same time local authorities plead poverty. There is also something like £2 billion-worth of uncollected council tax. Councils have varying degrees of success in their collection rates, but all need to aspire to the best. That is even before we begin to consider the more fundamental transformation in services through models like the troubled families programme or the whole place community budgets, where the emphasis is on early intervention and prevention. Over time, these programmes promise to be more effective and efficient. I could offer more examples but do not have the time. I highlight this kind of approach in response to the noble Baroness, Lady Pitkeathley, and others who raised concerns about some specific services. We have set aside £200 million from capital receipts to support service transformation. Next year, there will be a further £330 million to continue this transformation, including a £200 million expansion of the troubled families programme.

Several noble Lords raised questions about the timing of the announcement. I am sure that noble Lords will understand that the settlement must follow the Autumn Statement, which this year was on 5 December. The noble Baroness, Lady Donaghy, asked about the consultation period. I make the point to her and other noble Lords that the consultation period we are in at the moment is on top of widespread consultation during the course of the year that led to the provisional settlement. I have already mentioned in respect of the new home bonus one change that we made in light of listening to that consultation. My honourable friend the local government Minister has already had one conference call open to all local authorities. He will hold another and continues to have an open-door policy available to all those wishing to engage and discuss matters with him.

The right reverend Prelate the Bishop of Ripon and Leeds and the noble Lord, Lord McKenzie, asked about local welfare provision. Councils will continue to provide support to those in the community who face financial difficulty or find themselves in unavoidable circumstances. The LGA has raised those issues with DWP Ministers, and I understand that it is in discussion with the DWP at this moment.

As I said, I will follow up some other points in a letter that I will write following the debate. In concluding, councils have taken important steps towards modernising and transforming their services, and I pay tribute to them for their efforts, but it is possible to do more while also keeping council tax down. We have delivered a settlement that is fair to all parts of the country, and we believe that the flexibility is there to help councils to meet this challenge and, most importantly, to serve their local taxpayers even more efficiently and effectively than they have been able to in the past.