Local Government Finance — Statement

Part of the debate – in the House of Lords at 2:57 pm on 17th December 2015.

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Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government 2:57 pm, 17th December 2015

My Lords, I thank both noble Lords. I have been busily jotting down notes and will try to respond to them as effectively as I can.

First, I thank the noble Lord, Lord Beecham, for his gladness at seeing some certainty in the funding over the next few years. Perhaps I may address some of his concerns, particularly about the efficiencies that local government has had to make since 2010 and going forward. Nobody could deny that the efficiencies the public sector has had to make have been, by their nature, very difficult. Everybody in the public sector has had to bear the brunt of the need to reduce the deficit, and I commend local authorities for the work they have done over the last five years. They have been innovative and enterprising, and satisfaction with local authorities has been either maintained or improved.

The noble Lords, Lord Beecham and Lord Shipley, are absolutely right about the revenue support grant. It will reduce to virtually nothing by 2020 and the figure for this year shows a reduction, because of the increasing localisation of business rates. Local authorities now retain approximately 50% of their business rates and they will retain 100% by 2020. Mayoral areas will be able to increase their business rates in due course.

The noble Lord, Lord Beecham, talked about social care. A precept can be raised for social care which will be 2% above the 2% cap that triggers a referendum on council tax. The noble Lord may be interested to know that for Newcastle, this would mean £20.7 million by 2020.

The noble Lord also mentioned the comments of my noble friend Lord Porter. I am sure that in due course my noble friend will want to speak for himself. However, today he said:

“The government has listened to what councils said we need and has delivered. More independence to serve our communities, a fair financial settlement for all types of councils, more resources to help care for the elderly and the certainty of long-term budgets”.

That is really welcome and I wish that it had been in place when I was a leader. My noble friend went on to say:

“This settlement should mark the beginning of a new age of independence and responsibility for local councils. In local government we will make a success of it, building on the hard work of the last five years.

Councils will be in greater control of their own destiny. It is an exciting time to be a councillor and this reform gives us … the biggest chance for a generation to serve our residents in a way that we know best”.

The noble Lord, Lord Beecham, also asked about attendance allowance. We will be consulting on the devolution of that.

The noble Lord, Lord Shipley, talked about the concerns of the National Audit Office and the Public Accounts Committee. Within local authorities there is a Section 151 officer who, every year during the budget process, comments on the sustainability or otherwise of a council’s budget. We believe that local authorities and local areas are best placed to know the dangers or otherwise of their future funding and, to my knowledge, no Section 151 officer has made an adverse statement on sustainability.

The noble Lord also asked about the £1.52 billion to complement the precept. The local authorities that are least able to raise the funding will be protected by a greater proportion of that £1.52 billion. I think that recognises, fairly, that those local authorities still have to provide social care. Local authority leaders have said to us that they need £2.9 billion. We will be providing £3.5 billion over the next few years, so I hope that gives the noble Lord some satisfaction.

The noble Lord also talked about poorer areas being likely to get poorer because of the RSG reducing to nothing by 2020. There will definitely be some form of equalisation. Councils such as Westminster raise well over £1 billion in business rates and other local authorities may see reductions. For the latter there will also be some sort of floor protection through business rate equalisation.