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Local Government Finance

Part of the debate – in Westminster Hall at 9:30 am on 3rd April 2001.

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Photo of Mr Keith Darvill Mr Keith Darvill Labour, Upminster 9:30 am, 3rd April 2001

I thank my hon. Friend for that intervention. The problems that can result from using old data are one of my main themes today. The current system perpetuates existing problems but, as my hon. Friend suggests, current technology could help to ensure that grants take account of updated information.

The use of ministerial discretion in safety valves could give rise to concern unless the discretion is tied into a clear, published and transparent framework. In other words, the safety valve system could work quickly, but the framework must be open to avoid difficulties with the allocation of grants at central level.

The Government have changed their emphasis recently on public service agreements. I look forward to hearing the Minister comment on the setting up of pilots, and clarify the criteria for public service agreements. The Green Paper also touches on the business rate, which the Government are considering. In principle, the more the business rate can be defined and made accountable to the local area, the more effective it will be.

I apologise for concentrating on my local authority's position, but I wanted to highlight the severe difficulties that have resulted from the existing system. The borough has never been a profligate or high-spending council. It has made strenuous efforts to modernise and embrace change, yet finds itself in a difficult position. It has suffered from a lack of investment in the past, almost entirely due to previous Conservative Administrations. I am sorry to make a party-political point, but it is relevant to explaining the historical position.

In the lead-up to the 1990s, the borough was a low-spending, low-investment authority. Following subsequent changes in the 90s, several services--particularly children's and other social services--needed improvement. Improvements often resulted from inspections, but funding adjustments were not made following the implementation of recommendations, resulting in spending above the standard spending assessment.

The previous Conservative Government, with their disastrous poll tax fiasco and creation of the present system, exacerbated the problem. Low settlement figures in the few years before 1997 were another factor. From a low base, the borough has never been able to recover and has sometimes had to reduce its reserves. That effectively lowers income because, as reserves reduce, so does the interest from investments. Despite higher investment by the present Government, the borough remains in a difficult position.

As a result of its continuing problems, the borough has made its own representations. With all-party support in the borough, a campaign for "Justice for Havering" has been established. We must halt the decline before the position worsens. It has been calculated that there have been cuts of approximately £19 million in the past 10 years. Admittedly, some of them were the result of planned spending expansions, but in many ways such expansions were justified investment in several essential services.

The financial system impedes the planning and modernisation of services. It hinders delivery of the Government's programme, creates low morale among staff and council members and leads to public incredulity because council taxes are high when public services have been cut. Local government finance needs urgent review--that will be complex--and I am aware that the Government are starting to give the matter priority, which I appreciate. If the planned reforms take longer than expected, the Government should introduce the safety-valve concept as an interim measure. That would be a possibility for boroughs such as Havering, which has specific difficulties.

It is important that our public services are maintained. Delivery is important not only for the local authority's services, but for initiatives in which local authorities have an important role, such as reducing crime and increasing educational standards. With that, I conclude my remarks and look forward to the Minister's reply.