HC Deb 16 December 1997 vol 303 cc111-2
1. Mr. Miller

If he will make a statement on his review of the mechanism of local government finance. [19393]

The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott)

We announced the review of local government finance in July, taking forward our manifesto commitments, in close collaboration with local government, business and other representative organisations. We shall shortly consult more widely on possible changes and set out our proposals on local government in a White Paper next spring.

Mr. Miller

I thank my right hon. Friend for that reply and assure him that the long-overdue review of local government finance is widely welcomed in my constituency. When progressing towards greater localisation of the business rate, will he take into account the views of the business community?

Mr. Prescott

Yes, I can reassure my hon. Friend on that point. He will recall that, in our manifesto, we said that there were sound reasons why domestic rates should be decided locally. Any system must command the support of the business community, which is why we are consulting both the business community and local authorities about how we shall achieve that.

Mr. Yeo

As this year's local government financial settlement was clearly designed to penalise certain inner-London boroughs, as well as councils that serve rural areas and those that have prudently repaid their debt, will the Secretary of State now confirm that the aim of his review is simply to give more cash to Labour councils, no matter how incompetent or corrupt they may be?

Mr. Prescott

No, I cannot accept the conclusion drawn by the hon. Gentleman. The purpose of this Government is to be fair in determining local authority financing, and we spelt out precisely how that was so in the recent settlement which we brought to the House. I am bound to say that most local authorities have accepted our conclusions.

Mr. Barnes

There were two great Tory fiddles over local government finance when they were in government. One was the area cost adjustment and the weighting given to that figure to top-slice sums from shire counties. The other, affecting district councils in particular, was the enhanced population figures. Those meant that places such as Westminster and certain seaside resorts received excessive sums because of the people who moved into those areas; whereas areas such as north-east Derbyshire, where people had moved away for work purposes, lost out considerably. Will those matters be taken into account in the forthcoming review? I hope so.

Mr. Prescott

I can reassure my hon. Friend that that is precisely what we shall do. As I recall, during the statement on local authority financing, he mentioned a different sort of formula, which we are quite prepared to discuss with him during the review, and we await his contacting us.