HC Deb 21 January 2003 vol 398 cc53-9WH 3.30 pm
Mr. Patrick McLoughlin (West Derbyshire)

There are several reasons why I wish to raise this debate today. I hope that by the end of it, the Minister will be able to reassure a great number of my constituents and me that they have not been treated unfairly by the Government. Certainly, the view in Derbyshire Dales at the moment is that 5 December, the day on which the Government—[Interruption.]

Mr. Joe Benton (in the Chair)

Order. I am sorry to interrupt the hon. Gentleman, but will members of the public leave the Chamber quietly, please?

Mr. McLoughlin

As I was saying, 5 December brought a bitter blow to Derbyshire Dales. On that day, the Government announced the grants that they will make to district councils to provide services such as leisure, sheltered housing, environmental services, refuse collection and many others. They announced that Derbyshire Dales district council will receive an increase, on the Government's figures, of only 3 per cent., compared with a 12.5 per cent. increase for every other district and borough council in Derbyshire. I believe that that shows that Derbyshire Dales district has been very unfairly treated. Of course, that increase was not really 3 per cent., because there was a bit of double-counting, not dissimilar to what we have come to expect from the Government.

My constituency covers approximately 90 per cent. of Derbyshire Dales district and 30 per cent. of Amber Valley borough council. The other 10 per cent. of the Derbyshire Dales area is represented by the hon. Member for High Peak (Mr. Levitt). The leader of the council, Lewis Rose, wrote to the hon. Gentleman and me, saying: I am sure you will appreciate that these proposals leave us in an impossible position. The amount that the Government thinks we should spend at is higher than we do spend at. The average Band D for non metropolitan Districts is 180 pounds yet we are at 140 pounds. The real increase in our Grant Settlement year to year is not the safety net of 3 per cent. but a mere 1.6 per cent … We do have many problems, which we need to tackle. Our working in partnership with High Peak Borough and our joint LSP"— local strategic partnership arrangements demonstrate we have much in common and similar problems to solve, yet we are now on the back foot and they at least have a more equitable settlement. On top of all this all Authorities face as you know wage increases of 5.6 per cent. next year with the recent settlement and the extra National Insurance payments. It is not difficult to see that without a fairer settlement this Council will be left behind in Derbyshire through no fault of its own and unable to participate fully and properly in the valuable partnerships such as the one I have already mentioned, which will bring benefit to those parts of the Dales which require all our efforts. The Council is faced with a large increase in Council Tax (which appears to be the rationale behind the settlement to bring us up to the level of Band D elsewhere) or finding the money from increased fees and charges and balances. These last two options will only partly solve the problem, so unless you and others can bring about a change in the Settlement, we are faced with a large hike in Council Tax due to lack of proper funding in the Settlement. I am not sure why we have been singled out in Derbyshire for this treatment and we appear to fare a lot worse than many of our rural bench mark colleagues". That is why there is a lack of understanding about why Derbyshire Dales district council has been badly treated under the settlement. During the four years when Derbyshire Dales was controlled by Labour and Liberal coalition, the council tax for band D increased by 46.7 per cent. In the three years so far of Conservative control, the council tax has increased by 14.19 per cent. That shows a council that is determined to do everything possible to keep the burden on its council tax payers to a low minimum. However, it now finds that its work over the years to keep the council tax down is undermined by one fell swoop of the Government.

The cash increase this year for Derbyshire Dales district council is £52,000, which is an increase of 1.6 per cent. rather than the 3 per cent. that the Government claim. Of that £52,000, some £19,000 must be paid to the Peak District national park—there is no discretion for the council. West Derbyshire is a beautiful constituency, and we get many visitors each year. The Peak district, which covers a large part of the Derbyshire dales, is estimated to get 20 million-plus visitors each year. It is an area of outstanding beauty, but that does not mean that it does not have problems. Indeed, that number of tourists sometimes brings problems as well.

I hope that the Minister will say that she is willing to examine the case for Derbyshire Dales district council. Unless the Government reverse their decision, we will be looking at a council tax rise for band D properties of about 23 per cent. That is art unacceptable increase, as the council leader has said. If it comes about, it will be a result not of what the district council has done but of Government policy.

Derbyshire Dales is a large rural council that borders many different constituencies and district councils. Will the Minister tell me why the people in Sudbury in Derbyshire Dales will get an increase of £1.91 while the people down the road in Foston in South Derbyshire district council get an increase of £7.07 per person? Why will the people of Matlock get an increase of £1.91 while the people in Chesterfield get an increase from Government funding of £8.71? Why will the people of Tansley get an increase of £1.91 while the people of Lea in Amber Valley borough council get an increase from the Government of £7.50 and the people in Ashover in North East Derbyshire district council get £6.78?

Will the Minister tell me why people in Bakewell in Derbyshire Dales will get an increase of £1.91 while the people in Buxton in High Peak borough council get an increase of £7.88 per head? Why will people in Ashbourne get an increase of £1.91 while the people down the road in Mayfield in East Staffordshire borough council get an increase of £5.39? Why will people in Longford get an increase of £1.91 while the people in Church Broughton, just down the road, get an increase of £7.07? Why will the people in Earl Sterndale get an increase of £1.91 while the people in King Sterndale, which is literally just down the road but in the High Peak borough council, get an increase of £7.88 per head?

All those figures are the increases that different councils in Derbyshire and neighbouring East Staffordshire will see in Government funding. However, in Derbyshire Dales, the funding increase per head is a mere £1.91. It is a huge difference, even if one looks at the Government's figures.

The actual increases this year are as follows: Amber Valley £696,000; Bolsover £492,000; Chesterfield £635,000; Erewash £648,000; High Peak £565,000; North East Derbyshire £528,000; and South Derbyshire £472,000. However, the increase for Derbyshire Dales is only £52,000, and £19,000 of that has automatically to be paid to the Peak District national park.

There has always been a great mystique about local government funding. The Government assured us that they would make it simpler but they have not done so. I await with interest the Minister's explanation of why the Government have treated the people of Derbyshire Dales so badly. The variations in the figures are dramatic. For example, the figure for every person in Matlock is £1.91; in Chesterfield it is £8.71; in Tansley it is £1.91, but in Lea, which is just a mile away in Amber Valley, it is £7.50; in Bakewell it is £1.91, but in Buxton £7.88. I do not understand it, and neither will the people of Derbyshire Dales. I hope that the Minister can explain it today.

The district council has asked for a meeting with Ministers to discuss the matter and I hope that that meeting can be arranged. If not, perhaps the Minister herself or one of her colleagues will come to Derbyshire Dales to explain why it has fared so badly in this settlement.

3.41 pm
The Minister for Social Exclusion and Deputy Minister for Women (Mrs. Barbara Roche)

I congratulate the hon. Member for West Derbyshire (Mr. McLoughlin) on securing the debate, which gives us the opportunity to discuss the provisional local government settlement for Derbyshire Dales district council in the coming year.

The matter is also of considerable interest to other hon. Members' constituencies and local authorities. We are considering the comments received during consultation on the proposals that were announced in the House on 5 December. The hon. Gentleman mentioned meetings and representations; he will be aware that many local authorities came to see Ministers before the deadline for consultation, which has now ended. I assure him that all the representations that were made to the Office of the Deputy Prime Minister before the end of the consultation will be considered in detail, as he would expect.

Many local authorities, including Derbyshire Dales, have made representations on the settlement. Many hon. Members, too, have made representations to us on behalf of local authorities in their constituencies. My hon. Friend the Member for High Peak (Mr. Levitt) wrote on the issue of funding for Derbyshire Dales and the hon. Member for West Derbyshire was kind enough to refer to that in his remarks.

We will carefully consider all the comments made on the proposals before we take final decisions. We expect to be able to announce the final settlement early in February. I shall certainly make some detailed comments about what it means for Derbyshire Dales, but I think that it will help if I put the overall framework in context, as the hon. Gentleman invited me to do.

Our proposals for the funding of local government revenue expenditure provide for an overall increase in Government grant including grants for specific initiatives of £3.8 billion—an 8 per cent. increase at a time when inflation is below 3 per cent. In the light of the overall grant increase, we have also been able to set floors and ceilings, which will ensure that every authority in England receives an above-inflation grant increase, and Derbyshire Dales will certainly benefit from that guarantee.

Derbyshire Dales district council will no doubt be pleased by that, although I know from what the hon. Gentleman has said that it is not the happiest of local authorities. However, it will we hope be pleased to learn that we intend to keep the system of guaranteeing a certain level of grant for the foreseeable future. We do not believe, though, that it is appropriate to set the level of that guarantee for future years.

Mr. McLoughlin

That is where one problem arises, and it has taken some digging to establish the position on it. The Minister has referred to a figure of 3 per cent. This morning, I spoke to the chief executive of Derbyshire Dales, who told me that its increase is 1.6 per cent. in actual terms because the cash increase is £52,000. I have mentioned the fact that money has to go straight to the Peak District national park. Why do we continue with the fallacy of giving different figures? It is either a 1.6 per cent. increase on last year's figure, which it is, or it is a 3 per cent. increase, which the Government say that it is. Floors and ceilings offer no comfort when the Government say one thing but the actual figures do something else.

Mrs. Roche

I understand the hon. Gentleman's point, but he has got to look at the current formula, under which all districts receive at least a 3 per cent. increase on a like-for-like basis. He also has to take into account the transfers of responsibility that have taken place. Derbyshire Dales, for example, will receive a far higher grant from the Department for Work and Pensions for council tax and housing benefit administration, which must be included in the calculation.

Mr. McLoughlin

I know that the details were slipped out in a parliamentary answer on Friday and I happen to have them with me. The truth is that while Derbyshire Dales got an increase in its grant from the DWP, so did every other authority in Derbyshire. We did not get a higher than average increase, so we are still in the same position as every other authority in the county. I have sat on a Government Bench in my time and was warned that the increase in the DWP grant would be thrown in as a diversionary tactic; it does not alter the figures.

Mrs. Roche

Anyone who knows me knows that I would never go in for diversionary tactics. If the hon. Gentleman gives me a little time to make my case, I will deal with the exact position of Derbyshire Dales. We do not believe it appropriate to set the level of the guarantee for future years. That is because factors such as data can vary considerably each year, which makes firm decisions on the levels of the floors and ceilings very difficult.

The provisional settlement is generally good news for shire district councils. The average increase in general for those authorities is 7.6 per cent., and we have also been able to set a ceiling of 12.5 per cent. Our proposals are also good news overall for those authorities such as Derbyshire Dales with education and social services responsibilities. The county council receives a grant increase of 7.9 per cent., which is near the very top of the increases for county councils in England. I certainly hope that that settlement will bring considerable benefits to the hon. Gentleman's constituents.

If the hon. Gentleman is saying that other districts in Derbyshire have done better in the provisional settlement, he should take into account that only the two most deprived Derbyshire districts, Chesterfield and Bolsover, receive a greater formula spending share per head, with the others receiving similar or lower levels than Derbyshire Dales.

I will talk in some detail about Derbyshire Dales and how we calculated the formula there, but before I do so, I will comment briefly on the formula grant review. As the hon. Gentleman knows, we had a series of debates on the Floor of the House that reflected the wide range of views on the formula grant review. I hope that he will agree—I know that he is a fair man—that my colleagues in the Office of the Deputy Prime Minister have tried to consult all hon. Members as comprehensively as possible. It was a challenging task. We announced that we would introduce a grant distribution system for local authorities that would be fairer and more transparent, as the old standard spending assessment system was outdated. There was a widespread belief among local authorities of all political persuasions that change was needed.

In a year, the Department has held meetings of a technical group, complex discussions with local government and detailed meetings with other Departments. I assure the hon. Gentleman that we carefully considered all the responses that we received.

The result is a grant distribution system that is less complex and easier to understand. It also removes outdated and inadequate indicators. As the hon. Gentleman knows, the environmental, protective and cultural services—the EPCS block—is the main driver of resources for shire district councils such as Derbyshire Dales. There was a widespread belief that that was a main area for reform. The new system is based on a basic level of funding, with top-ups for various factors such as deprivation, high labour costs and sparsity.

The hon. Gentleman made specific points about the changes that have affected Derbyshire Dales district council. The authority has not received a greater grant increase for several main reasons. It has done fairly well on the relative need side of the equation, with an increase in formula spending share of 11.3 per cent. on a like-for-like basis. The figure was not higher for several reasons—the main one being a 2.9 per cent. fall in the population as recorded by the 2001 census, to which the leader of the local authority referred in correspondence.

The Government must rely on the best and most robust data available at the time. If the local authority has questions about the census data, I urge it and the hon. Gentleman to take up the matter with representatives of the Office for National Statistics, who I am sure will listen carefully to any representations made to them. I understand that several local authorities are considering doing so, and we will listen to anything that they have to say.

Derbyshire Dales has also been adversely affected by the removal of the overnight visitors indicator, to which the hon. Gentleman referred. I understand his point about visitors. One can make a plausible argument that visitors impose some additional costs on authorities, but spending patterns suggest that they also bring in revenue, especially through car parking. That may not be the case for every authority, but there is no evidence that overnight visitors impose a significant net burden on councils.

Derbyshire Dales has also been affected by the changes that we have made to take account of deprivation and sparsity. Some of those changes have been favourable to the local authority; others have not. We have removed certain housing indicators, and the long-term limiting illness indicator, because those measures were badly out of date and no longer held to be plausibly linked to councils' costs. I repeat that all the measures were extensively discussed and canvassed with local authorities.

As part of the general reduction of top-ups in the environmental, protective and cultural services block, and to enhance the basic amount for all authorities, we made changes to the factors affecting sparsity and deprivation. Most sparse areas, including Derbyshire Dales, have gained from the reduction in deprivation and density top-ups.

Formula spending share is only part of the equation that drives grant. We deduct from the assessed relative need the amount that authorities would receive from council tax if they charged at the same rate.

The national assumed council tax has been referred to by the hon. Gentleman and in correspondence. That is a notional figure used solely to distribute grant; it is not a target or a prediction. We have set it at broadly the same levels that councils charged in 2002–03, with a small increase for inflation. With the new formula, we have emphasised that, rather than pretending that we can say how much councils should spend or what their council tax should be, we are focusing on how we divide up grant—the real money—between them.

The hon. Gentleman asked why Derbyshire Dales had done so poorly on grant compared to the formula spending share. There are probably two main reasons. The first is the move towards greater resource equalisation. He will know that that is not a new concept; it also existed under the former system. Again, there was some concern among local authorities of all political persuasions about the way in which it had operated in the past.

In the provisional settlement, there was an increase in the EPCS block for districts of more than £1.2 billion. However, that is not real money; the extra is from an increase in the assumed council tax to a more realistic level. As a high tax-base authority—Derbyshire Dales is well above the national average and is the highest tax-base authority in Derbyshire—Derbyshire Dales' contribution to the extra council tax is relatively high.

Mr. McLoughlin

The Minister says—I think that I have got this right—that the council should move its council tax to "a more realistic level". Is she saying that it should increase it more than every other district in Derbyshire because it has so much less money from the Government than every other district in Derbyshire?

Mrs. Roche

No, that is not what I am saying at all. The level of council tax is not a matter for Ministers or even Members of Parliament; it is a matter for the local authority. I was talking about the move to greater resource equalisation and pointing out that Derbyshire Dales is a high tax-base authority. That is one of the considerations to which the new formula works.

The second reason is that we have a new system of apportioning assumed council tax levels, and hence grant, between the authorities in an area. We have used our judgment to determine the fairest allocation. In comparison with the former system, that has tended to favour shire counties in shire areas rather than the districts, although the effect on taxpayers in an area is marginal.

The changes that we have made are the result of considerable consultation with experts and those with an interest. We consulted widely and at length over the summer on a range of options for the new grant distribution system. We have tried to make the new system understandable. I do not deny that the hon. Gentleman is right to say that any system of local government finance is complex by its very nature, but we have tried to make it as transparent as possible through a system of basic entitlements and top-ups for certain factors. We have guaranteed that every local authority receives an above-inflation grant; that is unprecedented. Derbyshire county council has had a good provisional settlement, with benefits for all residents—

Mr. Joe Benton (in the Chair)