Oral answer (Lords) on Local Authorities: Fair Funding Review - Mar 14

To ask Her Majesty’s Government what progress they have made towards the completion of the fair funding review to set new baseline funding allocations for local authorities on the basis of relative needs and resources.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare my interest as a vice-president of the Local Government Association.

My Lords, we are making good progress on the development of a fair funding formula that aims to provide a simple and transparent link between local authority relative needs and resources and available funding.

I thank the Minister for that Answer, but the sooner the better, please. As this is the biggest change to local government funding in a generation, does the Minister agree that factors such as levels of deprivation are highly significant drivers of spending need in a local council’s budget? Will the Minister explain why deprivation is given no prominence in the new funding formula and how areas of greatest need, with the highest levels of deprivation, will be funded in future?

My Lords, the noble Baroness is right about the importance of deprivation but she is wrong to say that we have not yet issued the policy. It was out for consultation until 21 February, as she will know, and we are now considering the responses. Even in that consultation we recognise the importance of deprivation in relation to, for example, adult social services, children’s social services, fire and rescue services, and public health. The noble Baroness makes a powerful point but it is recognised and the policy is still being considered.

Will the Minister, for whom I have a great deal of time, admit to the House that it is impossible to have a fair funding formula if you are dealing only with the specific grants that he outlined in his Answer and the business rate arrangements now being put in place? With the removal of the revenue support grant, it is impossible to have the distribution to which he has just referred.

My Lords, I thank the noble Lord very much for those kind comments. The redistributive element that he referenced will be done through the business rate retention scheme, which will become live at the same time in 2020. I very much agree with him about the need also to bear in mind government grants, of which there are many, in addition to the local government settlement and many programmes such as the Future High Streets Fund, the Coastal Communities Fund, the Stronger Towns Fund and so on that we have seen recently.

My Lords, as part of fair funding, do the Government intend to recommend the solution that Cardiff City Council has put in place, which is 150% council tax on empty properties to push up occupancy, particularly where there is a shortage of rental properties?

My Lords, the noble Baroness raises an important point but she should be aware that we already have a procedure for a premium of up to 300%. That was introduced by this Government very recently.

My Lords, I declare my interest, as listed in the register, as the chair of a social care provider. Adult social care accounts for over 40% of local authority budgets and that number is rising, yet without the production of the adult social care Green Paper, which has been repeatedly delayed, how can the Government look at fair funding from a holistic perspective, and how can providers plan?

My Lords, the noble Baroness makes a very valid point about the importance of that paper on social care, which I hope will soon be forthcoming. She will be aware that we have made special provision for adult social care precepts in recent local government settlements.

My Lords, does the Minister recognise the extreme concern of local authorities about meeting the essential needs of vulnerable children and families? Many have had to cut essential services for those groups. Will he keep those requirements very much in mind?

My Lords, the noble Earl raises another very important point in relation to children’s care. He will be aware that we again made special provision in this year’s settlement, but he is right about the continuing importance of this issue. Earlier, he referenced the troubled families programme, which is important in that regard.

My Lords, I refer the House to my relevant registered interest. Would the noble Lord dispute the statement that the top 10 most deprived councils in England are set to see cuts higher than the national average, with nine on course for cuts more than three times the national average, and will the fair funding review address that?

My Lords, the 10 most deprived areas in England spend on average 22% more on care per household than the 10 least deprived, and that is an important statistic in contradistinction to those the noble Lord mentioned. However, he is absolutely right that it is important that in settling the fair funding formula we look at the needs of particular areas, as well as their resources, and we will do so later this year.

My Lords, when the Minister talks about levels of deprivation, is he taking into account youth services and deprivation in those areas with the highest levels of youth crime, which we have been talking about a lot in this House and across the country? I declare an interest as a former councillor in two London boroughs for 16 years. Youth services used to be an excellent way of keeping young people occupied and away from crime and anti-social behaviour; community safety officers also had a key role. These have all gone. Will that be taken into account?

My Lords, these are factors very much in play, which we will look at. The noble Baroness is right about the importance of youth services. In relation to the integration action plan that we are pursuing throughout the country, particularly in five troubleshooting regions, youth services are given special accent. That is in addition to what is coming through the local government grants.

My Lords, several councils have begun to declare climate emergencies, to develop plans that will adapt to and mitigate climate change. Will the Government consider making an allocation for that purpose, which could benefit the whole of the UK?

My Lords, as always, the noble Baroness speaks with great experience on climate change. She will know that this policy area tends generally to be directed quite separately, over and above the local government settlement. Certainly, local authorities need to bear these issues in mind; all responsible local authorities recognise their importance, and in many cases addressing them makes perfect economic sense.

My Lords, the other week, the Prime Minister recognised at last—in the derisorily small offer that she made to a number of Labour MPs for industrial towns—the link between deprivation and those areas that voted most heavily for Brexit. Regardless of what eventually happens on Brexit, do we not need, on a cross-party basis, a substantial long-term commitment to public investment in services, infrastructure and education for those deprived parts of the country that feel most neglected?

My Lords, first, I do not think that £1.6 billion can be described as derisory. That may be mathematics to the Liberal Democrats but it is not a true reflection of the amount offered by that programme. This offer was for communities that have been left behind, and had no necessarily causal link with how they had voted. Many of those communities are in the north of England, as the noble Lord would know. It is an important programme and, as he rightly says, we should all get behind it.