Local Government Finance

Yes, I do. We should look at the distance from target—the difference between the amount of money a local authority should be getting in accordance with the formula and the amount it actually receives. Even though both of our authorities have received very generous settlements, over the three-year period my authority will still have had about £25 million less than the formula says it should have had. The settlement is much better than in previous years, but we are still significantly underfunded. That is why I say that the next comprehensive spending review must work towards payment in full according to the formula, so that we can make sure that that direction of travel is continued. The Government have maintained the mechanism of floors, which I welcome even though my authority suffers from it, as the alternative would be much worse—not only for my authority but, possibly, for all local government. We should look back to what happened in Wigan in the 1990s: in one year, we suffered a loss—a cash reduction—in external support of some £15 million. That has not happened to any local authority in the past 10 years; not one of them has received one penny less in cash terms, let alone £15 million less. Therefore, I hope that the hon. Member for North-East Bedfordshire (Alistair Burt) will give a commitment in his winding-up speech that a future Conservative Government would continue with a floors arrangement. I should add that that cash reduction took place in 1993-94 and we did not manage to receive the same amount of money as before until the first year of the Labour Government. The formula is complex, as it is difficult to encapsulate in one formula all the different needs throughout the country; nevertheless, the Government and the Local Government Association negotiate on that formula, and the changes are worked in slowly in order to allow time to adjust. I strongly welcome the end to double damping. It is a tremendous achievement that the Minister has agreed to that—double damping was unsustainable and any phasing that was needed because of the changes to the personal and social services element of the formula could have been achieved by single damping. The needs and resources element in the formula is also welcome. Because an extra 2 per cent. has been shifted into that element, authorities such as mine and that of my hon. Friend the Member for Tyne Bridge (Mr. Clelland)—which face difficulties and have reduced ability to raise money from their councils because of the number of houses in bands A to C—are better able to fund areas of need. That is extremely important when we also take into account the gearing effect that can arise in authorities with a low tax base. It has been said—the hon. Member for Bromley and Chislehurst (Robert Neill) intimated as much—that this is somehow a London and the south versus the north and the midlands settlement, or an urban versus shire settlement, or a Tory versus Labour settlement. I do not believe that at all; it is none of those. It is a settlement that is about the haves versus the have-nots—and, quite properly, the have-nots have won. The London and the south versus the north argument is clearly wrong: Torbay has an 8.6 per cent. increase whereas Gateshead has a 2 per cent. increase, and Redbridge has a 5.2 per cent. increase whereas Liverpool's increase is 2 per cent. On urban areas versus the shires, Reading's increase is 2 per cent. whereas Lincolnshire's is 9.8 per cent., and South Tyneside's increase is 2 per cent. whereas Somerset's is 9 per cent. On Labour areas versus Conservative or Liberal Democrat areas, Labour Sunderland's increase is 2.9 per cent. whereas Conservative Rutland's is 12.7 per cent., Labour Salford's increase is 3.6 per cent. whereas Conservative Dorset's is 11.8 per cent., and Labour Wolverhampton's increase is 3 per cent., whereas Liberal Democrat Cornwall's is 9 per cent. I am sure that any hon. Member in this Chamber could produce a different set of statistics. The point I am trying to make is that saying this is north versus south, Labour versus Tory or urban versus shire is not a sustainable argument. The only consistent thing is that authorities whose needs are greatest are getting the greatest sums. That is the only pattern proven valid by the statistics. The movement on the needs and resources element is greatly to be welcomed, but it could be subverted if the floors were too high. That is why I was pleased when we reduced the floors to 2 per cent., 1.75 per cent. and 1.5 per cent respectively over the next three years. If we are to make the necessary changes and allow those resources to move to the authorities that need them at a rapid and sustainable pace, the floors need to be as low as possible. I hope that that approach will continue into the next comprehensive spending review round. The change from the neighbourhood renewal fund to the working neighbourhoods fund is equally welcome, and I congratulate the Minister on it. One of the things that this Labour Government have shown over the past 10 years is that ensuring that people get into proper, decent, trained work is the best and most sustainable way to tackle, and make a big difference to, poverty and deprivation in this country. Changing the focus from the broader renewal fund to the working neighbourhoods fund, which will tackle worklessness in areas of severe deprivation, will have a huge impact on those local authorities. Building that into the Department for Work and Pensions and having a single fund will be a major step forward in tackling deprivation in our authorities. I have always been opposed to capping, which was introduced by the previous Conservative Government. We toyed with getting rid of it, but we have had to go back to it for what are, in my view, slightly questionable reasons. Local authorities are answerable to their constituents, so we should not have capping. It should be up to that local—