Local Government Finance

Of course I do not oppose those increases. All I am saying is that if we are talking about trying to tackle the pressures on many services, such as adult social care, the headline figures fail to capture the fact that real-terms increases in local government funding have not been as good as they seem when it comes to their capacity to meet additional demands. That fact is clear, and I am not trying to have it both ways at all. We can compare the local government funding figures with some equally well-known figures, to which the hon. Member for Bromley and Chislehurst (Robert Neill) referred: council tax has doubled over the past 10 years and will be more than doubled when the three-year settlement is taken into account. When we add to that the fact that take-up of council tax benefit is not 100 per cent., we can see that the pockets of many vulnerable people will be hit hard as a result of the settlement. Today, and in the initial statement in December, the Minister described the settlement as tight but fair and affordable. Our concern is that it will be more than tight for many people; it will be unaffordable for people who are yet again experiencing above-inflation council tax increases. The real disappointment is that there were huge opportunities for reform. Since the last settlement, the Lyons inquiry has reported to the Government and raised some valid issues, but they were kicked into touch by the Department. The proposals were not the most ambitious, but were simply suggestions about how to tackle some of the difficulties that people on the lowest incomes face in paying their council tax, recognising the fact that the tax consumes an ever-increasing proportion of their disposable income. Lyons proposed extra bands at the top and bottom of the scale, and the automation of the council tax benefit system to end the scandal that millions of pensioners who are entitled to the benefit do not claim it. Those proposals for interim improvements were rejected; instead we are left with a complex and centralised system. Members on both sides of the House have talked about the complexity of the formula. They have pointed out that central control has been retained and that the threat of capping still hangs over the head of authorities that feel they simply do not have the resources to focus on what they consider their priorities. Ring-fencing is still in place, although there has been some erosion. More than half the external income of local authorities is still based on ring-fenced grants. All the talk about damping and double damping, and the fact that it will roll into the three-year settlement, means that it has been difficult for many authorities to get to grips with what their situation really is, and it is extremely difficult for members of the public to understand what is going on. My local authority in Cornwall has been awarded significant increases, but because they are near the ceiling they have been clawed back to meet the damping on the floor; increasing sums of money are being clawed back. If everything is supposed to be moving towards convergence I do not understand why those amounts are increasing. The hon. Member for Bromley and Chislehurst pointed out that control and centralisation are being exercised at a time when the Government's contribution to local government funding is decreasing. More and more emphasis is being placed on business rates, and direct funding from central taxation is decreasing by 29 per cent. this year. No wonder we face such a difficult settlement. As a result, some areas will find it extremely difficult to cope with its impacts. My concern is that the settlement leaves many local authorities with a lack of flexibility, especially in terms of dealing with the key issue of demographic change. We welcome the Minister's announcement of a cross-governmental programme of work on the issue with the Local Government Association and the national statistician. However, I am concerned because the opportunity to predict some of those changes has been missed. We have seen the expansion of the European Union, and perhaps it would have been better if the changes that resulted from it had been predicted. I wonder whether the Minister will comment on how such things might relate to students. In my constituency, the town of Falmouth has experienced an 80 per cent. increase in the 18-to-24 demographic in the past three years. Clearly, that is very dramatic, and it is happening very quickly. So I very much hope that the cross-departmental review will consider issues such as the allocation of housing in the regional spatial strategy, and other significant projects that will clearly have an impact on populations. I also have concerns about short-term migrants. In rural areas there is a lot of transitory agricultural labour. As well as the extra work that will be generated—for example, in refuse collection, which my hon. Friend the Member for Cambridge (David Howarth) has referred to—I know from speaking to my local district councils that they have felt the pressure of trying to ensure that a lot of those migrant workers are accessing everything that they are entitled to, and that there is compliance with gangmaster legislation. That has taken up significant resources, which might need to be factored into some of the work that they will do.