Local Government Finance

My hon. Friend makes a good point. I wonder whether there will be regional differences, because areas with a large number of visitors from within the country will face greater costs. That is the same for my local authority as it is for my hon. Friend's. Clearly, although the Minister spoke about recognising additional cost pressures, those pressures and costs are increasing faster than the grant increase. Waste is an example. The Office for National Statistics corporate services prices index indicates that prices are rising annually well above the settlement figures, at between 5 and 7 per cent. per annum. Of course, the obvious example is adult social services, where the gap between funding and demand is growing quickly, where cost pressures are increasing rapidly, and, of course, where the human cost of failing to meet those cost pressures will be felt most acutely. Last week's report by the Commission for Social Care Inspection made it clear that local authorities across the country are facing similar challenges. Two thirds of local authorities now support only those who have substantial and critical needs, even though councils overall have increased their expenditure on social care for adults in real terms. The UK's population is ageing rapidly. The change is more rapid in some parts than in others, but it is clear that Government financial support does not reflect that adequately. The Department of Health's response to the report was yet another investigation. Perhaps the Department for Communities and Local Government should consider its response, too. The social care reform grant, to which the Minister referred, is back-loaded. A lot of the resources are loaded towards the end of the three-year period, but the Commission for Social Care Inspection has suggested that they should be front-loaded. Will the Minister look at the issue again when he deals with the remaining two years of the settlement? I am also concerned about another way in which vulnerable people will be affected. The Minister mentioned the supporting people budget, to which there will be a real-terms year-on-year cut of 12 per cent. by 2011. The programme assists the elderly, those with disabilities and mental illnesses, and those fleeing domestic violence. A lot of those people will go on to rely heavily on adult social services. That is yet another pressure. The settlement is not just tight; it badly affects the most vulnerable. My concern is that there may be more cost-shunting from other services. Indeed, that is already apparent. A gentleman whose wife is terminally ill with a brain condition came to see me a couple of weeks ago because an argument is taking place about who is responsible for providing his wife's care. To begin with, it was funded under the continuing care programme, then responsibility was transferred to adult services. The hours of care were then cut, and then he had a telephone call to say that responsibility for provision was moving back to the primary care trust. Clearly, it is an incredibly distressing time for him. He is trying to work to support his family, but he has no certainty about what support he will receive and who will fund it. The concern is that such arguments will continue as cost pressures get ever tighter. Another issue of great concern is the effect on excellent cross-agency working. Representatives from local children's centres tell me that the first cuts that they are experiencing are to cross-agency working. Health agencies are pulling out because they cannot support the costs. My concern is that local authorities will soon feel the same. We are losing huge benefits. There is a familiar theme to all those problems. Responsibility is increasingly being passed to the front line, but without adequate resources. The Government are not being honest about the real pressures facing local authorities. That is reflected in the fact that their grant increase is 1.5 per cent. or less in real terms over the next three years. However, the Government are working on the assumption of council tax increases of up to 5 per cent. If there was parity in funding, council tax increases would match increases in central Government grant. There should also be parity in the increases for Government Departments. Overall, there is to be a 2.1 per cent. real increase in public expenditure. There is to be a 3 per cent. increase for education, 3 per cent. for transport, and 3.7 per cent. for health. There is no parity there. The Minister says, somewhat disingenuously, that local authorities could deliver council tax cuts if they were more efficient, but local authorities are performing well on efficiency targets. According to the latest published figures, councils are set to beat the overall efficiency target by 41 per cent., achieving £4.25 billion of savings, compared with a target of £3 billion. The figures are even more pronounced when we consider cashable efficiency gains: councils beat their target by 122 per cent. In any case, assumed efficiency savings are factored into the settlement that we are debating. In many respects, local authorities are doing better than the Department. One need only consider the 60 per cent. overspend on the FiReControl IT project to realise that perhaps there are lessons that the Department for Communities and Local Government could learn from local authorities, rather than it being the other way round. The Government are using the efficiency debate to sidestep the accusation that none of their actions on local government finance sit easily with their proclaimed fervour for the devolution agenda. There is no transparency and, most importantly, it is difficult to see a clear line of accountability. It would be better if the Government acknowledged that council tax is fundamentally flawed, and that there is desperate need for its reform. The Conservatives accept the need for reform but have not come up with an alternative. The Government's performance is disappointing, and again real opportunities for effective change have been passed up. The local government finance system should be designed to be fair to local taxpayers and open in its procedures and finances, and it should reflect priorities at local level. It must be local, so that decisions are made and cash is raised in a manner accountable to local voters, as they simply do not understand how that is done at present. It must be fair, so that it reflects people's ability to pay—the current system does not do so—and open, so that people can see what they get, and could reward or punish their local council accordingly. Local income tax will achieve much of that: it is fairer on the individual, because it is related to their ability to pay; there is no need for council tax benefit, so millions of people who are entitled to it but do not claim it would benefit; and it is a more buoyant form of revenue, which would give authorities the opportunity to focus on their priorities. However, it is not enough on its own. We need a fundamental change in the balance of central and local funding. The gearing system means that 75 per cent. of local expenditure is still funded centrally, and only 25 per cent. is raised through council tax, which is one reason why there have been larger increases in council tax. Addressing that balance would make the system more transparent. We need to move away from capping and ring-fencing.