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Local Government Funding (Poole)

It is not the first time that I have raised the subject of funding and finance in Poole, and I suspect that it will not be the last. The problems will not go away and I want to make a case for a better deal for Poole. It is great to have the support of the hon. Member for Mid-Dorset and North Poole (Annette Brooke), who has changed her plans to be here. I do not know whether she will intervene or catch your eye, Mr. Deputy Speaker, and speak for a few minutes later, but the important thing is that we both feel strongly about the way in which Poole is funded. Poole council is a good council. High quality people, from all parties, serve on it and it attracts high quality officers. I have always been impressed by the way in which they conduct their business. The council has been under the control of different parties but I have never had any great concerns about it. Matters have always been properly debated and efficiently dispatched. However, life is becoming harder in Poole because the grant settlements that we have received over a series of years put great pressure on the local authority. Poole is a beautiful place. It is also a place of extreme contrasts. Parts of it have some of the highest house prices in the country yet several wards are in the worst 25 per cent. for deprivation. One has to envisage some of the contrasts in London to appreciate what life is like in Poole. Poole receives only £169 per head of Government funding—it is in the floor. That is less than 50 per cent. of the average figure for unitary authorities. Although council tax in band D is slightly lower than the average—in 2006-07, it was £1,233—that was achieved by superhuman efforts by the local authority, which placed a high priority on keeping council tax down. We have many retired people who are on fixed incomes and, Poole being in the west country, salaries are not especially high. Council tax is therefore a live issue for our constituents. In 2007-08, the council’s net budget requirement was £84.542 million, of which £61.333 million—72 per cent.—was raised from council tax. Our funding from Government was £23.209 million—27 per cent.—through the general funding formula. The balance between Government support and locally generated council tax leads to a feeling of unfairness about the system of grant distribution. Since 2003, average unitary authority funding per head has increased by £114 but only by £44 in Poole. We therefore feel not only disadvantaged by being towards the bottom of the league tables—though nobody would expect us to be at the top—but that we are falling behind other authorities because of the operation of the funding formula. I want to make a specific point. I was here when the Minister for Local Government made his announcement about the grant settlement. He said that no authority would be below 2.7 per cent. The local authority in Poole feels that its grant in the current year has gone up by only about 1.7 per cent. It says that revenue support grant was £22.82 million in 2006-07 and £23.209 million in the current year, which represents an increase of only 1.6 per cent. I understand that there has been some correspondence and debate. Will the Minister point out where the discrepancy lies, as there is a feeling that we are missing out on 1 per cent. of that grant—£235,000, I think—which would make some difference? In December 2004, the Minister for Local Government announced that he had overhauled the system used to distribute formula grant to local authorities and increased the level of resource equalisation. That has had a substantial detrimental effect on authorities such as Poole, which has high house prices and is assessed as having a relatively greater ability to raise council tax locally. In previous conversations, I think that he acknowledged that that element in the formula is one of the factors that disadvantages Poole. Resource equalisation was intended to reflect the higher need for spending in authorities that have a weak tax base. However, the difficulty is determining the extent to which higher spending is genuinely the result of higher need, or whether it is attributed to factors that should not be compensated for through the grant system, such as higher levels of service or demand for discretionary services. Increased resource equalisation would appear unfair to lower-spending authorities, where local voters favour lower taxation over a higher service level. That is a key issue for people in Poole. If there is to be a high level of resource equalisation, the targeting of significant amounts of direct Government funding to deprived and declining areas could also be brought into the resource equalisation system. Without doing that, areas such as Poole, who miss out on much funding, will consider it unfair. Poole acknowledges that it has received funding to support the regeneration project in the town. One of the main capital projects is the building of a second bridge in the harbour. There is also a building schools for the future project and, more recently, a local authority business grant has been received.