---

Local Government Funding (Poole)

I congratulate the hon. Member for Poole (Mr. Syms) on securing a debate on an issue that I know is close to his heart. It has given us a useful opportunity to discuss Poole and local government funding. I want to praise the way in which the hon. Gentleman raised his case. At times we can all speak in the House with passion and commitment, but at other times, when our case is somewhat weaker, we find it more difficult to do so. The hon. Gentleman had a difficult case to make, and he made it well. The people of Poole should be proud that he represented them as he did. Let me outline the local government funding position. The Government will provide £65.8 billion in 2007-08, an increase of £3.1 billion, or 4.9 per cent., on the previous year’s funding. Formula grant will make up £25.6 billion of that total in 2007-08, an increase of 3.7 per cent. on a like-for-like basis. I shall say more about that, because I think there has been a misunderstanding and that I can help the hon. Gentleman. The settlement confirms the increased investment announced last year as part of the first stable and truly predictable local government settlement. Allocations for all English local authorities were announced for 2006-07 and 2007-08. We examined the spending pressures with local government. In 2007-08, there is extra provision, over and above the previous plans, of £508 million, following the representations that were made to us. Looking ahead, we are committed to securing a sustainable three-year settlement for local government in the comprehensive spending review 2007, and are working closely with local government to achieve that. We recognise that local government needs that stability and an assurance about what the funding will be. There has been a continued real-terms increase in investment in local government, which will allow authorities to continue to deliver effective services at a cost that is affordable for them and for local residents. The increase in total Government grant for local services since 1997 is 39 per cent. in real terms—that is 39 per cent. higher than inflation. On the calculation of formula grant, I take on board the points made by the hon. Gentleman and by the hon. Member for Mid-Dorset and North Poole (Annette Brooke) about complexity. It is not a case of not wanting to be transparent. It is just that the way to reach a fair settlement—the basis of the approach has existed since 1981—is relatively complex. The system of distributing grant to councils according to a formula that reflects the relative needs of an area and the ability to pay council tax in that area is not new. As I said, the broad approach to reaching a formula has existed since 1981. However, last year, we reformed the grant calculation system itself. The new system has the advantage of removing the old assumptions about spending and tax from the calculation of grant. As a result, it devolves more accountability to local authorities. Grant distribution is now determined by four things: a relative needs formula; an amount relative to the resources that can be raised locally based on the property profile; a central allocation per head; and grant damping. The relative needs and resource elements should be broadly familiar to hon. Members, since the system has long contained formulaic estimates of relative need, and of relative ability to raise council tax. The central allocation makes explicit what was always implicit in the system: that after taking account of differences in relative needs and resources, some of the grant is allocated on a per capita basis. We are continuing to protect all local authorities from detrimental changes to their grant allocation through the floor damping mechanism. Local government agrees that stability is an important consideration in the grant distribution system. Floors guarantee a minimum year-on-year grant increase and curb the volatility of grant levels for individual local authorities, thus providing the degree of stability that local authorities requested. I too regard stability as a key issue in local government funding. I have made it clear that the grant floor is a long-term part of the funding system. The hon. Gentleman raised some concerns about Poole. I will try to assist him, but I will also write to him if that is helpful. Poole will receive £23.209 million of formula grant in 2007-08, and that is a 2.7 per cent. increase on a like-for-like basis. Poole benefits from the floor protection by £65,564. The hon. Gentleman was kind enough to show me his figures and to raise his concerns before the debate. The figures that he has from Poole council suggest that it has had only a 1.7 per cent. increase. Those are incorrect inasmuch as they are not comparing like for like. The figure on which the 2.7 per cent. is calculated is a like-for-like figure, adjusting last year's figure to reflect the basis on which this year's figure is paid. That has been made clear to Poole council. I understand that the matter is complex, and I appreciate the work of finance officers and experts in local government. As a former finance officer in local government myself, I can understand the difficulties that are sometimes faced but it has been explained that that is a like-for-like figure.