Today I spoken in a debate on a Labour motion about local government finance.
Their spokesman, John Denham, gave a good knock-about speech to open the debate but didn't seem to understand the system he had presided over and said absolutely nothing about the fundamental flaws in our system for funding local government:
- the way in which councils are far too dependent on central government funding, meaning that they sometimes have to put up Council Tax through no fault of their own because their government grant has been reduced;
- the fact that much of the funding government provides is ring-fenced - councils have to spend it on what the government says; and
- the incredibly complex formula for dividing government funding between different councils which isn't transparent, predictable or fair (to give you a sense of just how barking mad it is, London Councils - who as the name suggests represent all London borough councils - produced a report which showed that if the relative needs of Wokingham increased by 1 per cent but the relative needs of every other council in the country stayed the same, the Metropolitan Police would get an extra £4.8 million and Hampshire would lose £2.5 million!)
This crazy formula treats Croydon very badly. This year, our council got an extra 1.5%. The average increase in England was 2.6%. The biggest increase was Dorset, which got a whopping 7.1%. Same story the year before and the year before that. There is simply no justification for this disparity.
And the result is that people in Croydon pay higher Council Tax than they should - and think that their council is less efficient than it actually is. The Council gets £347.71 for every man, woman and child in the borough. Enfield, the borough that is most like us, gets £423.01. If Croydon got the same level of funding as them, it could cut Council Tax by £200 at Band D.
One element of the formula which is clearly nonsense is the Area Cost Adjustment. This - quite rightly - gives extra money to councils who have to pay people more. But it assumes that Croydon can pay teachers and social workers less than in neighbouring Sutton, Merton, Lambeth or Tandridge. Again utter nonsense.
In the last part of my speech (which I will post when I get the video), I addressed the issue of cuts in local government spending, which is all that Labour Members wanted to talk about. It is right that local government should take its fair share of the necessary reductions in public spending and there is scope to make savings - last year, Croydon made efficiencies of nearly 7%. But the government needs to help councils do this without impacting frontline services by further reducing ring-fencing, giving them the power to work together to procure services and building on the previous government's interesting Total Place project, which looks at the totality of public spending in an area and asks how we could get better value for money via joint working.
I had to sit in the Chamber for over 6 hours to contribute but it was worth it to speak on this important issue.