Draft Local Authorities (Conduct of Referendums) (England) Order 2001

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Mr. Ainsworth: We do not intend that the neighbourhood renewal fund, which is the subject under discussion, should be distributed through a competitive arrangement. The arrangements are clear and I think that the right hon. Gentleman understands them. The funds will not be distributed by regional competition, but in line with the arrangements in the regulations.

Three key strands underpin our new approach to tackling the problems of deprived neighbourhoods: first, new policies, funding and targets; secondly, better co-ordination and community empowerment; and thirdly, national and regional support. The Government have set tough targets in five key policy areas—crime, health, jobs, education and housing—to ensure that Departments deliver in deprived neighbourhoods and that everyone in the country enjoys the same decent basic minimum standards in public services.

Those targets mean that Whitehall Departments are, for the first time, being measured on how they perform in areas that are doing worst as well as those that reflect the national average. Most public services, such as schools, general practitioners and the police, are most stretched in the areas in which they are most needed. Following the 2000 spending review, the Government will invest an additional £43 billion in public services—an extra resource that will play an important part in helping Departments to meet their targets in deprived neighbourhoods. Improving public services in the most deprived neighbourhoods will be crucial to the success of the national strategy. To achieve the necessary improvements, central Government, local authorities and other service providers will need to reallocate the huge resources in their mainstream programmes so as better to tackle deprivation, with priority given to the most deprived areas and groups.

The neighbourhood renewal fund is a new fund to kick-start the process. Over the next three years, it will provide £900 million to 88 local authorities in England to enable them to improve services in their most deprived areas. That will include contributing to the achievement of the Government's targets for narrowing the gap between deprived areas and the rest of the country. The money is not ring-fenced so as to enable authorities, in consultation with local strategic partnerships, to identify their local priorities and spend the money in the way that best tackles deprivation.

The Government laid the special grant report on the neighbourhood renewal fund before the House on 15 March. The report sets out the purpose of the grants, the allocations to each authority and the attached conditions. The fund will provide non-ring-fenced grants to local authorities. The conditions attached to the grants are unrestrictive, reflecting the fact that the Government want decisions about where and how the money should be spent to be taken locally. That flexibility is important, because local people know best where the pockets of most severe deprivation lie, what problems those areas face, and the best solutions to those problems.

Four of the conditions are especially noteworthy. Condition 1 requires local authorities to produce a statement of use for their neighbourhood renewal fund grant, setting out how it is being used, its expected impact and whom the authority has consulted. For 2001-02, the local authority is to decide how the money should be spent. However, it will make sense for authorities to consult existing or emerging local strategic partnerships or other local partners, and the Government strongly encourage them to do so. We have not made that a formal requirement for the coming year, because some areas do not yet have fully fledged local strategic partnerships, but we are minded to do so for 2002-03.

Condition 2 requires that, where there is no unitary authority, the county council and the district council agree on how the money will be spent. The majority of the 88 areas that are eligible for the fund are unitary authorities—London boroughs, metropolitan districts and shire unitary authorities. However there are 19 shire districts within eligible authorities that do not have responsibility for key services such as education and social services. In those 19 areas, in which there are two tiers of local government, the neighbourhood renewal fund is being awarded in the first place to the district council, but part of the grant would, by agreement, be passed to the county council in support of improving services in deprived areas of that district.

Condition 3 states that the local authority shall not use the grant to pay the administrative costs of the local strategic partnership without the prior written approval of the Secretary of State. The neighbourhood renewal fund is intended to improve services, so that outcomes in the most deprived neighbourhoods are also improved; it is not intended to fund the development of LSPs. The Government believe that it is essential for local people to develop effective and representative LSPs, but that should not mean establishing costly new administrative arrangements. LSPs should build on and rationalise existing partnership arrangements. The community empowerment fund is providing about £35 million over three years to support community and voluntary sector involvement in LSPs. All authorities—not only those in receipt of neighbourhood renewal fund money—will be expected to develop LSPs. If an authority wants to use some of the grant to pay the administrative costs of the LSP, it will have to argue to the satisfaction of the Secretary of State that doing so would contribute to addressing deprivation and that such funding could not reasonably be secured from any other source.

We have set condition 4, which relates to best value, to ensure that effective management arrangements are in place and that the money will be well spent. The Government have used the ``Indices of Deprivation 2000'' to determine eligibility for the grant and the distribution of it between eligible authorities. As with earlier regeneration programmes that targeted resources using the index of local deprivation, the Government propose that authorities appearing in the top 50 most deprived districts on any of the six district level measures in the new indices should be eligible for the neighbourhood renewal fund. On that basis, 81 local authorities are eligible. The Government have also decided that there should be transitional arrangements for those authorities that would miss out under the new indices, but which were in the 50 most deprived areas on any of the four measures under the old index of local deprivation. Therefore, seven further local authority areas will be eligible for the neighbourhood renewal fund.

Finally, better co-ordination at local level and measures to empower local communities need to be complemented by better support from central Government and the regions. The establishment of the neighbourhood renewal unit to spearhead the work of central Government Departments and to continue the drive to improve co-ordination across Whitehall signals the importance that the Government attach to achieving success in neighbourhood renewal. The unit will be fully operational from April and its new head, Joe Montgomery, who takes up the post directly from his role as director of regeneration at Lewisham council, brings a wealth of expertise and hands-on experience to the job. Neighbourhood renewal teams in Government offices in the regions will also have a vital role to play.

Mr. Don Foster: I welcome the Government's intention to improve co-ordination in the way that the Minister describes. Will that stretch to consideration of co-ordination with funding sources other than direct Government funding, especially the new opportunities fund, which, although it derives from lottery money, is directly influenced by Government Departments?

Mr. Ainsworth: The purpose of local strategic partnerships is to provide input broader than simple Government funding, but I cannot say exactly what impact the new opportunities fund will have. I shall return to the hon. Gentleman on that as soon as I can.

In conclusion, we know that we have set an ambitious goal and that it will take time to make a difference, but we can realise that goal by involving local communities, building effective partnerships, putting funding and structures in place to ensure decent public services and ensuring that central and regional government provide the necessary support. I commend the regulations and the special grant report to the Committee.

5.11 pm

Mr. Nigel Waterson (Eastbourne): I begin by saying that it is a pleasure to meet under your chairmanship, Mr. Benton. It may help the Committee if I explain that I shall speak on the alternative arrangements regulations and my hon. Friend the Member for East Worthing and Shoreham will speak on the referendum regulations and the neighbourhood renewal special grant report.

I was happy to congratulate the Minister when he was, rightly, promoted to ministerial rank--if that is promotion from the Government Whips' office. I meant it at the time. However, it is sometimes part of the ministerial merry-go-round in Government that the mess left behind by someone else must be cleared up, and today is the day to clear up the mess on alternative arrangements. The merry-go-round has moved round a bit and the Minister is forced to justify the unjustifiable.

The Minister referred to the mysterious and magical population of less than 85,000. Runnymede has a population of 86,000 and is cheesed off at not benefiting from the Government's last-minute climb-down. The only justification for the regulations and our having to meet today to discuss them is the Liberal Democrats' view at the time the matter was debated. I asked the Minister for his philosophical justification because his right hon. Friend the Minister for Local Government and the Regions has never given the slightest hint in the House or elsewhere of the thought processes behind the concession to small shire districts with populations of less than a specific number. Why should the threshold not be 90,000, 100,000 or 75,000? We have heard nothing of the reasoning behind its being set at 85,000. The Minister made a brave attempt to justify it, but merely described what was in the regulations as if it was given there. Who can blame him? I feel his pain, as the Prime Minister used to say.

If we strip away the rhetoric and verbiage, the only reason for the alternative arrangements regulations is a shabby, last-minute deal with the Liberal Democrats made behind closed doors in the House of Lords. Any reference by the Minister to debates that he and I might have witnessed is beside the point because the matter never arose in such debates. However, it arose in the House of Lords in the context of the primary role that the Liberal Democrats are currently developing, which is to save the Government's bacon.

The occasion in question was one of those—section 28 was another—on which the Government were staring defeat in the face in the Lords. Had the Liberal Democrats not galloped to the rescue, every local council in England would have had a proper fourth option. It is the only reason why almost 80 per cent. of local government is still saddled with the existing so-called option. It is all too reminiscent of the new Lib-Lab pact that we read about this week. The Liberals have been sold another pup and are shackled to the Government for another electoral cycle.

I commend the Minister's courage under fire for defending a problem that is not of his making. He suggested that what makes the new arrangements quite good is that they require streamlining of the committee systems for those lucky councils which have the so-called fourth option. That flies in the face of the whole philosophy of the Bill. The Minister for Local Government and the Regions and the Deputy Prime Minister always made it clear that the problem was the existing committee system, which the Minister described as creaking at the seams. The right hon. Lady was much ruder than that about it. Basically, it was a great scourge and evil that had to be rooted out at any cost. The only way to modernise—to use the buzzword—local government under the millennial Labour Administration was to get rid of all that unpleasantness and inefficiency and replace it with an executive-scrutiny split. Without an executive or cabinet and all that quite separate scrutiny, local government was not worth the name.

The Bill also contained the so-called three options that were allowed to councils, but in reality the majority of local authorities had only one option: the cabinet system. They had to have that, whether they liked it or not. Many Labour and Liberal Democrat councils took umbrage, as did Conservative councils. At the time, we described the Bill as the Henry Ford Bill, because one could have any colour one wanted, as long as it was black. Councils could have any option they wanted, as long as it involved an executive or a cabinet.

Why is that option not made available to all local authorities? It is bizarre that a strange line should be drawn in respect of the availability of this new system. With all due respect to the Minister, neither he and his predecessors nor any of their fellow Ministers have ever tried to give any coherent or cogent reason why the alternative arrangements should not be made available to all local authorities. If there is a good reason, the Minister is welcome to intervene, but as far as we can tell 85,000 is a wholly arbitrary figure.

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Prepared 26 March 2001