Orders of the Day — Local Government Finance

– in the House of Commons am 4:05 pm ar 31 Ionawr 1996.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of John Gummer John Gummer Secretary of State for Environment 4:05, 31 Ionawr 1996

I beg to move, That the Local Government Finance Report (England) 1996–97 (House of Commons Paper No. 164), which was laid before this House on 29th January, be approved. I understand that with this, it will be convenient to discuss the following motions: That the National Parks Supplementary Grant Report (England) 1996–97 (House of Commons Paper No. 167), which was laid before this House on 29th January, be approved.That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1996–97 (House of Commons Paper No. 166), which was laid before this House on 29th January, be approved.That the Special Grant Report (No. 16) (House of Commons Paper No. 165), which was laid before this House on 29th January, be approved. On 30 November, I issued my settlement proposals for consultation. They included the total provision for local authority spending, the level of central support for that expenditure, and my proposals for calculating standard spending assessments—the SSAs. I also announced provisional capping criteria. My right hon. and learned Friend the Home Secretary also announced his proposals for police specific grant on 30 November.

Since then, my colleagues and I have received written representations from 250 local authorities, and have met delegations from 84. We have carefully considered all the points that were raised with us during consultation. Our final decisions in respect of grants and notional amounts are embodied in the reports before the House today. I will also remind the House today of my provisional capping criteria.

Photo of Mr Jeff Rooker Mr Jeff Rooker , Birmingham, Perry Barr

The Secretary of State has made great play of the enormous consultation process that he has undertaken, and I do not criticise him for that. However, I must raise two points in relation to the city of Birmingham. The first concerns the extra population from Frankley Beeches and fact that the deprivation index for the county of Worcester and Hereford rather than that for Frankley Beeches was used, which has cost Birmingham £1.6 million.

My second point concerns the way in which capital financing is examined in the standard spending assessment. A notional amount rather the actual capital debt of an authority is taken, which has apparently cost Birmingham city council £30 million. Those points were raised with the Secretary of State during the consultation process. Why did he not take them on board?

Photo of John Gummer John Gummer Secretary of State for Environment

There have been three delegations from Birmingham, and I had the pleasure of meeting the leader of Birmingham city council and talking through the matters. The point about the estate that was transferred from Hereford and Worcester to Birmingham was raised with me. However, in later discussions, it was discovered that the figures were not as the hon. Member for cited, and in fact Birmingham felt that our suggestion was the better answer.

I do not think that it would be sensible for the hon. Gentleman to press the matter, as the figures were based on something that did not proceed. The transfer arrangements are agreed between the Government and the local authority association, so the hon. Gentleman would find it difficult to pursue the matter.

I told Birmingham that, if it wanted to continue, and if it could persuade the local authorities to propose a change, I would not be averse to altering the system. The system is agreed between local authorities because it is about the transference of amounts between local authorities and not about the total amount, as the hon. Gentleman would agree. I made that offer to Birmingham, but in retrospect the council decided that it would not be better.

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Member for Birmingham, Perry Barr (Mr. Rooker) has asked me two serious questions with which I wish to deal. I should be grateful if my hon. Friends could wait a minute.

We have been discussing notional amounts for some time. I am sure that the hon. Member for Perry Barr understands that, if one local authority—I cast no aspersions—spends a great deal and has built up a huge debt in the past, and another has been extremely careful and prudent, it would be unfair if the system meant that the first authority, however much it continued to spend, was bound to do better than the prudent authority, irrespective of need. That is why we fix notional amounts. That is the only fair way to cope with that genuine difficulty. We cannot have a situation in which the provident always find themselves at a disadvantage to the improvident.

The hon. Member for Perry Barr said that a local authority had lost some money. That was a curious use of the word "lost", because the authority never had that money. Birmingham council—I shall be direct—has a long record of spending much more money than it is able to finance. It is asking all the other local authorities to pay for that, but that is not fair, and there must be an intervening system.

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

The area of Frankley, to which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred, is in my constituency. It is the Frankley estate, not Frankley Beeches.

Hereford and Worcester, the area from which Frankley has now been removed, has been left with no plus factors in the standard spending assessment calculations, except for a small sparsity factor in Herefordshire. The area is not untypical, compared with other authorities.

I do not disagree with my right hon. Friend's proposed figures, but the calculation bears hard on those areas of the country that do not have any deprivation factors which add to the distribution of grant. Those areas are left with relatively small sums, and they feel that they have missed out in the overall distribution.

Can my right hon. Friend confirm that the Department of the Environment intends to review the formulae and the mechanisms for distribution of grant every year on the basis of the evidence that it receives?

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend is right. Hon. Members' attitudes, irrespective of party, to the division of grant are always affected by how it hits their areas. The deprivation factors are important, and I am sure that my hon. Friend would not want us to have a system that did not take deprivation into account.

I will confirm that, every year, we reconsider the system with the local authorities. When my hon. Friend the Minister for Local Government, Housing and Urban Regeneration sums up, he will describe in detail our next step. We have also agreed to have an independent review of the way in which we deal with some of the extra costs. I will cover that myself.

Several hon. Members:


Photo of John Gummer John Gummer Secretary of State for Environment

I have managed so far to read only the titles of the reports and two paragraphs, so I shall continue for a moment before giving way.

As I made clear when announcing the provisional settlement, all public expenditure programmes have to be rigorously examined each year. Local government spending is no exception. Within the objectives for the economy as a whole, I have looked very hard both at the pressures on local government spending and at the scope for greater efficiency and effectiveness within authorities. As in previous years, I am grateful for the practical help that the local authority associations have given in setting out and discussing issues.

I announced on 30 November 1995 a proposed total standard spending—TSS—for England for 1996–97 of £44.92 billion. In the light of consultation, we have now adjusted that figure slightly to reflect developments in the first phase of nursery vouchers and in the balance of police grant between England and Wales. The result is that the final TSS figure for England for 1996–97 will be £44.93 billion.

It is worth remembering just how much money that is. It represents a significant amount of public expenditure, and it cannot be ignored, considering the amount that the Government and local government spend from individuals' pockets. All parties are now committed—at least in words—to the restraint of public expenditure, so that amount has to be considered in the same way as any other major amount. It is, apart from central Government expenditure, the largest part of expenditure.

Local government will, of course, be able to spend more than that, because its spending accounts for a quarter of all public expenditure. Councils can spend above the TSS, up to their capping limits, and can, of course, make use of income from fees and charges and can spend from reserves.

Several hon. Members:


Photo of John Gummer John Gummer Secretary of State for Environment

I will give way, but I want to make clear a point that is often not understood outside; sometimes I fear that it is purposely not understood.

First, there is the TSS. As I have said, it is possible to spend more than that, up to the capping limits, by raising more on the council tax. There are other ways in which councils can spend; either from fees or from reserves. So it is always true that, at the end of the year, councils have spent more than the TSS at the beginning of the year. That means that, if we wish to compare like with like, we must compare the year end spending with the following year end spending, or the TSS at the beginning of the year with the TSS at the beginning of the succeeding year.

One cannot compare one set of TSS figures with one set of spending figures. Those of us involved in local government know that, but sometimes that mistake is made. I want to ensure that it does not occur in our discussions, because it shows a lack of understanding of the local government system. I do not want to accuse anybody of that, but sometimes that is the basis for argument.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

The Secretary of State is talking about comparisons. What happens with a new unitary authority where making comparisons is difficult? For my new authority of North Lincolnshire, the standard spending assessment will mean cuts across the board—an 8 per cent. cut in education, for example—and a substantial increase in council tax. That authority inherits no balances, and is very much dependent on the standard spending assessment laid down by the Department of the Environment.

The Secretary of State has received delegations from the authority, which made the not unreasonable request for capital borrowing over three years to mitigate the cost of the reorganisation, as well as to help deal with the problems of establishing itself as a new authority. That request has been refused. In those circumstances, does the Secretary of State accept that the education cuts are a direct result of his Department's policy, and have nothing to do with North Lincolnshire, which is a brand new authority with no track record?

Photo of John Gummer John Gummer Secretary of State for Environment

There are difficulties when one is transferring from an authority such as Humberside, which has a long history of excessive expenditure. It is difficult for one or two such authorities to move to the new structure without carrying something with them. They carry the history of a lack of efficiency in the services taken over. That has disadvantages, but it has an advantage, in that it may be possible to make significant savings in the running costs.

There is a whole range of provisions. One of the reasons for notional amounts rather than historic figures is that they take into account problems such as those raised by the hon. Member for Glanford and Scunthorpe (Mr. Morley). There is a damping grant should the council tax become excessive.

I am happy to look again at any of the points raised by the hon. Gentleman. The system is designed to help, but I must tell the hon. Gentleman that his circumstances are made worse by the previous management, which was one of the worst in the country—it was recognised as such. Humberside is an unlamented lost county.

Photo of John Greenway John Greenway , Ryedale

May I move my right hon. Friend slightly further north, to deal again with reorganisation? I thank my right hon. Friend, the Ministers and the officials for the helpful way in which they have considered how best to redistribute money in North Yorkshire out of the creation of the new York unitary authority. The county council has done rather better than many of us feared. That must be put on record.

However, is my right hon. Friend aware that we still have a problem with Ryedale district council, which has a notional amount that is almost £750,000 more than the SSA? My right hon. Friend mentioned the use of reserves. Is there any way at this stage in which we could bridge that gap without the whole cost falling on the council tax payers in Ryedale, because the sums that they will have to pay are substantial?

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend is perfectly right. I would look sympathetically at a request from Ryedale district council to capitalise some of those costs, which would help it considerably. Unfortunately, it has not yet made such a request, and I cannot respond to a request that has not been made. I hope that my hon. Friend will remind the council that it is a perfectly reasonable way to do things—indeed, the way we expect them to be done. If the case can be supported, I shall consider it carefully.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

I appreciate being given the opportunity to intervene. Will the right hon. Gentleman take account of the position in my constituency, where deprivation is severe because of the closure of the mining industry and the ancillary works that supplied it?

Wakefield district council has brought in fees and charges over the past five or six years because of the restrictions imposed by the Secretary of State. It cannot simply keep charging local people, who can ill afford to pay because of problems such as unemployment. Will he reconsider the problems, so that we can be allowed to provide the services in education and community care that people demand?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman knows that I have a reasonable knowledge of Wakefield, and I recognise the problems in the area. I am sure that he will agree that, in recent years, we have given Wakefield and the surrounding area extra help in a number of ways. Of course I will examine the points that he has raised. Although we have reached a conclusion on these matters in a number of areas, I am happy to reconsider, because I recognise the problems to which he referred.

Within the system, a significant amount of money is being diverted because of the factors that the hon. Gentleman mentioned. That is why some areas, such as Wakefield, do better than other areas where the resources and opportunities are greater. I shall consider the particular points that he raised.

Photo of Mr Richard Tracey Mr Richard Tracey , Surbiton

In my right hon. Friend's introductory remarks, he mentioned his joint responsibility with our right hon. and learned Friend the Home Secretary for the police service, but he did not mention the fire service. He is aware that worries have been expressed in various quarters about fire cover for London, and the possibility that the reduction in the fire service's SSA will disadvantage its ability to provide cover.

Will my right hon. Friend give a categorical assurance that fire cover is wholly adequate in London, and that that will in no way be disadvantaged by the reduced SSA?

Photo of John Gummer John Gummer Secretary of State for Environment

As the Minister with responsibility for London, I naturally consider these matters very carefully. I today responded to a Labour Member who has written to me on the very issue my hon. Friend raised.

The fact is that, next year, the authority's SSA will increase by more than £1 million, to £253.6 million. It will have by far the highest SSA per head of any single-purpose fire authority. London does better than any other single-purpose fire authority. Other areas throughout the country note that London has been given additional resources.

The proposed capping limit would allow the authority to increase its budget by more than £5 million compared with this year, which would take its budget more than 2 per cent. above its SSA. The authority's decisions will be very much in its own hands.

About 22 per cent. of the authority's work force are support staff behind the front-line services, Perhaps it could look for ways to make savings there. Perhaps it could look more closely at some of its accommodation and resources that are not being used. There is a wide range of things that it can do. The money provided to the authority certainly ensures that it can give fire cover. Indeed, it would not be allowed to close any installation without my right hon. and learned Friend the Home Secretary being sure that there is still fire cover.

I reassure my hon. Friend on the matters that he raised by pointing to the facts that the authority has been allocated extra money and that London is specifically advantaged by that provision.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Does the Secretary of State accept that the London fire brigade's standard of performance over the past few years has risen substantially? The brigade transferred to computerised call-out with no problems, and changes to its management structure and working practices have made the brigade a credit to London, its management and other employees. That is in marked contrast to the London ambulance service, which fails every national standard, is grotesquely mismanaged, and is run by a quango—unlike the board, which represents people from London boroughs and has been so successful in improving the London fire brigade.

Photo of John Gummer John Gummer Secretary of State for Environment

I would not have made that comment about the London ambulance service, especially as I—like the hon. Gentleman—depend on it for emergency services. His comments do not characterise the people who work for the ambulance service.

There are evidently two classes of people in society. There are the people whom the hon. Gentleman thinks will not vote for him, so he is rude about them. There are the people from whom the hon. Gentleman thinks that he might get a vote or two, about whom he is always polite. I do not think it right to attack the London ambulance service in a blanket way, as the hon. Gentleman did.

The improvement in the London fire brigade is creditable, but only what one would expect of a properly run organisation. It is doing its job properly, and will continue to do so. If it becomes better and more efficient, it will have more resources to spend on things that really matter, which are front-line fire services.

The TSS figure of £44.93 billion represents an increase of £1.42 billion—3.3 per cent. over the 1995–96 figure. That substantial increase reflects the importance that the Government attach to education and to the care of the vulnerable and elderly. We have provided for a 4.5 per cent. increase in provision for education and 6.9 per cent. for personal social services, including £418 million transitional community care special grant.

When we talk about priorities, we are concerned that the money made available is used for the proper purposes. It concerns me that there are already signs that local authorities, instead of spending money on education, are seeking to use the money for other purposes.

I have a letter from someone who calls himself the "chair" of Hertfordshire county council's education committee. He is Bob Mays, who leads the Labour group for that purpose. Writing to fellow governors, he began his letter, "Dear Comrade". That would have gone down a bit oddly in Hertfordshire, so the complete salutation reads, "Dear Comrade/Colleague". I am interested to know whether "comrade" is old Labour and the "colleague" new Labour, or whether that form of address is to get everybody involved.

Photo of John Gummer John Gummer Secretary of State for Environment

That would be polite, and at least it would not upset the people who received the letter.

I object to the rest of the letter, which shows that, far from extra money being spent on education in Hertfordshire, education will have to make savings. Extra money has been made available, but still savings will have to be made. Much of the money will be used for other purposes.

Local authorities asked to spend more money on education. They said that sufficient money was not made available last time, and that central Government should make sure that it was available this year. We have made additional provision, but Hertfordshire admits that it intends to pinch the money for some other purpose.

Photo of Mr Anthony Grant Mr Anthony Grant , Cambridge South West

Is there not another factor in the equation? Not only does Hertfordshire seem unable to run its affairs properly, but it benefits from the area cost adjustment, unlike Cambridgeshire just over the border. Although Cambridgeshire is not a particularly efficient Lib-Lab coalition, or whatever it is called, at least it has the excuse of not receiving an area cost adjustment. I hope that my right hon. Friend will refer to that difficulty.

Photo of John Gummer John Gummer Secretary of State for Environment

I congratulate my hon. Friend on finding yet another way in which to refer to the area cost adjustment. I shall refer to it later, and my hon. Friend the Minister for Local Government, Housing and Urban Regeneration will take the point further.

It concerns me that it appears that, all over the country, Labour councils and Liberal-Labour coalitions are taking for granted the figures that their officers give them. They think, "My goodness, we must spend this, that and the other to stay level." They are therefore not accepting that spending is all about priorities. They said that they wanted to spend the money on education, and that they would be responsible in doing so. It will therefore be a real test of whether they say one thing and do another. We shall see.

Photo of Mrs Anne Campbell Mrs Anne Campbell , Cambridge

Is the Secretary of State aware of the extreme anxiety in Cambridgeshire over his provisional statement that capping in the county would be set at the level of the standard spending assessment? I think that it is only one of two shire counties that have been penalised in such a way.

I should like to quote Mr. Peter Downes, the head teacher of Hinchingbrooke school in the Prime Minister's constituency. The right hon. Gentleman may be aware of the case. Mr. Downes said: We are not very far off melt-down—we are getting to the point where there is extreme anxiety whether we can actually keep children in school for the full time. I am worried about that, and I hope that the Secretary of State is also prepared to express his concern.

Photo of John Gummer John Gummer Secretary of State for Environment

The message that the hon. Lady must take back to her area is that Cambridgeshire has the resources to improve its education. If it does not spend them on education, it will be because the Liberal Democrats and the Labour party have misused the money. I understand how difficult it is for her. I would not like to be shackled to the Liberal Democrats. None the less, she is, she chose to be, and she will therefore suffer as a result. Authorities worse run than those run by the Liberal Democrats are difficult to find. I know how hard it is, but all she has to do is give them up. They are not worth associating with.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

Will my right hon. Friend consider Devon county council, which is a prime illustration of the terrifying behaviour of Liberal Democrat county councils? It is being given £17.5 million extra, yet in its provisional budget it is allocating only £1.5 million to schools. The rest will be gobbled up by the county council. Is that not disgraceful?

Photo of John Gummer John Gummer Secretary of State for Environment

It is not only disgraceful but contrary to what I understand to be Liberal Democrat policy, although I know that that is difficult to define. Although the Liberal Democrats have said that their prime priority is education, they are not planning to use the extra money to fund it. They are planning to use it for a range of other things.

I do not yet know what Suffolk will do, because, like most other Lib-Lab pacts, it has been very careful not to tell anybody in case the schools notice too quickly. I understand that, although it has an allowance of £11.5 million, which it could spend on education, it is planning to spend only £8.4 million on education. I suppose that the rest will go on yet more road signs, since that is the main interest of my local council.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

As my right hon. Friend knows, Lancashire is a very unpopular county council, and it does not devote anything like as much as it should to education. Unfortunately, although it has received much more money to spend on education this year, it is not spending it on education. Worse than that, money within its education budget does not even go to schools; it goes to staff at county hall.

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend makes a fair point, which no doubt she will want to take up with every school in her constituency and in Lancashire as a whole.

Lancashire appears to have a great deal of money to spend on lawsuits. I wonder whether it should spend some of that money on education, rather than on its continual attempts to use the law courts to implement policies that have not been accepted by the generality of the people.

Photo of John Gummer John Gummer Secretary of State for Environment

I give way to my hon. Friend, and then I shall give way to the hon. Gentleman

Photo of Mr Irvine Patnick Mr Irvine Patnick , Sheffield, Hallam

Is my right hon. Friend aware that, once again, Sheffield states that it will spend more than its standard spending assessment on education, and claims that its 2.1 per cent. is lower than those of the other three districts in South Yorkshire and much lower than metropolitan councils?

Photo of John Gummer John Gummer Secretary of State for Environment

I am aware of that, but, on a list of councils, one is bound to be lower than others. I try to apply these objective criteria—[Interruption.] The Association of District Councils agrees that they are objective. The methodology is agreed with all three Labour-controlled councils.

County councils would like to place more emphasis on one part of the methodology than district councils, because they do better out of it. District councils would like another shift, whereas metropolitan councils or the London boroughs would like a different one. That is perfectly reasonable.

The only people who disagree are Opposition Front Benchers, and I think that only one of them does so. That Opposition spokesman does not understand the system, which is why he finds it so difficult to accept—[Interruption.] I shall just have a word with the hon. Member for North-West Durham (Ms Armstrong), who has not been responsible for this subject for very long. I remind her that the hon. Member for Holborn and St. Pancras (Mr Dobson) is always—[Interruption.] I would like her to listen, because I always thought that she was fair-minded, but she has obviously joined the giggling fraternity.

Westminster city council did very much better under the system that applied when Labour was in power than it does under the present objective system. Labour's system was devised by the hon. Member for Blackburn (Mr. Straw), who used, with considerably greater power, to perform the job that the hon. Member for Holborn and St. Pancras now does.

We accept that the system is objective. Sheffield has rather less than others only because the measurement of its need has been lower than that of its neighbours. If only Sheffield was not saddled with the debts that the hon. Member for Sheffield, Attercliffe (Mr. Betts) and his predecessor, the hon. Member for Sheffield, Brightside (Mr. Blunkett), landed it with, it would be able to spend its money on other matters; but despite that, Labour Members tell us how we should run national finances

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone

The Secretary of State said that the TSS figure of £44.923 is a 3.3 per cent. increase. He will be aware, however, that, when that is deducted from the cost of local government reorganisation, community care and the police, it falls to 2 per cent. As the Government's forecast for inflation is 2.75 per cent. for next year, that works out as a decrease of 0.75 per cent

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman knows perfectly well that we certainly expect some savings to be made—the idea that they cannot be made is largely a Liberal one.

I visited Liberal-controlled Richmond, which said that it had already made enormous savings and challenged me to see whether I could find further savings. The Liberal leader of Richmond council gave me an exhibition of slides on the wall. The first one was designed to show the enormous savings that it had made. In fact, it showed that, year on year, it had made budget increases—the savings were not there at all. When I asked him what he defined as savings, he said, "Not doing something that we used to do." Then they take the money and spend it somewhere else—and that is counted as a saving. The slides designed to show how the council had cut, cut and cut again, showed instead how it had spent, spent and spent again.

When I went through the savings that could be made, it turned out that the council had not even considered the possibility of collecting the rubbish from front doors rather than back doors, or of going out to private contract in many areas in which it was not forced to do so. It had not even looked at a whole range of mechanisms whereby expenditure could be reduced.

The authority really needed to consider those savings, because, as my hon. Friend the Member for Twickenham (Mr. Jesse') has said, it has a real problem, in that it has entered into a very long-term contract for waste disposal, giving it less flexibility there. I only wish that it had found the flexibility elsewhere, instead of saying that it had got everything right and tickety-boo. Even Ealing, unlike Richmond, has discovered some of those savings. That man had been in power in the authority for 13 years, yet he had failed to find even those fundamental and simple mechanisms.

During our discussions with local authorities, we have agreed to add to the figures that I have mentioned additional funds that they will receive through a special grant to offset the income lost through changes to capital disregards for community care provision. The arrangements for that special grant will be laid before the House in due course

Photo of John Gummer John Gummer Secretary of State for Environment

I must continue for a while.

As part of the consultation exercise, we asked local authorities for their views on the need to address, through a special grant rather than through SSAs and RSG, the localised pressure on a few authorities' social services budgets arising from the provision of care for unaccompanied asylum-seeking children. The hon. Member for North-West Durham should pay attention; I am sure that she would like to know about unaccompanied asylum-seeking children.

Such children will need particular help in certain areas, so we accepted the strong representations making a case for a special grant, and the fact that no one wanted the money to be paid through the RSG. My right hon. Friend the Secretary of State for Health will therefore lay before the House in due course a special grant report for that purpose. The grant will be cash-limited to £3 million in 1996–97, and will provide a better distribution to meet the needs of the authorities concerned than would have been possible within the RSG. The resources remain within TSS.

The total of aggregate external finance—AEF—for England will be £35.65 billion. The revenue support grant element of that total will be £18.02 billion. That is slightly higher than the figure announced in the provisional settlement, as a result of changes to police grant, and the changes in total standard spending and RSG that I mentioned earlier.

The increase in AEF over 1995–96 is 2.8 per cent.—less than the increase in TSS—because we take the view, which I believe the Opposition share, that council tax payers should properly fund a slightly larger proportion of the costs of their local services. But the level of council tax is a decision for each authority, and will depend upon the level of service that it chooses to provide, the improvements that it can make to efficiency and effectiveness, and how well it collects what it is owed. When the taxes are set, local people will be in a position to judge the performance of their councils.

Before all that was set up, I received many requests for a relaxation in the capping limits. I was told that, if that happened, great responsibility would be shown, which would prove to us that all such limits are unnecessary. Authority after authority told me that it would be extremely responsible.

However, I am afraid that, immediately the limits were announced, the leader of the metropolitan authorities went on the radio to say that councils would use the whole lot up—no question. I hope that local councils recognise what that means. If it happens, no Government will have any alternative but to keep that very large amount of Government spending within controls. That is a particularly disappointing attitude, and I hope that it will not be copied throughout the country

Photo of John Gummer John Gummer Secretary of State for Environment

In a moment.

We have listened to the case put to us for more resources for education and social services, and we have allowed more. We were told that these were the top priorities, and there was something of an orchestrated campaign to that effect. There is some sign, however, that that will not be the case, and it is unlikely that education and social services will be the priorities that we know they should be in some authorities. The Government and local people must look carefully at whether the money ends up in the schools—and not education generally—because that is where people believe the money ought to go

Photo of Mr Dudley Smith Mr Dudley Smith , Warwick and Leamington

My right hon. Friend has mentioned a huge amount of money today that is part of the settlement. Does he agree that all local authorities throughout the country should, more or less, try to match their spending with the level of inflation? If they did that, they would be able to regulate their affairs much better. That is a lesson that could be learnt by the Labour and Liberal Democrat councils up and down the country, including the teacher-led Warwickshire county council. They cannot spend more money than is available, but there is more than enough money available

Photo of John Gummer John Gummer Secretary of State for Environment

One can go further, and say that, unless there is an inflationary society, no business can possibly proceed by spending more on overheads and putting up the price of its goods every year. In a society where inflation is under control or is falling, local authorities must do better than match inflation. They must find ways in which they can provide the same services while getting better value for money. If they do not do so, they are not helping people to get jobs, they are not helping the nation to become more wealthy, and they are not helping businesses to expand. Local authorities must do that as part of their economic regeneration contribution. We must press county councils such as Warwickshire to take that step.

I shall be happy to place in the Library a letter that I received from Hertfordshire, which starts off by stating that inflation does not count with that authority because its rate of inflation is higher than the national rate, so inflation is bound to be higher there. I believe that no local authority should approach the job in that way.

Several hon. Members:


Photo of John Gummer John Gummer Secretary of State for Environment

I shall give way in a moment.

It is necessary for parents, school governors and those concerned with care in the community to insist that their share of the extra available resources comes to them. It will be necessary, therefore, to make savings elsewhere, and to continue to improve efficiency.

Here, I must point out to the House that the idea that one ever finishes making oneself more efficient or finding new ways of getting better value is totally foreign to every organisation outside the public service. We all know that councils must find new ways of making the money go further every year if they wish to take on other responsibilities or improve some of the services they provide.

I should like to refer to the distribution of grant.

Photo of John Gummer John Gummer Secretary of State for Environment

I should like to move on, and then I shall give way to my hon. Friend.

We have worked closely with the local authority associations to achieve a distribution methodology that is simple enough to be understood, robust enough to be able to cope with the changes, and complex enough to reflect the real differences in need. Local government knows, and the Government know, that we can never iron out every local wrinkle, but the system is open to scrutiny, and it is clearly objective.

I know that councillors and hon. Members are concerned about the resources of their local authorities, and I must stress that the Government do not look with favour or disfavour upon any individual authority, as the system makes that absolutely impossible. The previous system allowed one to do that, but now the Government can only alter the distribution by classes of authority, and not by individual ones

Photo of John Gummer John Gummer Secretary of State for Environment

I will give way to my hon. Friend, and then later to thehon.Gentleman

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown , Cirencester and Tewkesbury

Does my right hon. Friend recall that he gave the Liberal-dominated Gloucestershire county council one of the highest increases in education SSA—some 5.3 per cent., amounting to more than £9 million? Was not the council's immediate response that it needed £24 million to spend this year? Does my right hon. Friend recall that Gloucester cut the individual school budgets last year by between 4 and 7 per cent.? Will it not be a disgrace if the bulk of that money this year does not go to the individual school budgets?

Photo of John Gummer John Gummer Secretary of State for Environment

It would be a disgrace, but then it is always difficult to know what a Liberal Democrat council will do, because there is no connection between what such councils say in public and what they actually do.

I am aware that that embarrasses the hon. Member for Newbury (Mr. Rendel), who no doubt will speak later. I note, however, that not many Liberals are present to stand up for their county councils. I think that that is because they know just how bad Liberal Democrat-dominated councils are, and how few of them plan to hand the money on to schools. We shall watch them very carefully, and, if they do not hand the money on, we shall know that their words and their deeds do not coincide.

Photo of Richard Burden Richard Burden , Birmingham, Northfield

I listened with interest to the Secretary of State's reports of his discussions with various local authorities, including Birmingham city council. I was particularly interested in the issue of Frankley, and the right hon. Gentleman's statement that the city council had accepted that the deprivation indices used for Hereford and Worcester were appropriate for that area.

Further investigations have been made in the light of the right hon. Gentleman's answer to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). It is clear that Birmingham still objects to the use of those indices for an inner-city area of Birmingham that suffers from extreme deprivation and high unemployment, and has many needs. May I ask the right hon. Gentleman to return to the answer that he gave my hon. Friend, and reconsider the issue of Frankley? If he does not, Birmingham will probably be short by about £1.5 million, the capping limit will be wrong, and the people who will suffer are the people of Frankley.

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman is mistaken. Birmingham city council wanted to discuss two issues relating to Frankley. It wanted us to treat primary and secondary school children differently, and, in that connection, presented me with a figure for the large loss that it expected to make. When we examined the position in more detail, however, the council agreed that the action that it had proposed would not result in the savings that it had identified. It acknowledged that, in that instance, the methodology did not have the effect that it had assumed it to have.

More generally, the council wanted a complete change in the system, to overcome the difficulty encountered when we move from one year to another at a time of boundary changes. One area has to be moved into another, as it were. To do that, we would have to change the method that we have agreed with the local authority associations. We cannot act unilaterally, because that would be wholly contrary to the way we operate. We have told Birmingham city council that, if the local authorityassociations felt that there was a better way of dealing with the matter, we would adopt it if we possibly could; but the local authorities feel that difficulties are involved in moving at such speed.

This is not a matter on which the Government should act unilaterally. Like previous Governments—I claim no particular credit for it—we have acted after lengthy negotiations with local authorities. The hon. Member for Birmingham, Northfield (Mr. Burden) should address his question to other local authorities, and, if they support the methodology, we can make progress. [Interruption.] The hon. Member for North-West Durham can moan as much as she likes, but that is not only my view; it is shared by many Labour local authorities, as she will gradually come to realize.

Photo of John Gummer John Gummer Secretary of State for Environment

No, I will not give way. I wish to continue my speech.

We pay heed to local government in considering possible changes in the various methodologies. Most of this year's proposed changes flowed from suggestions from those in local government. They encouraged us to make distinct provision for rent allowances and for levies of the national parks; they asked us to look again at the way in which we reflect special educational needs and support services, following the ending of recoupment last year; and they asked us to look again at the pensions element in the formula relating to the police.

We have responded to those representations, and also to the concern expressed in many areas outside the south-east about the area cost adjustment. The review that we set up, chaired by Professor Elliott of the university of Aberdeen, has already begun discussions with local government. Tenders have been invited for research specified by the review team. We have asked the team to report by June.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

Reverting to education, what does my right hon. Friend think of the conduct of the Liberal Democrat-controlled West Sussex county council, which wrote to the governors of every school in West Sussex, long before the revenue support grant settlement had been announced, telling them that their spending would have to be cut by £25 million in the next two years? It did so without any evidence. When the settlement was announced, it was found to be far more favourable than it had predicted, but it made no apology, nor has it approached any of the schools to tell them about the improvement that the Government announced in the revenue support grant, which should go straight to the schools.

Photo of John Gummer John Gummer Secretary of State for Environment

The only thing I have to say about West Sussex Liberal-controlled council is that it did not undertake much independent research on the matter, but merely took the whip from Liberal-controlled councils throughout the country. There was nothing special about that. A deal was done that they would frighten parents and governors in advance by writing such a letter without any basis.

They did so early enough for a basis not to have been possible. Often, they used examples of how many teachers might have to go, how many books could not be bought and what would be the effect of cuts of 5 per cent. in each school. Stereotype letters were sent to Members of Parliament. They were handed out to Liberal Democrat activists and to some Labour people—happily, some of the latter felt that the letters were a little extreme, even for them.

I have heard of no example of a Liberal Democrat-controlled council that has since written to the governors to say, "We are sorry there was undue alarm. The figures are as follows, and we are hoping to passport this through to you as rapidly as possible, and that you will be able to use it effectively." I will happily give way to the hon. Member for Newbury, if he can cite a single case in which Liberals have apologised for the letter that was sent out, or for the letters that went out from Labour councils.

Photo of Mr David Rendel Mr David Rendel , Newbury

Perhaps the Secretary of State would like to tell me how many of those authorities are already spending more than the Government now say they should spend.

Photo of John Gummer John Gummer Secretary of State for Environment

The interesting thing is that the hon. Gentleman does not explain that any of those authorities has written to apologise. They all said that there would be large cuts. That will not take place, unless the Liberal authorities do not pass on the money that is now available to them.

Photo of Mr Toby Jessel Mr Toby Jessel , Twickenham

On the subject of spending by Liberal Democrat-controlled councils, when my right hon. Friend visited Richmond on Thames and was shown the slides about which he was kind enough to tell us, did he notice a rather small, new town hall called a civic centre—the building is rather small for a town hall—on which the Liberal-controlled council spent no less than £12 million, as it is of extremely extravagant design? The people of the borough are still paying the hire purchase on that, which is one reason why, in the last council elections in the London boroughs in May 1994, the Liberals lost four seats to the Conservatives in Twickenham.

Photo of John Gummer John Gummer Secretary of State for Environment

I was surprised at some of the things that were included in the slides. Now, I am even more surprised about some that were excluded. Although no doubt the Liberal-controlled council is proud of its new town hall or civic centre, it did not feature. No photograph was included, nor was there any reference to the cost. Indeed, it was not mentioned during the discussion. No doubt my hon. Friend would like to give me further information, so that I can ask for a few more particulars.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

The Secretary of State has attacked virtually every Labour or Liberal council in the country. How does he respond to the chairman of a council policy and resources committee who told the Government: we found that government spending restrictions were forcing us into cuts that would damage services to the people"? He wanted another £2 million to spend on education. On top of the cuts, it seems that that council will have to increase council tax by up to 9 per cent. to make up the shortfall in Government grants. That was the chair of the policy and resources committee of Buckinghamshire county council, one of the few—endangered—Tory county councils left.

Photo of John Gummer John Gummer Secretary of State for Environment

No council can escape the need to make savings and run itself efficiently. The money that has been provided for Buckinghamshire, as for the rest of the country, is consonant both with its needs and with what the country can afford. There is no other way. [Interruption.] I am even-handed, unlike the hon. Gentleman, in what I say, whatever party is involved.

Local government has received a significant increase in the money that is available. That money needs to be spent on education rather than elsewhere. The hon. Member for Attercliffe is almost the last person in the House to lecture anybody on running local authorities. His local authority is an example of appalling local government. He was in charge of a local authority that could not teach anybody anything about running authorities except how to run up debts. He must not address the House as if he knows anything about the matter.

During the consultation period, we have received representations from authorities about our proposals, and have considered them carefully. We have responded to many of the representations about the data that we propose to use in the calculation of SSAs. Some of those representations brought to light the need for amendments, and in those cases, we have been able to make corrections. We shall continue to discuss SSA methodology with the local authority associations.

I said in November that I would continue to pay a special grant to compensate authorities that have lost more than 2 per cent. of SSA as a result of methodology changes for 1996–97 or for 1994–95 and the incorporation of 1991 census data. That is a fair arrangement that recognises the special problem of a sudden drop in SSA, while also recognising the need to phase out such support, so that grant can be redistributed elsewhere. The Special Grant Report (No. 16) will establish that grant for 1996–97, and some £128 million will be distributed to local authorities in that year.

I announced a scheme last November to damp unacceptable increases in council taxes directly attributable to local government reorganization—a point that was raised earlier. I do not propose any changes to the scheme, which will apply to areas where the direct council tax effect of reorganisation exceeds £104 in band D. Taxpayers in North Lincolnshire will therefore benefit from a grant of about £2.18 million. I shall lay regulations to implement the scheme before the House in a few days.

The capping of local authority budgets is the means by which Government ensure that local authorities play their part in controlling public expenditure. I set out in my statement in November the capping criteria that I had in mind to apply for the coming year. I have now considered carefully the representations made by authorities, and I wish to reaffirm that I still intend my original criteria to apply. A table of provisional cap limits based on those criteria will be available in the Vote Office after I sit down.

Capping is an essential tool for retaining effective control on overall spending. It is an open secret that I would like to be as free as possible with capping, but the reactions of local authorities so far make that stance difficult to maintain. We shall consider carefully how to deal with that. The capping criteria are necessarily provisional.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

Will the right hon Gentleman give way?

Photo of John Gummer John Gummer Secretary of State for Environment

No, I must finish.

I cannot take my decisions on capping until authorities have set their budgets for 1996–97. When I come to take those decisions, I shall of course take into account all relevant considerations, to ensure that any cap set for an authority will be reasonable, achievable and appropriate. The House will, of course, have an opportunity to debate any orders that cap individual authority budgets.

I am also specifying a base budget in the relevant notional amounts report for authorities that are being reorganised or are subject to a boundary change. That will allow me to make a fair comparison between years for capping purposes.

I now turn to other aspects of local authority finance. Hon. Members will recall that I told the House in November that the Government wished to build on the successes we have already had with challenge funding of local authority spending. In particular, we want to explore whether that approach offers a better and more efficient way of funding authorities' capital expenditure and attracting private capital to supplement public money.

In my November statement, I promised that we would publish a discussion document on taking forward challenge funding in the near future. I am pleased to tell the House that, yesterday, my Department sent a consultation paper on this subject to English local authorities. This outlines proposals for a capital challenge fund that would provide support for the best capital spending proposals submitted by local authorities. We propose that our ideas be tested—.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

That is local authority money.

Photo of John Gummer John Gummer Secretary of State for Environment

It is interesting that the hon. Gentleman says that it is local authority money. It is the taxpayers' and the people's money. The proposals would bring in more private money, so that, for every pound that the local authority spends, at least £1, and probably £2 or £3, more will be brought in.

The Labour party thinks of only one stakeholder—the local authority stakeholder: it is not the people's money, it is local authorities' money. They say "our money" like they say "our schools". They mean that they are longing to get their fingers on what they think is their money. That money is earned by men and women, who want to make sure that every penny is spent properly. If we can get an extra pound from the private sector, we can provide something much better. [Interruption.] The hon. Member for North-West Durham ought to know that.

That shows what is different about Labour. It wants to talk in modern terms, but has the same atavistic view of everything that happens. Labour Members say, "It's our money, and we are going to spend it. We don't care about partnership when it comes to getting more money for the things that really matter."

That is why the outline proposals for the capital challenge fund will enable us to have a better system, which will ensure that the money goes not only where it is needed but where the schemes to meet those needs are the best, and where they can bring in more money from outside, so that what can be done can be better done. We propose that our ideas be tested by a pilot scheme that will be run in the 1997–98 financial year.

The scheme that we propose would give local authorities a clear lead in deciding on local priorities for capital spending. The best, most imaginative, authorities will be given an incentive to work with local people and businesses to create and implement a local strategy for investment. That would target resources at the areas where they can do most good.

Consultation on those ideas finishes in mid-March. I anticipate announcing our conclusions and the next steps shortly after that. In the meantime, I look forward to a positive and constructive response to the consultation paper because it will mean more money for the very capital projects that all of us want—those that are best fitted to the needs of the people.

I have dealt with the main issues that are covered by the four reports before the House. This year's settlement will help local authorities meet the needs of their citizens in education and other key service areas, but authorities will need to continue to get better value for every pound they spend. They will be watched most carefully by the public to see what their priorities are and whether they are spending that money on the things they said the public most wanted. I commend the settlement to the House.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport) 5:07, 31 Ionawr 1996

The central message from today's debate is that, in the coming year, council tax payers will end up paying more and getting less. As happened last year, there may be a few parts of the country where the council tax does not rise or where services to local people are not reduced, but in most places the council tax will go up and services will come down; local people will have to pay more, and will get less.

Last year, our initial estimate was that the council tax would go up by about 6 per cent. The average turned out to be 5.2 per cent. but before the Secretary of State starts crowing in one of his mini-raves, I remind him that the council tax increase in his constituency was exactly as I had predicted, 6 per cent; in the Prime Minister's constituency it was 8.5 per cent; and in the Deputy Prime Minister's it was 7 per cent.

This year, on the basis of the Government's original statement, we predicted similar increases. It now seems that, even according to the Government, the average increase may be quite a bit higher. When the Chief Secretary to the Treasury gave evidence to the Treasury Select Committee, he let the cat out of the bag. He admitted that the Treasury was working on the assumption that the average council tax rise would be 8 per cent., showing that I was guilty of the serious political offence of failing to exaggerate.

If the average council tax rise is 8 per cent., that will cost council tax payers some £780 million. That is equivalent to adding about half a penny to the standard income tax rate. If the Chief Secretary is right, therefore, the Government's promised 1p reduction in the standard rate will be immediately halved in value by the council tax increase. That is a perfect example of the Government giving with one hand and taking away with the other.

It does not stop there. Budget documents show that the Government expect council tax payers over the next three years to cough up an extra £3.5 billion, equal to almost 2p on the standard rate of income tax. That was recently confirmed by the head of local government finance at the Department of the Environment, who said that the Government were aiming to increase the council tax payers' contribution to council expenditure from 21 per cent. to 26 per cent. He added: That represents a view by Ministers that the council tax can take more of the strain of paying for local services.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Let me finish the quotation. The official said: It is not a huge change, but nevertheless it is a trend that present Ministers want to see. The downside is that your taxes go up quite sharply".

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

Is the hon. Gentleman familiar with the publication "Renewing Democracy: Rebuilding Communities", which advocates on page 18 that local democracy would be more responsible if a much higher proportion of money to be invested and spent was raised locally? It appears therefore that the Labour party is proposing exactly what he is condemning the Government for.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

As I wrote every word of that document, I am quite familiar with it and it does not mean anything that the hon. Gentleman thinks that it does. The Labour party is saying that, for a start, it would return the business rate—which the Government nationalised, just as they nationalised the water industry—to local control. If he is so concerned about tax rates, he should remember that, if his local authority received from the settlement the same amount of help to provide local services as Westminster city council, rather than paying council tax, people would receive a £489 rebate this year. If Essex county council received the same amount of help per pupil as Westminster council, it would be able to take on 5,350 extra teachers.

Photo of John Gummer John Gummer Secretary of State for Environment

As the hon. Gentleman feels that the Government are not giving enough money to local authorities, will he tell us how much more a Labour Government would have given, and how much more of taxpayers' money it would give to local authorities? We want to know how.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

The Secretary of State took one hour and two minutes to try to tell us his settlement is. We are now going to question it—that is what we are here for today. The settlement that I am talking about is part of that process. [Interruption.] The object of the debate is to consider the Government's proposed settlement and to find out whether it is adequate. As I always say to the Secretary of State, come the general election, we shall make things clear. We shall not make any promises, as the Tories did at the last election, when they said they would reduce tax and then put it up. We shall not make promises to protect people with mortgages and then take that protection away. We shall make sensible, careful promises. When we go into the general election, people will know what we shall do, and when we win, we shall do it.

Photo of David Curry David Curry , Skipton and Ripon

The hon. Gentleman has said that he will return the business rate to local communities. That must mean that some will win. Those with a large business infrastructure will presumably gain; others will lose. In places such as Liverpool, where will the strain be taken: on the council tax or on increased Government grant? How will he deal with that redistribution problem?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

As the hon. Gentleman knows—so he should not be getting up and asking daft questions—when the business rate was in the hands of local councils, various schemes existed to equalise it between different regions. Those schemes, or fairer variations on them, would obviously be necessary. He, too, is one of the authors of the settlement. If he ensured that the local council that he represents—Craven district council—received from the settlement the same amount of help per head of population as Westminster city council, his council would not need to levy any council tax. It would be able to pay a £528 rebate to everyone. He then asks me about the consequences of our promises.

Photo of John Gummer John Gummer Secretary of State for Environment

I should genuinely like to help the hon. Gentleman. Does he accept that his comments on the settlement would be a great deal more credible if he told us his alternative to our proposal? Does he not understand that, by merely saying that sometime, some place, somewhere, he might tell us, he removes his right to make any comment about the settlement? Therefore, I ask him again: what would he do?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

The Secretary of State has taken the best part—no, the worst part—of an hour and a bit to try and explain his position, and we are going to analyse what he said and what is in the settlement. If he does not like it, he will just have to lump it. After all, he receives a Secretary of State's salary and a chauffeur-driven car for the privilege of listening to us. I might add that he is responsible for the settlement and that, if his local council, Suffolk Coastal, received from the settlement as much help per head of population as Westminster council, his electors would receive a rebate of £591. If Suffolk county council received the same help per pupil as Westminster council from the settlement, it would be able to take on an extra 2,700 teachers without increasing the council tax.

This year's local government spending level set by the Government does not make full allowance for inflation and for pay increases, such as those needed to attract teachers to inner-city schools. Nor does it allow fully for the cost of educating an estimated 86,000 more schoolchildren; extra contributions that are needed for pensions, police and firefighters; and meeting the costs of new laws on the environment and, rightly, requiring the installation of seat belts on school transport—a measure for which my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) worked so hard and successfully.

The spending level does not meet the cost of local councils having to pay to central Government the landfill tax, which will cost them more than £70 million. Nor does it meet adequately the cost of meeting other environmental requirements that have been placed on local councils.

The level that the Government have set for the coming year is £1 billion lower than the amount councils are spending this year, before taking into account inflation. The Government assume that councils will make up the difference partly by using their balances and their reserves, but many councils have been drawing down heavily on balances for some years. In some cases—for example, Hounslow, Newcastle, Tower Hamlets and the Merseyside police authority—the district auditor has warned that their balances are too low. Councillors there and in many other places will be faced with the dilemma of cutting services or facing the wrath of the auditor and possibly the courts.

In his Budget, the Chancellor of the Exchequer gave the impression that the Government were increasing their grant for education over and above the amount councils were already spending on schools. That misleading impression has been repeated by other Ministers, including the Prime Minister, and Tory Members have written to school governors and head teachers in an effort to give even wider currency to that myth.

Local education authorities would like nothing better than to have more money to spend on schools. That is why, between them, they are already spending more on schools this year than the Government target for their spending on schools next year. Local council education spending on schools this year is £872 million higher than the Government's target for their spending. If those authorities were to spend next year the amount that the Government want them to spend, their spending on schools would not increase. They would have to cut it by a figure that works out at a reduction of £40 per pupil—so much for the extra money that is available for education.

Publicly, the Government speak about increasing spending on schools—while Tory Members of Parliament write letters to school governors—while furtively setting targets that are lower than current spending. That might be described as saying one thing and doing another.

Local education authorities will do their best to meet the hopes of parents and the expectations that the Government have falsely raised, but it will not be cost-free. Extra spending must come from somewhere. It is likely to result in cuts in other services for children; in price increases for school meals, for meals on wheels and for home helps; and in cuts or price increases for services for elderly and handicapped people, such as those who use day centres or luncheon clubs.

Education authorities must cope with the needs of an extra 86,000 schoolchildren, with the cost of installing seat belts and with the need to provide more money for children with special educational needs.

In many parts of the country, another vital service will be placed in difficulty as a result of the settlement—the fire service. That service is under pressure. Cuts have been made in services almost everywhere, but especially in London and the other metropolitan areas, where fire brigades are run by separate authorities. Those are under even greater pressure. Cuts will be made of more than £4 million in the West Midlands brigade, £2 million in the Tyne and Wear brigade and more than £9 million in the London fire brigade.

For years, those fire brigades have been cutting staff and postponing the renewal and updating of equipment; now they are expected to do it again. They also have difficulty in funding pensions, which take an increasing share of their budget. The trend cannot continue without weakening the service to the public and endangering firefighters by reducing the number of firefighters available to fight each fire and allowing equipment to deteriorate.

In London, the process may lead to the closure of four fire stations, the reduction of 22 fire engines at other fire stations and massive cuts in control room staff. The response times of fire brigades throughout the country may be lengthened—surely something that no one could seriously contemplate, but that the Government apparently do.

Special problems have arisen this year for some of the less urban new unitary authorities that have resulted from the break-up of the counties of Cleveland, Avon and Humberside. Higher-than-average increases in council tax may be needed to maintain anything resembling the present service. That refers to those unitary councils that have already been established, and that take over the running of services this year.

Equally significantly, the settlement fails to provide money to meet the costs of the change to unitary status by the new unitary districts approved by the Secretary of State or recently recommended for that status by the Local Government Commission. Failure to push through those changes in time for elections to the new authorities in May 1996 will increase the costs and uncertainties of staff and of people living in the area. Such delays will almost certainly lead to council tax increases and to cuts in services in years to come, which might have been avoided by finding the extra money now.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

The hon. Gentleman's colleagues in local government, Labour leaders of councils, have suggested that the settlement is inadequate to the tune of £3 billion. Does the hon. Gentleman endorse that figure?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

I do not endorse anyone's numbers but my own, and the hon. Gentleman is not getting one from me. [HON. MEMBERS: "Oh!"] I explained that earlier. In case the Conservative simpletons did not notice, that was what one of my earlier responses meant.

Photo of Paddy Tipping Paddy Tipping , Sherwood

My hon. Friend mentioned the move towards unitary authorities. Have not some orders yet to be laid, and do not shadow authorities that should start in May 1997 need elections in May 1996? Is there not a suspicion that the Government are cherry picking which orders will come through? Why has no commitment been made that the order in respect of Nottingham will be laid before the end of February?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

In fairness to the Secretary of State—it strains my good nature—I should point out that Nottingham was held back because the newly reconstituted Local Government Commission was considering the proposed unitary status of other districts in Nottinghamshire, so it was considered reasonable to hold Nottingham back until that issue had been resolved.

As the commission has recommended that there should be no further unitary districts in Nottinghamshire, however, Nottinghamshire should go ahead, as should Devon, where both Torbay and Plymouth have long been recommended and no further additions are proposed, along with Leicester and Rutland, to which the Minister has already made a commitment. I hope that he will respond to that, but not necessarily today.

The way in which the central Government grant is allocated is as important as its overall size. The Government claim that the allocation is the inexorable product of impeccably objective criteria. That claim is plainly false; no one believes it. The allocation of grant is a racket, designed to secure the Government's political objectives. I have no objection to a Government trying to secure their political objectives; I simply wish that they would accept that that is what they are doing.

One of the basic building bricks of the grant system is the Government's assessment of deprivation, which is not made independently but is carried out by officials at the direction of Ministers. It is a racket that favours a few areas at the expense of most others. Nothing better demonstrates the scale and nature of that racket than the Government's treatment of Westminster city council.

According to the Government's fantasy finance, Westminster is the fourth most deprived place in Britain, while Barnsley, after a score of pit closures, lurks in 313th place. According to the Government, only three places in England are worse off than Westminster-Hackney, Tower Hamlets and Islington. Everywhere else in England is less deprived than Westminster.

As the Duke of Wellington said: If you believe that you will believe anything.

Photo of John Gummer John Gummer Secretary of State for Environment

If that is wrong, why did Westminster do better comparatively when the Labour party was in power, when it was seen to be more deprived proportionately than many of the places that the hon. Gentleman mentioned? Why did it do better when the hon. Member for Blackburn (Mr. Straw) did the figures than it does now, when they are calculated objectively?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

If the Secretary of State inquires, he may find that the council tax—or, as it was then, the domestic rates—in Westminster was roughly comparable with those everywhere else. Westminster's council tax payers are now being subsidised by those everywhere else. He knows it; everyone knows it. It was the object of the exercise.

That was why, when the poll tax was being introduced, Lady Porter said in a memorandum that the man who is now the Secretary of State was more acutely tuned into the political consequences of the original proposal for the share-out, because it would have hammered Westminster and Labour authorities in London would have done better. He knows that it is political and always has been.

Photo of David Curry David Curry , Skipton and Ripon

I should like to help the hon. Gentleman with his analysis. The last Labour Government, as my right hon. Friend said, was more generous to Westminster, and that was on the basis of a needs analysis. Westminster's need per head was 486 compared with 327 for Liverpool—a difference of 49 per cent. In 1996–97, the SSA paid in Westminster will be £1,265, and that for Liverpool will be £944—a difference of 34 per cent. On the needs analysis, the Labour party gave greater support to Westminster than the present Government do.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

This week, we have had to put up with three amazingly lengthy performances by the Secretary of State and, if he does not mind, I wish to make my speech in my own way and give my answers in my own way. If the Minister of State, who rushes to the aid of the Secretary of State, wants to give the full picture, will he tell us what the rates were in Liverpool, Westminster and the other areas? The sole object of that exercise has been, and is now, keeping down the poll tax and then the council tax in Westminster.

I admit that there are deprived parts of Westminster, such as the ones where Westminster city council housed homeless families in asbestos-ridden blocks of flats. That is not half the story. The Westminster protection racket does not stop there. Massive benefits flow to Westminster from the way in which the grant system treats visitors. For grant purposes, the Government deem that Westminster's resident population increases by 81 per cent., the residents being augmented by commuters and other day and overnight visitors. So Westminster receives more money to meet the needs of those visitors.

Those same visitors add not only to Westminster's costs but to Westminster's income, in particular through parking charges. The income from parking charges is in excess of £20 million a year, which is more than about half the district councils in this country have available to spend in a year. That £20 million excess is not offset against the extra grant for visitors. It is added to it. Westminster receives the extra grant and the income from parking charges. That allowance-for-visitors fiddle does not end there—it becomes even more amazing.

For grant purposes, the Government assume that the visitors to Westminster, like the residents of Westminster, are also the fourth most deprived people in Britain. So, for example, 12 per cent. of the people staying at the Ritz or Savoy hotels tonight will be deemed to be severely overcrowded, thus qualifying Westminster for extra grant. That is the truth of it. All that of course makes no allowance for the £7 million that Westminster received in the past for spending on flood defences, which were never built, or for the £2 million that it received towards the cost of the English National Opera—£2 million that the opera company never received.

It is no good the Secretary of State trying to deny it. The chief executive of Westminster city council accepts that it is true. In an internal memorandum, he said: We are vulnerable to the criticism that we receive double compensation for these costs; firstly, via the SSA formulae and secondly, via the generation of parking income … Although the use of this is restricted by law, we are able to contribute some £20 million per annum towards our budget requirements (eg off-street parking, highways, street lighting and concessionary fares for the elderly and the disabled). This contribution is equivalent to a Council Tax of £197.

Photo of Joan Walley Joan Walley , Stoke-on-Trent North

Some months ago, 14 people from Staffordshire came down to Westminster as visitors to lobby the Secretary of State for Education and Employment for more money in the standard spending assessment for Staffordshire, so that we could have extra teachers in our classrooms. Those people looked with envy at the buildings in Westminster. They also looked with envy at the extra 4,800 teachers available for pupils in Westminster—at the expense of teachers in Staffordshire.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

The awful thought for my hon. Friend is that, if those visitors came down by road, they almost certainly contributed to increasing Westminster council's funds. One of the great ironies is that, every time people come by road to lobby the Secretary of State, they help to make the racket an even bigger one.

To be fair, the special help for Tory areas does not begin and end with Westminster city council. Depending on how they are defined, there are only 13 or 14 Tory councils in the country, which makes it easy for the Government to target help on them. It could be described as precision-bombing with money. That is what the settlement has done. According to the Government, Runnymede—I repeat, Runnymede—is the 38th most deprived place in England. It is more deprived than Liverpool, Knowsley or Warrington and more deprived than Easington or Wakefield—which includes Hemsworth—after the pit closures.

According to non-Government assessments of deprivation and wealth, Runnymede is not the 38th most deprived place in Britain. Quite the opposite, it is the 40th most wealthy place in Britain, if judged in terms of realities such as the proportion of households with three or more cars, the size of the house or the number of households in which average pay is above the higher tax-rate threshold. I do not say that those criteria are perfect, but they are much nearer to reality than the Government criteria, which are the reverse of reality, that are applied to some areas.

According to the realistic criteria, another Tory area—Surrey Heath—is the best-off place in Britain. If one knew the area—it is near Camberley, Chobham, Bisley, Windlesham—one would have to conclude, from the visible evidence, that Surrey Heath was pretty well-off. However, it is not well-off according to the criteria that the Government used in calculating their grant to local councils. According to those criteria, Surrey Heath is more deprived than 83 other councils in this country, including Barnsley, Allerdale, Bolsover, Ellesmere Port and Warrington.

If we shift a little to the north, Huntingdonshire, which is represented by the Prime Minister, according to the realistic criteria that I have spelt out, is the 43rd most wealthy place in England. However, according to the Government, it somehow qualifies for a higher deprivation rating than all the councils that I have just mentioned, apart from Barnsley. The Prime Minister's Government recognises that Barnsley is just marginally more deprived than Huntingdonshire. I do not know what that says about what the Government have done to Huntingdonshire during the past few years.

It is almost impossible to spell out the scale of the financial gerrymandering that the Government have used to bail out their friends on Westminster council. Some time ago, when we made these points, Ministers suggested that there was some independent back-up research, from Bristol university, for placing Westminster fourth in the deprivation scale. The Minister of State nods. Mr. Deputy Speaker, if you look at the table produced by Bristol university, it contains even more bizarre rankings than that which places Westminster fourth. According to the table that the Government want us to accept, the Scilly Isles are ranked third. I do not think that the Scilly Isles are more deprived than Barnsley, and Mr. Deputy Speaker, I do not suppose you do either.

On the next page of the tables that have been worked out by the people at Bristol university, it shows that Westminster is ranked 96th. It is clearly just a racket. It is the grants-for-votes scandal. The scale of the scandal is difficult to exaggerate, so I shall not even try. I shall rely on the Government's own figures, which show that if every council in the country received the same grant per head as does Westminster city council, 94 per cent. of councils would not have to collect any council tax at all. Instead, most of them would be able to pay out rebates. Seventy per cent. of them would be able to pay out rebates of more than £500, and nine councils—including Southampton, Portsmouth, Redditch, Stoke-on-Trent, Tamworth and Wellingborough—would be able to pay out rebates of more than £900.

Let us examine the education SSA for this year. If Kent received the same help per pupil as does Westminster, it could have taken on an extra 4,600 teachers; Staffordshire could have taken on 3,250 extra teachers; Essex could have taken on 5,650 extra teachers; Nottinghamshire could have taken on 2,500 extra teachers; Warwickshire could have taken on 1,400 extra teachers; and Shropshire could have taken on an extra 890 teachers. Wakefield, which includes Hemsworth, could have taken on an extra 1,470 teachers. However, those councils could not do that. Instead, they were forced to make cuts and increase class sizes. That is what happens in other parts of the country. Even that—

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

No, I will not.

Even that is not the end of the story. Westminster council clearly needs central Government help to make up for the funds which it has lost through fraud and mismanagement. The district auditor is about to issue his final report on the homes-for-votes scandal, which he said has cost £29 million. To get that huge sum—£29 million—into perspective, hon. Members should understand that, of the 365 district councils in this country, 261 have total budgets of less than £29 million. Therefore, 261 councils in England have less to spend on their citizens in a year than Westminster has unlawfully squandered in just one of the many financial scandals for which it has been caught out.

It is not only the scandals that consume public money in Westminster, but the grotesque expense of the services that the council provides. According to the Audit Commission's figures—I always use official figures—Westminster spends £53 per head on refuse collection and disposal compared with Camden, which spends £24 and St. Helen's, which spends £18 per head. Street cleaning in Westminster costs £37 per head. In Camden, it costs £14 per head and in St. Helen's, it costs just £2.28.

Westminster's administration of housing benefits costs £226 per claimant—that is the highest figure in the country, like so many others that I have cited—and only 62 per cent. of applicants receive their money within two weeks. In the neighbouring borough of Camden, which has similar problems and a fairly similar population, the equivalent figure is £103 and 95 per cent. of applicants receive their money within two weeks. That is why the Government gave Camden's benefits section a charter mark.

However, the Tory Government never say a wrong word about Tory Westminster council. We can only conclude that it is because they approve of every single thing that the council does. The Government's problem is that they do not have to answer only to the voters of Westminster—although, with the boundary changes, they will lose one Member of Parliament to Labour in Westminster at the next general election. They also have to answer to the people in the rest of the country.

The people know that the Government are furtively pushing up council tax and cutting local services, while at the same time publicly and repeatedly drawing attention to the 1p reduction in income tax. In other words, the Government give with one hand and take away with the other. As a result, local people all over the country will be forced to pay more and get less. That is why the orders are wrong and that is why we shall vote against them tonight.

Photo of Mr Michael Alison Mr Michael Alison , Selby 5:41, 31 Ionawr 1996

As a Member of Parliament who represents a northern seat, I found it bizarre to hear the hon. Member for Holborn and St. Pancras (Mr. Dobson) focus so obsessively on Westminster. It is quite impossible to follow the debate, which has serious implications for the whole country, when the hon. Gentleman dwells obsessively on Westminster.

I cannot understand why the hon. Gentleman is so obsessed with Westminster. Is it simply because his constituency is situated near Westminster? Are there rival football teams? Is lacrosse at the root of his obsession? What is the explanation of his extraordinary obsession with Westminster? Why did the hon. Gentleman not mention a word about Holborn and St. Pancras so that we could, perhaps, get to the root of his obsession with the city of Westminster?

The hon. Gentleman compared the cost of street cleaning in Westminster with the same service in St. Helens but, in so doing, he was comparing the sun with the moon. What conceivable parallel could be drawn between the cost of street cleaning and sweeping in St. Helens and in Westminster? A vast number of people from every part of the country often gather to protest in the City of London and in Westminster.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

To protest about the Government.

Photo of Mr Michael Alison Mr Michael Alison , Selby

It is true that they sometimes protest about the Government, but that is an occupational hazard that we readily accept—it is part and parcel of being in government. People come to protest for many other reasons. For example, Turkish citizens may protest about events in Bosnia. I hope that the hon. Member for Sheffield, Attercliffe (Mr. Betts) welcomes the fact that many people, including overseas visitors, come to protest outside the Home Office—quite irrelevantly—about the persecution of Turkish minorities in Bosnia.

Has the hon. Gentleman seen the muck and the rubbish that accumulates in all sorts of central London locations—near embassies and so on—when a large number of people gather to protest and object? That is why there is a little disparity between the cost of street cleaning in St. Helens and in Westminster.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

Are the right hon. Gentleman's constituents happy to subsidise Westminster in the way my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) so clearly described? Does the right hon. Gentleman think that it is fair that there should be a double subsidy—as the chief executive of Westminster city council pointed out—in terms of the standard spending assessment on day and night visitors and car parking income? Should not one subsidy be offset against the other? What would the right hon. Gentleman's constituents think about that?

Photo of Mr Michael Alison Mr Michael Alison , Selby

I must be careful how I respond to that intervention as I hope to bend the ear of my hon. Friend the Minister for Local Government, Housing and Urban Regeneration about certain improved transfers to the Selby district. I hope to gain his sympathy in that regard.

As to the hon. Gentleman's question, I simply refer him to the intervention that my hon. Friend the Minister made during the speech of the hon. Member for Holborn and St. Pancras. My hon. Friend pointed out that the situation was worse when Labour was in power: Westminster received more subsidy and more help. The idea that the present arrangement is a Government racket geared to improve the lot of Westminster voters does not stand up to analysis, as my hon. Friend said earlier. I should like reassurances from both parties as to what will happen if there is a little money to spare, as I am particularly concerned that the Selby district should benefit.

The hon. Member for Holborn and St. Pancras referred also to the old, pernicious and damaging system of the business rate. I am very proud and happy to represent the Selby district. The area has a gigantic industrial base, which includes the Drax and Eggborough power stations as well as the whole of the Selby coalfield. If we were to return to the old business rate system, we would have a bonanza, but how much would we then lose in rate support grants? How would the balance be adjusted?

What would happen to the wretched neighbouring areas which have no industry? Some of them—particularly Merseyside—have no industry precisely because the business rate system drove it out. Is the hon. Gentleman suggesting that a return to the old business rate system is a great leap forward to modernity? If that is Labour's policy come the general election, we shall be happy to debate it.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

Is the right hon. Gentleman aware that, if my local authority in Stoke-on-Trent had increased expenditure by anything like the percentage by which the Government have jacked up the business rate, it would have been capped three times over?

Photo of Mr Michael Alison Mr Michael Alison , Selby

I should have received notice of that question. I shall ponder it in my bath when I am in a reflective mood, having carefully read the hon. Gentleman's intervention in Hansard.

Photo of John Gummer John Gummer Secretary of State for Environment

I am sure that my right hon. Friend will recall that the business rate may not be raised by more than the percentage increase in the cost of living. He will probably also recall that, when the business rate was in the hands of local authorities such as Sheffield, it was used as a mechanism for taking huge amounts of money from business with the result that almost all businesses in Sheffield would have moved out if they could have sold their premises.

Photo of Mr Michael Alison Mr Michael Alison , Selby

I entirely accept my right lion. Friend's reminder. It is bizarre that the hon. Member for Holborn and St. Pancras poured such acidic wit and criticism on the attempts that local government associations have made, in co-operation with the Government, to produce some sort of objectivity in the analysis of need.

The hon. Gentleman showed, mockingly, using various lists, how implausible that seemed to be, but he is offering to go back to the weird system of raising the business rate in an entirely irrational and undifferentiated manner, which depends entirely on the location of historic industrial premises and those that have been swept to new locations as a result of the Labour party's battening on to the fatted calf in certain areas. He gave us a wholly inconsistent critique. He criticised my right hon. Friend's attempt to be objective, but then proposed a return to the old system of business rates.

While I have the attention for a brief second of my right hon. Friend and of my hon. Friend the Minister for Local Government, Housing and Urban Regeneration—and I cannot hold it much longer—I wish to refresh their memories of the peculiarly Procrustean torture that befalls local authorities that have large chunks of their old district removed as a result of structural or boundary changes.

My hon. Friend the Minister was kind enough, at the end of October 1995, to allow me to bring Selby's chief executive, Mr. Chris Edwards, and chief finance officer, Mr. Martin Connor, to meet him to explain the problems that have arisen because the district has suffered a loss of resident population of nearly one third. That is a big chunk—from 92,000 to 72,000. Selby has lost some 20,000 of its resident population through the boundary changes associated with establishing the new neighbouring York unitary authority.

We told my hon. Friend the Minister, and he was kind enough to listen with great patience and perception, thatalas—local government services and their costs cannot be cut precisely to match the transfer of outgoing population. Procrustes had a bed which unwary wayfarers were made to fit. If they were a bit shorter than the bed, they were stretched in an agonising rack; if they were a bit bigger they had bits chopped off.

My hon. Friend the Minister has unwittingly imposed the perversion of that fearful torture on the Selby district—a combination of chopping and stretching. The chopping happens because lots of local government officers have to be chopped off after a big loss of population—which amounts almost to one third. In the case of Selby, that will produce a redundancy bill of £1 million which, considering our grant from central Government is only £4 million, is a large proportion of extra costs. The stretching happens with the services that are left behind—they have to be stretched over a large, but thinner, district. We will have fewer local government officers, which produces redundancy obligations, and probably a poorer standard of service. We cannot cut precisely to match the loss of council tax paying population.

When we met my hon. Friend the Minister on 26 October 1995, the provisional SSA figures were just about to be published. On 30 November 1995, only a few weeks later, my hon. Friend published his provisional SSA figures. I found that Selby's provisional SSA figure was £6.513 million and I thought that, as a result of meeting my hon. Friend at the end of October, we would see some evidence of recognition of our Procrustean dilemma when the definitive figures appeared.

I was appalled to discover that the SSA has fallen from the provisional sum which was published just after I met my hon. Friend. I can only conclude that we in some way offended or outraged him. That is why I am doing my very best today to offend and outrage the hon. Member for Holborn and St. Pancras—so that I may win the enthusiasm, support and friendship of my right hon. and hon. Friends on the Front Bench.

It is certainly true that the so-called relevant notional amount in the case of Selby has been raised to £7.19 million, but that simply means that our capping limit has been adjusted upwards to take account of the problems with local government structural and boundary changes. The sum still has to be funded and financed by the local council tax payer. That will mean, for example, that the estimated council tax for band D, which is now £92.67, is likely to go up—if we go to the full new capping limit of £7.19 million—to £105. That is an increase of 13 per cent. or more.

I just caught the wisp of an indication from the conclusion of the speech of my right hon. Friend the Secretary of State that there might be some help for Selby—and north Lincolnshire—in the new limit that he has established to give special help to local authorities with severe boundary and population movement changes. I shall consider carefully what he has to say. I hope that my right hon. and hon. Friends realise that if we have to spend up to the new capping limit to accommodate £1 million of redundancy money, we will have to do exactly what the hon. Member for Holborn and St. Pancras accused the Government of doing overall. I dispute and repudiate his accusation, but in Selby, because of a unique and non-recurring phenomenon, we will have to charge people more for reduced local government services. People will get a poorer service, but they will have to pay more for it.

Photo of David Curry David Curry , Skipton and Ripon

I hope that I may assist my right hon. Friend. He mentioned the redundancy and transitional costs that will be especially important for Selby, given the size of the area which is being removed. As he will know, for 1996–97, Selby made an extremely low bid—of £100,000—compared with many other authorities. We met that in full. The 1996–97 bid did not include provision for redundancy and compensation payments, but we expect that that will be included in the mid-year bidding round and further allocations could be made at that stage. I shall bear in mind my right hon. Friend's remarks at that time.

Photo of Mr Michael Alison Mr Michael Alison , Selby

My hon. Friend is very kind not to force me to wait in agony and expectation until he speaks later for that little expression of hope and encouragement. It is very much appreciated. I hope that my hon. Friend will continue to focus on the needs of Selby. There will be a problem if the extra demands have to be paid for purely by local council tax payers and not through the agency of some sort of redistributive mechanism.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

In the same spirit, and to save my hon. Friend the Member for North-West Durham (Ms Armstrong) making the point later, may I say that the right hon. Gentleman has made a good case? Selby is in unique circumstances and the help that the Minister mentioned would not breach any principles, or set any precedents for anywhere else. The Opposition would be happy to support any efforts that the Government, the council and the right hon. Gentleman can make to sort out the problem, because Selby has been battered twice rather than just once by the changes.

Photo of Mr Michael Alison Mr Michael Alison , Selby

I am much obliged to the hon. Gentleman for that helpful contribution. I know that he has some geographical and personal knowledge of the Selby district. I hope that I can end my speech on a note of constructive harmony in the expectation that my right hon. and hon. Friends on the Front Bench will listen carefully to me and to the Opposition spokesman and ensure that everything possible is done. I can see other colleagues nodding in every part of the House. Perhaps we can have a general agreement that something special should be done for Selby and that my right hon. and hon. Friends will do their best to secure it.

6 pm

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

I am delighted to follow the right hon. Member for Selby (Mr. Alison), who is a fellow Yorkshireman. I hope that the support of my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) will prove helpful. When the right hon. Gentleman retires at the next election, we shall be looking for his successor to come from the side of the House that we will occupy—although I, too, shall have retired.

This is not the first time that I have participated in a debate on local government finance. I have not done so for the past two years, but I did so frequently before that. Today, I found the Secretary of State to be courteous, although he was rather cutting about the Liberal Democrats. He took a great deal of time and gave way frequently, but it was not until my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) intervened that he clearly and specifically accepted that local government spending this year is so inadequately supported by central funding that council tax will go up substantially.

Many experts believe that, on average, council tax increases throughout the country will exceed the rate of inflation by a factor of two and, if certain eventualities such as higher settlements, greater costs and more urgent crises assail local government, the burden will be even higher. Some key services will be threatened, as will some of the non-statutory activities normally undertaken by local government.

For example, the Government are supposed to be keen on combatting crime. In the past few months, they seem to have detected a slowing in the rate of increase in crime. In fact, it has much more than doubled since 1979. Many of the villains are not in prison because the rate of convictions has fallen in actual terms. Many local authorities, mine in particular, are keen to see measures to discourage crime, but there will not be any capacity to do that adequately.

I do not believe that the lot of police authorities is particularly pleasant today. The fire services, which have been put under great pressure, have been mentioned. The Minister might like to recall that the number of calls to which fire services had to respond during the drought months created serious problems for those authorities.

I am concerned about education. I welcomed the Chancellor's reference to education in the Budget—he announced that almost £800 million extra for education would be directed to local authorities—but many local authorities are already spending above the level on which the Chancellor's calculations were based. A further 83,000 children will enter our schools and they will have to be catered for from an increase that may well be more fictitious than real.

There is another problem. The Minister will be aware of it because he has visited my constituency on a number of occasions in the past year or two. We have enormously high unemployment. A vast proportion of our young people see no opportunity for employment and a great deal of effort is put into seeking to ensure that they stay on at school or enter further education—anything other than hanging about the streets. The number of young people who have stayed on beyond the normal school leaving age recently has presented serious problems for an education authority that seeks to be sensible and realistic. The Government might say that other authorities have been treated more severely, but I do not believe that we have been given the assistance or the resources necessary to save money.

The same argument applies in respect of old people. People are living longer, but going into care costs a great deal of money. It is sensible to give local authorities the capacity to sustain elderly people in their own homes because the alternative is more expensive. The number of people who reach 90 or even a century has increased appreciably in my area.

Not long ago, I wrote to a couple who I thought had been married the longest in my area—they were celebrating their 65th wedding anniversary. I wrote to them because I know their son-in-law. I congratulated them and reminded the old man that I had seen him by a reservoir not long before. His daughter telephoned me to say that I have in my constituency a couple who have been married for six years longer—that fact did not get into our observant local newspaper.

People are living longer and they need the sustenance and care that can be provided by a local authority. They will not get it if local authorities remain docile and seek to keep council tax down to avoid offending their tax payers and the Government.

This will be a difficult year for local authorities. It has become increasingly difficult for local authorities to bear their burdens while the flagship of the Conservative party has been supported for the past eight years. Seven years ago, I gave the House a detailed comparison between my authority and Westminster. I reviewed the comparison the following year. If my authority had been treated in the same way as Westminster during the past seven years, none of my constituents would have had to pay any council tax, we would have been able to provide twice as many old people with free meals and several hundred more home helps every year and every person in the Rotherham metropolitan borough—man, woman and child—could have pocketed more than £1,250.

The argument advanced in support of the enormous assistance given to Westminster is that it is part of the capital city and has to sustain the responsibility of the centre in promoting national culture, art, music and so on. In fact, the vast majority of provincial local authorities spend a larger proportion of their budget on those purposes than does Westminster. I challenge the Minister to deny that. The average local authority provides a higher level of support for art, culture and music than does Westminster city council. The situation is so bad that the national lottery has to use my constituents' contributions to fund the extravagant schemes and to provide those central responsibilities that the Government assume Westminster bears.

If the authority was efficient, I would not mind so much. During a debate in the House a few years ago, I mentioned an old-age pensioner in my constituency who had not set foot in London since 1955. He received 14 parking tickets and a summons in Westminster for parking a car that had never been there. [Laughter.] Oh yes. It just so happened that the car with false number plates was discovered on the morning of my debate. The person involved was never prosecuted. The car was a large blue Rover. I do not have a blue car for obvious reasons and I suspect that the person involved may have been closer to the political sympathies of Conservative Members.

If my local authority had done anything like that, there would have been demonstrations such as those mentioned by the right hon. Member for Selby. There would have been protests about the incompetence of the council. Yet the Tory flagship must continue to sail. I hope that, after the next general election, we will see rather more intelligence and a greater sense of justice pervading decision making in the Department of the Environment.

Seven years ago, I argued that there was grossly inadequate weighting for the unemployment factor in the determination of central support. The Government decided that it was a good case and there has been some improvement since then. However, I still consider that there is grossly inadequate consideration of the factors of poverty and low pay.

If a community suffers from low earnings and the average household income is therefore extremely low, that has a serious effect. I take the view—and have done so for a long time—that that factor is not given sufficient weight. Any improvements that the Government may have made have been grossly inadequate. There is a strong case for an independent assessment of and arbitration on such factors in the determination of central grants. It is a serious argument. My authority and others in South Yorkshire, which contribute to the Deane valley city grant scheme—over which the Minister has a watching brief—are areas of real poverty. Jobs have been destroyed and the wages of those in work have fallen in real terms. It is a grossly inadequate that that economic reality is not taken into account in the determination of grant. That must be dealt with immediately.

In 1979, Graham Page, the former Minister with responsibility for local government finance, described his task as flying around England in a helicopter dropping bags of money on town halls. That may have been an inefficient system, but it did not matter so much then because, in those days, the rates provided a much smaller share of local government income than does council tax now. [Interruption.] It is true.

Once Lady Thatcher decided that the burden had to be shifted from the taxpayer to the ratepayer, people became a great deal more sensitive to the problems. The Government then became a great deal more critical of local authorities that did not do exactly what they wanted. Local government must serve local needs. It should not depend on a Government who exercise excessive pressure through such measures as capping. Sometimes, local government knows best. Indeed, local government is often more careful in its stewardship of public money than the Government Departments that so often criticise it.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party 6:12, 31 Ionawr 1996

It is a great pleasure to follow my right hon. Friend the Member for Selby (Mr. Alison). He gave us a lesson in how to charm the Government. As many of us have thought for some time, he is an old smoothie.

It is also a great pleasure to follow the hon. Member for Wentworth (Mr. Hardy). I read his speeches in Hansard before I came to the House. I wish him well in his future retirement. I am sure that it was a slip of the tongue, but the hon. Gentleman said that under Lady Thatcher the proportion of grant raised locally was increased. In fact, it was decreased. Perhaps he was confused by the fact that the gearing was changed.

It is wrong of Labour Members to say that the standard spending assessment figures have been fiddled. No one seriously believes that. They have been examined by the Audit Commission and by such luminaries as Tony Travers from the London School of Economics. All the reports say that the way the methodology works is satisfactory and fair. No one can point to another system in the world that is more fair.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

My hon. Friend's long list did not include the Environment Select Committee, which also found the system to be entirely objective.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

I am grateful to my hon. Friend for that additional information.

Labour Members have drawn comparisons between Wandsworth and Westminster. If Wandsworth received the same grant as Tower Hamlets, it could give back £1,000 to each council tax payer. Unless my geography is terribly wrong, Tower Hamlets is not exactly a safe Conservative borough. It is certainly not part of some supposed Tory plot. Sooner or later, Labour Members will have to produce reasoned arguments.

The reason why Labour Members say that the SSA figures are fiddled is that they do not want to answer two basic questions. First, if the grant is inadequate, how much extra would Labour be prepared to provide? Secondly, what proportion would be raised locally?

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

The hon. Gentleman said that the Audit Commission had accepted the methodology. Is he aware that the Audit Commission commissioned a report by Price Waterhouse on the issue of capital financing, which my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) mentioned? It rejected the idea of notional debt as part of the capital financing arrangements within the SSA and suggested a system, albeit an adjusted one, based on credit approvals. Why do not the Government take up that suggestion, which would help authorities such as Birmingham and Sheffield?

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

The hon. Gentleman knows that in April the way in which local authorities can deal with capital financing will change because of the private finance initiative. That will give them many opportunities, in partnership with private enterprise, to renovate schools, libraries and leisure centres.

There is a certain carnival atmosphere about the debate. The Evening Standard last night said that it was like a ritualised dance. The Opposition come and say that the grant is inadequate and that the world as we know it will come to an end. The Government come and say that the grant is generous and reasonable. The Opposition say that there will be many redundancies among teachers and council staff and that it will be the end of services as we know them.

This year, the Opposition say, "We are not crying wolf. There will be deep cuts in local government services." Of course, that never happens—and why not? Let us take one standard assessment. The largest part of any local authority budget is staffing. Local authorities have to deliver education and social services, which tend to be reliant on high numbers of staff. Compared with last year, there has been a reduction of 1.5 per cent. in the staffing level. However, if we deduct from that all those employees who have transferred to private companies through compulsory competitive tendering or who now come under the arrangements for grant-maintained schools, the figure shrinks considerably.

Hon. Members may say that that is just one year, but comparisons with 10 years ago show that about the same number of people are employed in local authorities now as they were then—despite compulsory competitive tendering and the various new functions that have been introduced. It is simply not true to say that vicious cuts are being imposed.

At the time of our debate last year, one authority screamed loudly about the number of teachers and other staff that it said it would have to make redundant. I am referring to the late, but not very lamented, Avon county council. When it was finally wound up and its reserves were examined, there was an unexpected balance of £54 million. That is enough to absorb the total budgets of five or six district councils. The spokesman for the council said that the balance was larger than had been anticipated. That is a bit like the late Emperor Hirohito saying that the second world war had not gone entirely to his satisfaction.

Mention was made of Westminster city council and other Tory authorities. The hon. Member for Holborn and St. Pancras (Mr. Dobson) is no longer in his place—he is a busy man and no doubt has other things to do. It was a bit rich of the hon. Gentleman to lecture Tory authorities when Camden council ended the 1994–95 financial year with £180 million of uncollected debts. For many years, the majority of that council's staff enjoyed terms and conditions of employment that were described by their chief executive as reflecting unique generosity to the point of illegality. That council spent £1.5 million on computer equipment, then failed to use it. That council lost £300,000 worth of computer equipment for four years. That council was described as having no coherent children in care policy. It was more than a bit rich of the hon. Member for Holborn and St. Pancras to shroud-wave about education cuts, saying that children would miss out, when his own council in Camden took more than £4 million from its education budget in 1994–95 to cover bad debt and interest rate swaps, which had nothing to do with education.

The hon. Member for Holborn and St. Pancras questioned the mix, and expressed concerned that the amount of money that would have to be raised locally will increase. As I pointed out, a Labour document suggests that that will happen. The hon. Gentleman said that he wrote every word of it. On page 18 of "Renewing Democracy, Rebuilding Communities" the hon. Gentleman stated: We believe that it would be better for local people to make a healthier democracy if councils were responsible for raising locally a much higher proportion of the money they invest and spend. The hon. Gentleman said that he did not mean that exactly but that the business rate should be repatriated. That would increase the amount of money raised locally. If that is what Labour Members mean, why not say so? Why use obscure wording when it would be simpler to say, "We will ensure the return of the uniform business rate." Then everyone would understand. This is a clear example of Labour running from a policy that it now perceives to be unpopular.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I am sure that the hon. Gentleman has read the whole document—in fact, his copy is annotated. He will be familiar with its statement that the first thing that Labour wants to do in terms of denationalising Tory policies is to restore the uniform business rate, but Labour is consulting businesses and other interested parties on how to achieve that effectively. We want to make sure that those other interests are involved. That is why we are not prepared at this stage to fling numbers about. If Mrs. Thatcher had behaved that way, the Conservative party would not have wasted £4 billion.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

I have read the full document, and very enjoyable it is too. I did not miss out any sentences. I did not fiddle the words to mean something different. It is clear that the document is referring to the uniform business rate, but it says something extra. It says that the proportion should be increased. When Labour consults, it will no doubt be told by business men, "We remember a time when people took roofs off factories, to avoid paying exorbitant business rate." The hon. Member for Sheffield, Attercliffe (Mr. Betts) will no doubt remember, because that occurred in his own metropolitan district council. The hon. Lady is not on a winner. If this is the only denationalisation—[Laughter]. I mean, renationalisation. Those words are so old that we tend to forget them. It is like a journey into the past. If this is the only renationalisation that the Opposition propose, it is not even old Labour.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

Does my hon. Friend recall that Labour members of Labour-controlled authorities were on to what they believed was an electoral winner—and it probably was, for them? The bills were paid by the milch cows of business, which had no votes, while the rates of people who had votes were disguised as part of their rent. Labour was able to destroy businesses and jobs. The figures are on record. Businesses voted with their feet and moved out of Labour boroughs. The hon. Member for North-West Durham (Ms Armstrong) plainly wants that situation to return.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

My hon. Friend said that the voters did not appear to pay, but rightly pointed out that they did. They lost jobs, investments and opportunities. That was the price paid by people when they decided for narrow, sectional interests to impose ideological policies on local councils.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

I will give the hon. Gentleman two examples of raising money locally. Sheffield city council raises extra income from local sources by opening the town hall car park on Saturday. Secondly, all the internal roads for Meadowhall shopping centre were designed by the council's own engineers and received commendations from Meadowhall's owner, Eddie Healey, for doing a job as good as any private firm. Local authorities are restricted by the vires rules that the Government inflicted on local councils, which prevent them from earning money in the ways that I described.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

No doubt the hon. Gentleman went round that centre with his personal plumb bob and spirit level, to examine the roads. I do not understand his point. Nobody is suggesting that all the work done by local authorities is bad. We are arguing that heaping debts on the back of local business is not the best way to be involved in the local economy. If the hon. Gentleman wants to involve and to work in partnership with the private sector, and to relieve himself of an obsession with municipal ownership, the people of Sheffield will welcome that approach.

This year, local authorities will r0eceive £900 million, which is greater than expected from last year's statement. Arrant nonsense was talked about local authorities suffering different rates of inflation from the rest of the country. That is a hoary old chestnut. That was true in the late 1970s, but it has not been true for the best part of 20 years. Against the background of additional money, it is only right for the Government to focus on the priorities of education, social services, and law and order.

I share my right hon. Friend's concerns about relaxation of the capping rules. Removing capping is like getting off the back of a tiger. One is safe until one tries to dismount, and then the problems start. With local authorities, the tiger has been smiling through its beard and saying, "It is going to be all right. You can trust us, we are responsible and we will do the right thing." Yet the very moment capping is relaxed, we hear statements like the one made by Sir Jeremy Beecham.

Like many hon. Members, I received a briefing note from the three local authority associations—which are soon to be one—in which Sir Jeremy Beecham said that the settlement did not match what councils were spending. What a daft idea that it should. Indeed, there would something wrong with the settlement if it did match spending. In no other sector would the wish list of an organisation suddenly become its spending plans. The idea that the best way in which to solve a problem is to appoint an officer is entirely wrong. In my experience, the best way in which to solve a problem is to disappoint an officer.

Local authorities use a strange language of compliance. We hear councillors say that as the capping level has been relaxed they will spend up to the new level—just because the Government say that they can. When the Government say that it is possible to raise the level of spending, they are by no means advocating that such a level should be reached. Just because the standard spending assessment has gone up or just because the cap has been relaxed, there is no compulsion to increase total spending.

The hon. Member for Holborn and St. Pancras seemed rather excited about what the Chief Secretary to the Treasury said about expected levels of council tax. I should think that the Chief Secretary, by his nature, has a rather jaundiced expectation of human nature. There is no reason for council taxes to increase by about 8 per cent. Indeed, some councils are planning to cut their council tax next year. We should expect, however, local authorities to start to address priority.

Clearly, we are giving education a high priority this year. In my county of Essex, the total sums available for education are being increased by almost 5 per cent—an increase the size of the allocation for two or three district councils. We have already heard that the Lib-Lab coalition on the council is determined not to pass on those extra resources to schools. All we will see as a result is a further flood of schools opting for grant-maintained status. Every secondary school in my constituency is already grant-maintained. They offer enhanced choice and diversity in education, whether in language or technology.

I would, however, like to take a leaf out of the book of my right hon. Friend the Member for Selby and make a special plea to my hon. Friend the Minister, because we have worries in the Brentwood area. [HON. MEMBERS: "Ah."] They are real worries and I hope that the Opposition will support me in my plea. Our schools are so good and so attractive that we are desperately worried about the prospect of an influx of children of members of the shadow Cabinet. We are not entirely sure that we can take such a number of children, but we will do our best. Should Brentwood schools be favoured by Opposition spokesmen, will my hon. Friend look kindly on the wish to build a number of extra classrooms in our secondary schools to accommodate them?

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

At least the hon. Gentleman has no need to fear an influx of children of Conservative Members, since they all send their children to private schools.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

We are very proud of some of the children who went to private schools in Brentwood, the hon. Member for Blackburn (Mr. Straw) being a prime example. We often see him at old boys' reunions. As someone who did not come from a privileged background, it is always nice to see the toffs doing well on the Opposition Front Bench.

It is also important to concentrate on social services. Along with the rest of my hon. Friends, I have become increasingly worried about the way in which the Lib-Lab coalition on Essex county council has been abusing its position over care in the community. Essex is virtually unique in so far as it has received the largest allocation of special grants and SSA on personal social services. Unfortunately, it has a bunch of old-fashioned, municipal councillors who simply want to organise and control everything. They have ended the Conservatives' modernisation programme of old persons' homes, they have ended the modest charge for home helps and reduced the service, and they have taken money from social services to introduce stress officers for their staff—no doubt so that their staff can explain to the rest of the population why the service has been reduced.

The Conservatives had introduced a scheme whereby a series of old people's homes, whose structure and decoration had been neglected, were offered for sale in the private sector. The controlling group on the council has stopped that process and essentially reduced the amount of money available to help old people get into private homes.

In my constituency a home called Brook House, which is owned by the county council, was threatened with closure just before the last general election. Despite many protests from the local Liberal Democrats, who said that the proposed closure was a disgrace, the home was eventually closed. I had the pleasure of reopening it. Virtually the same staff work there, but in new conditions.

Instead of looking like some kind of poor house or somewhere where old people are sent to be forgotten about—I am talking about the basic surroundings not the quality of the staff—the home now looks like a hotel. That says to our old people that we recognise the work that they have done, respect them and want them to see their last days out in some dignity. We know that it is cheaper for the county council to place elderly people in private sector homes instead of its own homes, yet it does not do so because of ideology.

As I said to the hon. Member for Attercliffe, the private finance initiative is likely to come into being next year. It will enable county and district councils to use some of the disciplines of the private sector in renovating their libraries and schools.

We must ensure that local authorities behave responsibly with their new responsibilities and flexibility. My council of Brentwood is controlled by the Liberal Democrats. The local leader was in the paper saying what a disgrace the settlement was, how the council could not manage on it and how there would be a massive hike in council tax to compensate for it. He predicted large council tax rises and said that it was all the Government's fault.

Sometimes we politicians can be taught a lesson or two by members of the public who say the obvious and cut through much of the political froth. I am grateful to my constituent Mr. Michael Pointer who wrote to the Brentwood Gazette to comment on the local leader of the Liberals blaming the Chancellor for the prospective increase in council tax. He said: In fact the Chancellor is increasing the cap by 1.75 per cent., but that does not mean our councillors need spend it. He points out that in 1992, the council took £4.2 million from the reserves and spent it on revenue, in 1993, it took £2.5 million and spent it on revenue, in 1994 it took £2.7 million and spent it on revenue and in 1995 it took just short of £2 million from the reserves. What the gentleman says in his letter is that the day of reckoning has arrived. Brentwood has a badly run council that has not applied basic housekeeping rules. Frankly, it has been deserted.

Photo of Mr David Rendel Mr David Rendel , Newbury

I thought—perhaps I am wrong—that the Government were trying to persuade local councils to use up their reserves, on the grounds that that is the best way to keep council services going.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

The problem that my local councillors have is that they rely on the hon. Member for Newbury (Mr. Rendel) for advice, which is the road to ruin. The Government are saying, "We don't mind you using your reserves, but we want you to do so in a way that will get your budget down." It is no use substituting measures and hoping that one day something will turn up. The hon. Gentleman has let those councillors down terribly, because he produced an alternative budget that proposed not a penny-piece extra for district councils. He is saying to the Liberal district councillors in Brentwood, "Sorry, chaps. I've deserted you. We want to make education a priority."

I appeared on a television programme with the hon. Member for Newbury. He is very nice to be on television with; he is a very nice man indeed. When I put the point to him, he looked shocked. I do not know whether he was let down by his hon. Friends in his Treasury team—

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

My hon. Friend suggests that no one told the hon. Gentleman. I suspect that that is true. If it is, I do not think that that was fair. He should have been told.

I had an opportunity to talk to my hon. Friend the Member for the Isle of Wight (Mr. Field), who told me about his Liberal-controlled council, which has been given an extra £1.5 million for its education budget. It did not want to give that money to schools, so there was a tremendous row—Liberal against Liberal, shouting at one another. Eventually it offered a compromise: it will keep £300,000 and let schools have the rest.

My hon. Friend the Member for Isle of Wight and I say, "let the schools have the money that has been allocated to them." We shall judge the settlement by whether the money is passed on. Will priority be given to education and social services? If Opposition Members do not do that, we will not, under any circumstances, allow them to forget it.

Photo of Mr David Rendel Mr David Rendel , Newbury 6:41, 31 Ionawr 1996

The Chancellor pledged in his Budget speech last November that an additional £878 million would be made available for investment in education in 1996–97. Of that amount, £770 million was to be channelled through local government. We now have the finalised local government settlement, but we do not have the additional £770 million that was pledged. The total amount of external finance for local authorities has not risen in real terms. That is the important point. All that the Government have done is to raise the standard spending assessment for education by 4.5 per cent.

To make that increase meaningful, the Government have at least raised the capping limits for many authorities this year. As we heard from the Secretary of State earlier, however, the Government have refused to do what many hon. Members have called for and to remove capping limits altogether. If the Government are serious about local democracy, it is time that capping went.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

I wrote in my local newspaper on the Isle of Wight that the council and the Liberal Democrats had campaigned for capping limits to be raised or abolished, but they said that they had never asked for that and tried to suggest to school governors on the island that that was not Liberal Democrat policy. I should be obliged to the hon. Gentleman if he would emphasise the point so that I can take it back to the Liberal Democrat councillors on the Isle of Wight.

Photo of Mr David Rendel Mr David Rendel , Newbury

I am delighted to underline Liberal Democrat national policy. I cannot tell the hon. Gentleman precisely what was said on the Isle of Wight, but I can tell him, happily, that it is also Conservative party policy, as passed at the last conference, although the Government have not yet taken that on board. Only when capping has been removed can people really hold their councillors to account, because only then will councillors face making real choices about the provision of services and how to fund them. With capping in place, it is not the local electorate who decide what value to place on education for their children but the Secretary of State in London.

There are two ways of looking at the line taken by the Chancellor and the Secretary of State. We could assume that the Government are recommending that councils stick to the SSA for education. If so, it should be noted that last year local authorities spent more than the Government recommend that they spend this year. If we assume that the Government really want councils to stick to their SSAs, that will lead to a cut in education spending, not an increase. If, however, the Government are urging local councils simply to spend 4.5 per cent. more on education regardless of whether they were above SSA last year, with no additional funds from central Government, they are calling for a substantial increase in council tax, coupled with a programme of cuts in other local authority services. Even then, it will not be possible for many education authorities to boost spending by the amount that the Government suggest.

I realise that Conservative Members may be unwilling to take my word on that, so I will quote the words of the Treasury Select Committee, which published its report on 15 January. That Committee, which has a Conservative majority, revealed the extent of the Chancellor's con trick when it said: This increase in spending does not, however, have quite the substance the Chancellor claimed for it. It went on: Moreover, when the increase in spending is placed in the context of local authority resources, it seems less likely that, whatever the expectations of parents, local authorities will be able 'to carry that funding through to school budgets.' The Committee concluded: There seems little doubt that some local authorities will be unable to pass on any increase in spending, and that some schools may neither perceive nor receive any increase in resources. The Government have told us throughout the debate that that would be entirely the local authority's fault, but the Treasury Select Committee has pointed out that it is inevitable, given the Chancellor's Budget.

Clearly, any increase in education spending will be a matter of too little too late. It will not even be enough to cover the £191 million needed to cover rising pupil numbers. Nor will it be enough to cover the £131 million required for additional costs in the provision of special needs education. It takes no account of the 8 per cent. reduction in schools' capital grants and credit approvals.

Let us consider what it will mean to one education authority. In Cambridgeshire, the SSA for education in the current year was £226.1 million. Next year, it will rise to £237.3 million—up by 4.9 per cent. Generous, one might think. But Cambridgeshire, one of many shire counties no longer controlled by the Conservatives, has already decided to spend £241.1 million on education this year, because the present authority places a much higher value on education than the Government do. That is already some £4 million more than the Government suggest that the authority should spend next year. The extra resources this year have been found partly from reserves and partly by raiding other areas of spending, which have consequently been starved of funding to a level below even that which the Government think appropriate. As was bound to happen, the reserves have effectively run out.

The Government are providing less money than Cambridgeshire was already spending. The authority has no money left to make up the difference. It has increasing pupil numbers and demands for special needs. Moreover, of course, it is not allowed to raise any extra funds because it is capped. In anyone's book, that can add up to only one result: cuts in education.

It is no wonder that the teachers and governors of Cambridgeshire are up in arms. Those figures were produced not by some party political body, but by a combination of the primary governors group, the secondary governors group, the primary heads forum, the local education authority secondary heads, the Special Schools Heads Association and the National Association of Governors and Managers.

I have used Cambridgeshire as an example, but I have received briefings from many other county councils showing that almost exactly the same is happening all over the country—in Cornwall, Devon, Somerset, Gloucestershire, Dorset, Berkshire and Hampshire. The list continues across the country.

Photo of Mr David Harris Mr David Harris , St Ives

The hon. Gentleman mentioned Cornwall. Will he cast his mind back to what was said in Cornwall a year ago by all his Liberal Democrat colleagues—that Cornwall would face horrendous cuts in school budgets, and that teachers would be laid off right, left and centre? They did a survey and produced bogus figures just before the local elections. Does the hon. Gentleman know how many teachers were actually laid off in Cornwall last year? They were fewer than the fingers on my hand.

Photo of Mr David Rendel Mr David Rendel , Newbury

I am delighted to hear that confirmation of how well Cornwall is being run now. The council has managed to avoid cutting a lot of teachers' jobs despite cuts in Government funding. That is a wonderful example of how well Liberal Democrat councils have managed.

When the Conservatives have succeeded in infuriating such huge bodies of opinion in the way that I have described, is it any surprise that they have lost the confidence of the country?

I realise that statistics will abound in the debate, but there is one that is especially well worth recalling in view of the Government's claim that they are doing so much more for our schoolchildren this year. Since the general election the standard spending assessment per secondary school pupil in England has fallen by 9.5 per cent. in real terms.

Time and again, the Government have raised parents' hopes that their children's education will get the funding that it deserves, only to dash those hopes when it is revealed that Government promises are nothing but a lot of hot air. Their attempt to con parents is motivated by the desperate desire to win votes, but they will soon realise that the British public do not take kindly to a Government who seek to pull the wool over their eyes, especially where the education of their children is concerned.

The Secretary of State continues to play the Chancellor's fiddle. Yet he and the other Conservative Members are already gearing up to criticise local authorities which respond in the only way possible—by cutting services and increasing council tax. We have already heard such criticism in the debate.

The Government themselves produced figures in the Budget Red Book showing that they expect a 10 per cent. increase in council tax revenue this year. That translates into an additional bill of about £61 for the average household. For the Government to cut income tax one day and then reimpose that tax burden in a less fair way the next is nothing new, but it is still dishonest: it is still an outrageous Conservative sham.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

The hon. Gentleman talks about dishonesty; would he care to tell us why not one penny piece of additional money was allocated for district council functions in the Liberal Democrats' shadow Budget?

Photo of Mr David Rendel Mr David Rendel , Newbury

As I hope has become entirely clear—indeed, I believe that the hon. Gentleman himself made it clear in his speech—the Liberal Democrats' priority now is to increase education funding and spending, because we believe that to be in the long-term interests of the country. We have made it clear that where necessary we shall raise income tax to pay for extra education spending. That is where our priority is, and that is where it will remain.

Local Government finance is about more than council tax—

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

I am interested in the Liberal Democrats' policy on education. I have seen a copy of the resolution passed at their conference which says specifically that the additional penny in income tax that they have said for some time should go to education would be spent on education for the over-16s and under-fives, which would not be relevant to this education debate at all. The resolution is quite clear.

Photo of Mr David Rendel Mr David Rendel , Newbury

I understand that the motion that the hon. Gentleman mentions was on nursery education and did not cover the whole gamut of what we expect the extra money to pay for.

Local government is about more than council tax: it is about local services that are vital to the quality of life of ordinary, decent people. While local authorities have attempted to shore up funding for education, it is inevitable that other services have suffered. If local authorities now try to boost education spending by the proportion that the Government suggest, other services will have to be squeezed even further. The adjusted spending assessment for social services has been cut by 2 per cent. in real terms, so it seems that the Government regard social services and the vulnerable people whom those services exist to protect as expendable.

The neglect shown by the Government in their funding of social services naturally manifests itself in some sad examples of how vital services have declined. I will give the House the opportunity to hear about two of them.

I recently received a letter from a doctor in Hungerford, in my constituency, referring to what he described as the "sorry state of affairs" that the underfunding of community care has brought about. His patient had been trying to secure bath aids through social services. The House will appreciate that providing handles to enable somebody to get in and out of the bath safely and comfortably can be an essential ingredient in maintaining that person's independence. It is a vital safety measure, and may even save money in the longer term by enabling an elderly person to remain at home rather than having to go into residential care. The response from social services was that the gentleman would have to wait for up to a year—not to obtain the aids, but for a care manager even to visit his home to assess his needs. Goodness knows how much longer it would have taken to have the bath aids fitted. But the real sting in the doctor's letter comes in the last sentence, which reveals that the patient is 90 years old.

Another case was brought to my attention by a special school in Hampshire which caters for a constituent of mine. The boy is described as a very vulnerable pupil at our school which provides 52 weeks a year education and care for children with the most challenging behaviour associated with autism. The challenging behaviour can be life threatening. The young man is now approaching his 19th birthday, and once he is 19 he must move on from the school and will no longer be funded by Berkshire education authority. Responsibility then shifts to social services, which must find a suitable placement.

The school has been pressing social services to place the young man for the past 12 months, but social services have been unable to do so. Meanwhile, the school has provided a place for the boy at a community care home and merely wants social services to agree to fund the placement. But social services have been unable to confirm funding for the placement, on the grounds that they need to find something cheaper. The interests of the young come second to the rigours of an underfunded budget.

In the words of the school: With Government pressure on education, care and health budgets, these children and young people are now the victims of a bureaucratic 'ping-pong' between Education and Social Services pre-19 and Social Services and Health post-19 as they argue about who will provide what proportion of funding for their placements. Those two examples are but the tip of the iceberg, but both show how the Government have put short-term tax bribes before the provision of essential services. In the long term their policies will lead to greater expense, and the tax increases that we have witnessed since the general election. The Government have failed to provide the funding for local authorities to make community care work.

That is not the end of it. The Government are also cutting the funds for highway maintenance. I understand that Somerset, for example, is so desperate to safeguard education spending that it has imposed a cash freeze on highway spending, despite increasing numbers of claims for damage to vehicles, and to human beings as a result of falls. There is more: the Government are also cutting the funds with which local authorities attempt to protect the environment.

Those cuts in every area of local government services will be the prime concern of most ordinary people. In many areas, people will have to put up with cuts in services combined with steep increases in council tax. A further problem is that in calculating spending assessments no account has been taken by the Government of the burden of the landfill tax this year. I hope that local authorities will reduce their use of landfill, and as an incentive to that end I welcome the landfill tax, but in the short term many local authorities will face a considerable burden in terms of the landfill tax.

In Gloucestershire, for example, the impact will be £740,000 in the financial year 1996–1997. Where do the Government believe that cuts should be made to find that money? In a full year, the impact will be about £1.5 million. Even with the change in national insurance contributions promised for April 1997, the impact on Gloucestershire will still be well over £1 million.

What cuts do the Government recommend to find the money for the new tax? Should cuts be made in education? The county's spending on education is over the SSA, yet it has had to make significant cuts in school budgets for the past five years. Should cuts be made in social services? Only today, a demonstration took place outside shire hall in Gloucester about possible cuts in services, including child care provision and adult opportunity centres.

It is frustrating for us all that the Secretary of State has still not rectified the iniquity of the area cost adjustment. I was glad to hear the right hon. Gentleman say today that there is a possibility of future adjustments to the scheme, but that has not happened yet. It makes no sense to place a higher value on the educational needs of children living on one side of the Hampshire—Dorset border than on the other. After all, teachers' salaries are effectively identical in both areas.

The Government are simply starving local authorities of resources, and they are doing so deliberately. They are gambling for electoral gain. The Conservatives' strategy is clear: hammer local government to help pay for tax bribes and, if there is any backlash, blame the Opposition parties who run most councils anyway. They are making one last desperate effort to stop the Liberal Democrat tide sweeping the Conservatives from power right across the south of England in the May local elections, but it will not work. Nobody trusts the Conservative Government any more. Sleaze, incompetence and downright dishonesty have all taken their toll.

It is ironic that the party which promised tax cuts but delivered tax increases now attacks the Labour party for saying one thing and doing another. Tory Members who want to see evidence of what is happening need only look towards their own grass roots. The Conservative party's grip on local government has been decimated, not least by the Liberal Democrats, who have turned the political map yellow from Cornwall to Norfolk, from Cheltenham to Worthing and from the Isle of Wight to Harrogate.

Photo of David Curry David Curry , Skipton and Ripon

The hon. Gentleman has his party's Treasury spokesman, the hon. Member for Gordon (Mr. Bruce), sitting beside him. As he has given a long catalogue of the deficiencies of the settlement—in social services, community care, education, environment and highways—perhaps he would like to suggest by how much he thinks the Government's grant to local authorities is deficient. If there is to be a "Liberal Democrat tide" people will want to know how much it will cost.

Photo of Mr David Rendel Mr David Rendel , Newbury

The Minister should have heard by now that we want to put a penny on income tax to pay for increased funding for education. That is our clear priority, and always has been. We have also said that we wish to release housing receipts to enable local authorities to spend more in other areas, but particularly on housing. We also want to change the whole method of financing local government by introducing a local income tax and by removing the cap.

Last May, the Liberal Democrats relegated the Conservatives to third place in local government—not just in terms of the number of councillors we have across the country but, more importantly, in terms of the number of councils we control. When will the Conservatives get the message? They are not trusted to run local authorities and in a matter of months it will become clear that they are not trusted to run central Government either.

It is ironic that a key factor in the breakdown of trust in Conservativism at every level of Government will be the way in which the Tory Government have treated local councils and local services. The Conservatives will deserve all that they get in the local elections in May and in the general election whenever it comes. But even that will be poor compensation for the rundown of local services over which they have presided. It certainly offers no immediate solution to my 90-year-old constituent who cannot bathe in comfort or safety, or to the parents of the autistic young man for whom a sufficiently cheap placement cannot be found. This financial settlement is a disgrace, and the fact that Ministers and other Conservative Members have the gall to commend it to the House shows how shoddy their politics have become.

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone 7:05, 31 Ionawr 1996

The speech of the hon. Member for Brentwood and Ongar (Mr. Pickles) was interesting, but I shall not be led down the route that he would have taken the House. The hon. Gentleman referred to the fact that there have been no vicious cuts. I hope to be able to show him that there are cuts, but that they have been well hidden by the Government's presentation of the settlement.

In November, the Secretary of State for the Environment announced in Parliament the Government's financial settlement for 1996–1997, along with proposals for expenditure and capping-related matters. The Secretary of State today confirmed the announcement. I want briefly to examine the main direction of the national settlement, and look at the implications of that settlement for my local authority, Barnsley metropolitan borough council.

The local authority associations told the Government in July that there was an ever-increasing gap between the demands placed on local authorities by central Government and what the local authorities are allowed to spend to meet those demands. That puts in a nutshell the dilemma in which local authorities find themselves.

In July last year, the local authority associations informed the Government in two comprehensive papers that increased demand plus the new priority requirements for spending would mean that local authority spending needs, as far as total standard spending is concerned, would be some £47.97 billion for 1996–1997. The Government proposal that we have heard today, however, is for £44.923 billion. The Secretary of State claimed at the Dispatch Box today, as he did back in November, that that represents an increase of 3.3 per cent. on the previous year.

The Minister will agree—the Secretary of State did not in any way challenge me when I raised this point—that that 3.3 per cent. is not, in effect, an increase at all. When the figure is adjusted to take account of the provision for local government restructuring, community care and the police, the adjusted increase is 2 per cent.

Given the Government's forecast of an inflation rate of 2.75 per cent. in 1996–97, that means an overall decrease of 0.75 per cent. rather than an increase. That is a clear example of the Government saying one thing and doing another. Local authorities will be in an horrendous position next year. Moreover, as the local authority associations pointed out, authorities had calculated that they would require £3 billion more than the Government propose to provide.

There are three ways in which local authorities can deal with the problem. The hon. Member for Brentwood and Ongar (Mr. Pickles) said that many authorities could use reserves. Others, however—including mine—have no reserves to use. Because Barnsley's SSA is only 1.9 per cent. above the capping level, we cannot take that route, either. Therefore, like many other authorities, we are left with the option of cutting services year on year, and that has begun to affect people's quality of life.

Barnsley metropolitan borough council has again been asked to make large cuts. Following last year's cuts, which amounted to £10 million, it is estimated that this year's will come to about £7 million. Barnsley's provisional SSA for 1996–97 is £159.335 million. I admit that that is 6.5 per cent. higher than the 1995–96 figure, but, after adjustments for community care and rail support funding, the underlying increase is just 2.8 per cent. Given that Government inflation forecast of 2.75 per cent. for next year, it becomes a freeze in real terms.

Barnsley is now 31st in the SSA league table, whereas last year it was 32nd, but we are still at a considerable disadvantage in comparison with most other metropolitan boroughs. In other boroughs, the average SSA per head is 12 per cent. higher than ours, which is £687. The average is £770.

Furthermore, as in previous years, the level of tolerance of spending above SSA varies widely. It is generally accepted that this method of calculating local government finance involves considerable imprecision, and that is borne out by the fact that some authorities with SSAs implausibly higher than Barnsley's are allowed to exceed them by 12.5 per cent. Barnsley is permitted an excess of only 1.9 per cent.

The average level of tolerance for metropolitan boroughs is 5.5 per cent. Barnsley, however, is restricted both to a low SSA and to a low level of tolerance. The Minister will, I think, accept that any rational system would allow authorities such as Barnsley a much higher level of tolerance, so that they could be flexible in meeting local demand. As that is not built into the system, however, there is some irrationality.

The equation for education spending is somewhat imbalanced. The hon. Member for Newbury (Mr. Rendel) gave the figures. The education SSA is purported to have increased by £740 million, but the overall SSA has increased by only £677 million. If the Secretary of State's equation is to be balanced, it will have a far-reaching effect on local authorities. Resources will have to be siphoned from other essential services in respect of which—as I have pointed out—there is a negative inflation provision. In Barnsley, many services provided for elderly people will be hit.

Barnsley makes the delivery of effective education a priority—it spends 45 per cent. of its budget on education each year—but its position is very similar to the national position that I have described. Increases in education spending that match the purported increase in the education SSA will rob other essential services.

Barnsley is probably more deprived than most other metropolitan boroughs of a similar size—

Photo of David Clelland David Clelland , Tyne Bridge

More deprived than Westminster.

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone


More than 8 per cent. of adults of working age are registered permanently sick, compared with a national average of 4 per cent. Because Barnsley is traditionally an area of heavy industry and contains an aging population, a large proportion of the adult population are informal carers—12 per cent., according to an estimate that I saw last year. The pressure on social services and care in the community is greater than it is in most other districts, and the Minister should ensure that that is taken into account in the allocation of resources.

Between 1981 and 1991, total employment in Barnsley fell by 19 per cent; over the same period, there was a national increase of 3 per cent. In the decade between 1984 and 1994, more than 15,000 jobs were lost, and the gross domestic product in the Barnsley and Doncaster training and enterprise council area is estimated to be 41 per cent. below the national average. Factors such as that should he paramount in the allocation of resources.

The Minister will be aware that Barnsley and hon. Members representing South Yorkshire have raised the issue of the supertram time and again. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) will be discussing the subject in his Adjournment debate on Monday, so I shall not go into the subject in too much detail. I understand that the debate is a matter for the Secretary of State for Transport, but the Minister may want to ensure that one of his colleagues is present.

Photo of David Curry David Curry , Skipton and Ripon

The hon. Gentleman will know that I have had extensive exchanges on the supertram with Mr. Mike Bower, the leader of Sheffield council. Equally, the other districts that are part of the transit authority have made representations. We are seeking clarification of some of the actions that might be possible and continuing that discussion with the authorities concerned—there has been a useful defining of options.

As the hon. Gentleman said, the Adjournment debate on Monday will hopefully give an occasion at least to clarify those aspects that fall within the remit of the Department of Transport. I shall continue to pursue the matter. The hon. Gentleman will acknowledge, as will all the local players, that the number of people using the tram has been disappointing. The fundamental problem has been that the take-up—the number of passengers carried—has fallen below the estimates. That is the heart of the matter, and we could discuss it at some length.

Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone

I welcome the Minister's response. I will not take the issue further, other than to say that it has caused unexpected damage to services in the district. That has been all the more disappointing because we understood that assurances had been given.

The real challenge for an area such as Barnsley is trying to restructure after the enormous dislocation caused by colliery closures. It is a problem that the council is determined to overcome. We must recognise, however, that Barnsley has a narrow industrial base, which needs to be expanded and diversified. Traditional industries, such as coal mining, placed too little emphasis on personal development. Upgrading skills and educational attainment is a necessity and has become a key objective for the authority. The rebuilding of infrastructure, much of it worn out, is crucial if we are to attract investment to sustain the area.

Those are formidable challenges for the local authority, but each year, as we start to come to terms with some of the issues—I accept that city challenge money has helped to restructure the local authority—local residents find that their quality of life is worsened because of the system of central Government finance, which is, to say the least, not sensitive to the characteristics of the community. I ask the Minister to review the finance mechanism for local authorities, to ensure that authorities such as Barnsley, which are in most need, are adequately assisted to move forwards.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham 7:22, 31 Ionawr 1996

There was a leak from the Liberal Democrat Whips Office the other day. I am glad, therefore, that the hon. Member for Newbury (Mr. Rendel) is here. Perhaps he can confirm some of the things that were leaked from that office. For example, on Liberal health policy, the document said: Liberal Democrat policy on GP fundholding is found to be 'at best, confused, at worst duplicitous'.Their policy to put councillors in control of local health authorities is 'a barmy idea'. On local government it states: Noting that some of the parties' councillors are 'potentially a liability', the Liberal Democrat policy staff also believe that: 'Under the Lib-Dems local income tax you would pay income tax twice.'

Photo of Mr David Rendel Mr David Rendel , Newbury

I am grateful to the hon. Gentleman for giving me a chance to reply. He will realise that the point of that leaked document was to bring out the misrepresentations of our policy that we expected other parties to produce. That is precisely what he has done, exactly as expected.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

I have heard some pretty good Liberal Democrat stories in my time, but I have never yet heard them put out a policy for the sole purpose of arousing Conservative comment, which they can then dismiss. That is remarkable.

To turn to the subject of West Sussex, it is true that the Liberal Democrats have not held office before, and that they have had to play the part of opposition for more than 100 years, which can be a baleful exercise—[Interruption.]—as the hon. Member for North-West Durham (Ms Armstrong) knows from experience.

Last year, West Sussex had an extremely favourable revenue support grant settlement—the second best in the country—and the highest increase in standard spending assessment in the country. Not content with that, the Liberal Democrats proceeded to raid the balances, spend the cash and increase spending by more than 5.5 per cent. in one year. They did it in the knowledge that that sort of thing could not conceivably go on for ever. The public expenditure White Paper forecasts the likely flow of public spending for three years. Nevertheless, they behaved like children let loose in a sweetshop, and started to spend as if there were no tomorrow.

The results are there for all to see. The balances of West Sussex have been run down, and now the Liberal Democrats complain that the outlook is difficult. They complained months before the revenue support grant settlement was reached and wrote to the governors of every school in West Sussex complaining that school budgets would have to be cut by £25 million in the next two to three years—a specific figure.

Naturally, my colleagues in West Sussex were deluged with letters from very concerned governors and parents. There was no basis for their concern. I see that the hon. Member for Newbury—a Liberal Democrat—takes credit for that. It is exactly the kind of behaviour that people in West Sussex will never forget—a false alarm based on duplicitous behaviour.

West Sussex has received another reasonable settlement for the coming year, and it will be interesting to find out just how much of it is spent on education.

Nothing is more annoying to Members of Parliament than to find that, although a settlement is favourable for education and all local authorities are told that they should spend their money on education, they spend it not on that but on other things; and that, where they do, it goes to the local education office and not to the schools. My hon. Friend the Minister and his hon. Friends in the Government will have to find some way of ensuring that the money that Parliament proposes should be spent on education is spent on schools and I hope that he will mention that in his reply.

I do not know the best way to secure that aim, but it is important. One has only to consider the vast disparity between the amount of money that goes to schools and that which is kept by the local education authority in the different authorities. I hope that the Minister will look into that matter, and that, next year, when we return to the revenue support grant, some method will be found of ensuring that the money actually goes to schools.

There is, of course, no more important authority in the country than Horsham district council. Horsham is a totally blameless authority, with low spending. For many years, it was well below its SSA.

The population of Horsham has increased, and the level of Goverment support has been reduced. I do not complain about that, but matters become difficult if the cap is reduced in line with spending. It is difficult for a local authority to plan its future when it knows that the population is increasing, if it cannot take the total support from the Government in one year as the base for another. If it cannot do that, it is lost in the whims of the total SSA calculation, which no authority can accurately compute.

I do not complain about the SSA system, but low-spending authorities, typically those spending rather less than their SSAs, should not be penalised by the formula and the capping mechanism. My hon. Friend the Minister should examine that.

There is one other small point that appears to be inequitable. What if a council appeals against the business rates and finds that, due to the Inland Revenue revaluation, they are higher than originally expected? Horsham council—correctly, in my opinion—decided that the money should be returned to the council tax payers. After all, they should receive the benefit of a more accurate valuation.

It seems hard that Horsham council should be penalised because it has returned the money to the council tax payers rather than hanging on to it. Assessments should be based on the most accurate estimate of business rates, as corrected by the revaluation exercise. If there is a deficit for that reason, it should be made up in the revenue support grant. Horsham council acted properly in returning the benefits of the revaluation exercise to council tax payers. I ask my hon. Friend the Minister to consider that, especially in determining the SSA for Horsham council next year.

Many hon. Members—especially those outside its scope—are concerned about the area cost adjustment. They say that it is disgraceful. I think that the area cost adjustment is much maligned and fully justified. Not enough of my colleagues from the south of England stick up for it. It is an excellent refinement that accurately reflects the extra costs of West Sussex and other parts of the south. I notice that the chairman of the review body comes from Edinburgh. I trust that he will remember that he is a Scot—at least, I hope he is—and therefore strictly neutral.

Photo of David Curry David Curry , Skipton and Ripon

I hope that my right hon. Friend will forgive me, but the chairman is an Englishman, working in Scotland. The other members of the review panel are a Scot and an Ulsterman. Local authorities in England had difficulty in agreeing on an Englishman to serve on it.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

It would have been much better if a member of the review panel had come from Sussex. It should be strengthened by someone whose area gets the area cost adjustment. The panel will naturally proceed on its way with all due academic detachment, but it would have been better if it had been able to take into account the views of local authorities in the south which benefit from the admirable instrument of the area cost adjustment.

Photo of Mr Harry Barnes Mr Harry Barnes , North East Derbyshire 7:33, 31 Ionawr 1996

I want to discuss the standard spending assessment for North East Derbyshire district council. There are certain peculiarities about North East Derbyshire that need to be described. Sometimes, the worst case should be considered to test a formula. The SSA formula is inadequate and hits North East Derbyshire in almost every respect.

One problem with the formula is the shape of North East Derbyshire. It is a sort of C-shape that wraps round Chesterfield, which creates problems. It is accepted by the boundary commission as a sensible and viable authority, but the formula creates some difficulties. For instance, the head offices of North East Derbyshire district council are in Chesterfield, which is in another district. That means that standard spending assessment drifts into Chesterfield, even when the councillors and officials of North East Derbyshire work there. That shows that the formula is nonsense.

In North East Derbyshire, many of those fortunate enough to be in employment go to neighbouring authorities such as Sheffield and Chesterfield to work. The net outflow of population is 18 per cent., which is high. We have heard that Westminster has a net inflow of 81 per cent. and gets all sorts of SSA moneys as a result. We are at the other end of the spectrum but there does not seem to be any link between the figures that are taken into account for what is called enhanced population and the services that have to be provided.

The services of a district council chiefly involve people who live permanently in that district, although they may travel for work or entertainment to other areas. Council planning, housing, refuse collection and other costs tend to relate to the services that are provided not for the transient population but for the fixed population.

North East Derbyshire is a socially mixed area. There is a clear distinction between the western and eastern sides. The east end is more working class than the west end. Classically, when Conservatism was strong, the west of the constituency was a strong Conservative area and the east was strong Labour. This affects the operation of SSA because the wealthier elements on the western side are placed upon the backs of the poorer people in the eastern side when the formula is being worked out.

What my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said about Westminster has been attacked by some Conservative Members as being obsessive. That case is fascinating to us in North East Derbyshire because Clay Cross, where councillors were debarred and surcharged, is there. The scandal in Westminster involves £29 million. The Clay Cross case involved expenditure on behalf of its residents that amounted to something like £60,000. The second group of 11 Clay Cross councillors were debarred over an amount of just over £2,000. They had to be dealt with jointly and severally.

We in North East Derbyshire are very interested in what goes on in Westminster. That case involves £28 million, while the SSA for North East Derbyshire district council is £7.3 million. A bit of that, handled properly and sent to a needy area, would have been used very well by us.

The formula for the standard spending assessment is covered on page 53 of the booklet, "Local Government Finance Report (England) 1996/97". The formula first considers population, which I have already discussed. North East Derbyshire's total resident population is 99,180. That gives, under the formula, a standard spending assessment of £8.4 million. As I have said, when the sums are worked out, the amount shrinks to £7.3 million. To start with, we lose £368,000 because of the population's movements during the daytime into surrounding areas. We receive little in terms of night stays and day visitors because, although we are near to national park territory and a bit of such territory clips the end of the district, the region is not used greatly for such a purpose. People from outside use certain facilities: they come from surrounding areas to go out for evening meals in Dronfield. Generally, however, the region is not able to supply the type of facilities that draw in such extra revenue.

The next factor to consider is population density. That is considered within "enumeration districts". North East Derbyshire is not doing as badly as it has in the past. Previously, wards, not enumeration districts, were taken into account. Because North East Derbyshire region was a C-shape and the wards cut across it, we managed at one and the same time to finish bottom of a table of population density and bottom of a table of population sparsity of comparable authorities as provided by the Audit Commission. The system made calculations on that basis, but dustbin collection is difficult both in rural areas and in highly concentrated urban areas. We probably had more problems in dustbin collection than many other areas because of the region's shape and we had the costs that went with them.

Thankfully, there has been some adjustment in both the sparsity criteria—although we are worried that some of that will be dropped—and in the density criteria. It shows that one can change the formulae to make slight improvements. Those, however, are minor compared with the Herculean task that we face when presented with the consequences of the formula.

The next set of criteria is the social index. Under that index, North East Derbyshire loses £1 million. We do not score well in terms of the proportion of persons sharing accommodation, with more than one person per room or the proportion of people living in flats. The building, especially by Clay Cross urban district council, of decent council housing in the region has meant that resources to tackle its problems are not available.

North East Derbyshire does not score either in terms of the proportion of residents who were born outside the United Kingdom, in the Republic of Ireland, the European Community, the Commonwealth or the United States of America because it has one of smallest ethnic minority populations of any district in England. I do not question the criteria of ethnic provision being considered, but we do not gain anything from such criteria, which are surmounted by other problems that people face. That is not taken into account. The homelessness provisions are based on the 1991 census, but it is getting worse. The current homelessness level is not being considered.

That loss of £1 million is serious to North East Derbyshire and is not justified by the circumstances and conditions there. There must be an adjustment in the formula.

Then there is the economic index. At one time, such an index did not exist and issues such as unemployment were not considered. In areas such as Gosforth Valley, which is part of Dronfield, and Ashover, which is a big rural area, the unemployment level is down to about 4 per cent. In Danesmoor, Clay Cross, Renishaw and Holmewood and Heath, however, it is 20 per cent.

Criteria involving unemployment and long-term unemployment, housing benefit claimants, lone parent families and the mortality rate of people under 75 score highly on the eastern side of the district, but the numbers are diluted considerably in the western area. Therefore, we lose on those criteria as well, even though strong needs exist in the eastern district.

After we work through the above calculations, we come to something like the figure that we started out from: an £8.5 million SSA. However, as with all other authorities, North East Derbyshire is subject to the scaling factor. The figures are multiplied by 0.93021227385—the scientific precision of the Government's scaling factor is incredible. It is worked out in terms of how the authority fits the formula into the total amount that will go towards the differing areas. The figure is multiplied—or reduced because the multiplication is by a figure under 1—by 0.93 rounded up, which means that the amount drops to about £8 million.

Last year, the scaling factor was 0.9979, which was reasonable. Why suddenly has the scaling factor been chopped by such a dramatic amount, leading to considerable cuts? Other cuts arise because, in the formula, amounts of money are transferred to the county council from the district council. Some extra money comes in from rent allowances and interest receipts, but, in the end, we have an SSA of £7.3 million, which is a serious cut on the level that existed the previous year. It is a 7.3 per cent., appropriately, cut on last year's figures.

That figure does not take inflation into account. At no time have the Government produced any of the figures that we are discussing in terms of their real value, comparing one year's monetary values with another. They say things about Derbyshire such as, "It has done very well in terms of education. It has had a 4.7 per cent. increase". But that is not true because the inflation rate has been 3.2 per cent. After doing the maths, the real increase is I think about 1.1 per cent. Even taking that into account, other reasons exist for criticising the Government. Derbyshire is already spending beyond that level on education. That means that, with the Government's figure, there will be no increase in the education budget, which is part of the county council's provision.

North East Derbyshire is suffering an 11 per cent. cut in its SSA—the amount that it is expected to spend. The new provisional capping levels produced in the documents today are only marginally above the SSA for last year—the figures are almost identical. That means that, even if the authority pushes up the council tax considerably, it will reach only last year's figures, which do not mean the same this year because they have been eaten away by inflation.

What are we supposed to do? We are supposed to get a bit of money from the business rate. After inflation, the business rate provision is much the same. In the connection with the business rate, the formula works in that way.

The rate support grant is down by £621,000—nearly 30 per cent., taking inflation into account. That is a ghastly position, and it is well worth contrasting with that of Westminster. If the funding formula that operated for Westminster had operated for North-East Derbyshire, instead of charging council tax we would return £759 to each home.

What are we to do? We must try to make good the shortfall by increasing council tax. If we do so at the level that the standard spending assessment suggests, we shall nevertheless fall short by about 11 per cent.

I am sorry that I have had to produce so many figures, but they are worth producing to show the way in which the formula operates. We have known for a long time what is wrong with the formula as it applies to North-East Derbyshire. The enhanced population is a reduced population. The economic and social factors do not take into account needs in the area. Greater flexibility and movement are needed in the operation of the formula.

We suffered previously from the nonsense of the sparsity and density factors. Even if those problems had all been overcome, they would continue to affect us from the past, because all sorts of services have had to be cut or increased revenue has had to be raised by the council tax and poll tax, simply because of the pressures that existed on us. We need to be able to recover from the position in which that nonsense has placed us.

No one could accuse North-East Derbyshire of being a profligate authority. It is the successor authority to Chesterfield rural district council, Dronfield urban district council and Clay Cross urban district council. Clay Cross urban district council, which I fully supported in its battles, could be regarded as seeking to defend its community. If that council was regarded as profligate, North-East Derbyshire has not acted similarly. North-East Derbyshire has sought to operate respectably. It has been obliged to operate fully within the rules and has not at any time created any problems that might be used by the Government to denigrate its activity.

The Government denigrate Derbyshire county council with great exaggeration. I wish that I had the time now to go through the accounts of Derbyshire county council and the criteria that are taken into account when calculating its standard spending assessment, because only part of its provision is covered by what I have said. Different considerations apply to the police and education.

Police is a problem. Derbyshire police authority is asking the appropriate Minister to visit the area, because we need our certificate of competence returned and we need the resources to achieve that.

I wish to place on record the importance of North-East Derbyshire. The Government should consider it closely to rectify the nonsense of the formula that is applied to it. Although we do not have destitution throughout the area on as wide a scale as might exist in other areas, the formula does not fit us in any way and tells against us time after time.

Photo of Mr Sebastian Coe Mr Sebastian Coe , Falmouth and Camborne 7:52, 31 Ionawr 1996

I am delighted to speak in the debate. I shall not detain the House for more than a few moments. I am pleased to he able to welcome the local government settlement for 1996–97. I do so for local and national reasons; it is impossible to divorce the two.

Virtually everything that we, as constituency Members of Parliament, hope for and promote—and our constituents' aspirations—depends on the way in which we consider our spending nationally. That impinges on inflation, on tax policy, on ensuing interest rate policy and—although there has been little mention of it during the debate—on the percentage of gross domestic product that the Government take out of the economy. Those issues must be considered.

I welcome the settlement in local terms because the three key beneficiaries of this year's settlement were education, health, in terms of our care in the community settlement, and the police—law and order. Hon. Members know that those three issues, especially in my constituency but in constituencies the length and breadth of the country, have considerable resonance at the moment.

I was interested in some of the comments made by the hon. Member for Newbury (Mr. Rendel), who spoke about the local government settlement in Cornwall and adopted a broad-brush approach. He is the Liberal Democrat spokesman. It is understandable that he will speak about the county. However, the Government's settlement for Cornwall, at more than 3 per cent., was generally accepted to be a good one. It was higher than that of any comparable county—and the national average was about 2 per cent. The education budget in the county increased last year by 5.6 per cent. That, in hard cash terms, is an extra £8.7 million going into county education against the background of a national increase of 4.5 per cent.

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

The hon. Gentleman has said that the settlement for Cornwall was more than 3 per cent. As I understand it, the SSA increase is 3.1 per cent. but the actual increase in grant is 2.6 per cent. As that increase in grant is less than the rate of inflation, and less than the teachers' pay increase award and will not cover the cost of increased numbers of children, does the hon. Gentleman advise the county council to cut education, to cut other services, not to fund the teachers' pay settlement or to increase the council tax by more than the rate of inflation? What does he advise?

Photo of Mr Sebastian Coe Mr Sebastian Coe , Falmouth and Camborne

I will not suggest any of those. I am suggesting that there are savings to be made. I am talking not about huge savings but about savings.

It is interesting that, at this stage every year, we get into this ritual dance. I have been in the House for three years. I remember exactly the same debate this time last year, prompted by Liberal Democrat Members. Bogus surveys shot around the county, demonstrating in no uncertain terms that every Cornish child was £100 worse off and more undervalued than anywhere else in the country. We woke up on the morning of the settlement to be told that there would be mass redundancies. Radio Cornwall camped outside county hall. At the end of the day, as my hon. Friend the Member for St. Ives (Mr. Harris) knows full well, there were two and a half redundancies in the teaching profession in the county. There was no mass loss of jobs in county hall.

We must move away from the meaningless argument that the index of assessment for local authorities is simply how large the increase in the internal directory is from one year to the next. We must talk about not only inputs but outputs. There must be some balance in the argument.

Photo of Mr David Rendel Mr David Rendel , Newbury

I am not quite sure what the hon. Gentleman meant when he replied to the previous intervention. It sounded as though he thought that he could enable the circle to be squared, so to speak, by finding savings in unspecified areas of council spending, so that he could use those savings to increase education spending in the way that he would hope.

If that is what the hon. Gentleman meant, I would point him to the remarks made by the Secretary of State earlier in the debate. Such savings, when they are spent on something else, are not savings at all, according to the Secretary of state.

Photo of Mr Sebastian Coe Mr Sebastian Coe , Falmouth and Camborne

No. The point that I choose to make—and this is grown-up politics—is that the hon. Gentleman's county is run by the Liberal Democrats. It is, if I may say so, democracy. The council will have to decide priorities. That is no different from what Ministers do every day of the week. The priorities are simple. The hon. Gentleman must decide what the expenditure priorities are. His county was given the tools by the Government in key areas of expenditure. It is up to those people who represent my constituents at county level to determine those priorities. It is ludicrous to suggest that there is any process other than that.

Photo of Mr David Harris Mr David Harris , St Ives

Did my hon. Friend by any chance hear, as a number of us heard one day last week, the Liberal Democrat Treasury spokesman blaming the Government on the "Today" programme for excessive borrowing and public expenditure? Does my hon. Friend have the difficulty that I have in squaring such remarks with the remarks of the hon. Member for Newbury and any Liberal Democrat spokesmen in the House? Whenever they are on their feet, they call for more Government expenditure.

Photo of Mr Sebastian Coe Mr Sebastian Coe , Falmouth and Camborne

My hon. Friend makes an important point. As he knows full well, the priorities within Cornwall at county level are those of a Liberal Democrat-controlled council. They have to make their choices and set their priorities.

I do not naively or coyly suggest that Cornwall's education settlement last year was anything other than tight. I know that it was. I and my hon. Friends the Members for St. Ives and for South-East Cornwall (Mr. Hicks) have close links with schools in our constituencies. I have a parliamentary education forum and I meet head teachers from all my schools at least four times a year. I am open about last year's settlement. I was told in no uncertain terms by head teachers last year that they were pushed. They had to dig deep. They did not get rid of teachers.

I pay tribute to the quality of teaching in the county of Cornwall and the quality of governors of the schools. They had to make some difficult decisions and they made them well. Education in the county did not suffer. This year I am delighted that the settlement has been significantly more generous, in an economic climate that has allowed it.

I wish to draw to the attention of my hon. Friend the Minister a concern that was drawn to my attention and that of my hon. Friend the Member for St. Ives in a meeting with Kerrier district council two Fridays ago about its settlement this year. My hon. Friend the Minister will be aware that within the constituency of St. Ives lies the Royal Naval Air Station Culdrose. It is among the largest helicopter training schools in western Europe. It is a major provider within NATO cover. It is also a mainstay of the local economy. Research has shown that the defence sector supports 40 per cent. of the local economy of the Helston travel-to-work area, where many of my constituents are based. That is three times higher than the contribution of the defence sector to Plymouth. The air station contributes some £50 million to the district economy annually and to the economic well-being of west Cornwall.

As a result of the reductions in armed forces expenditure some difficult decisions have had to be taken not only as part of "Front Line First" but as a consequence of the peace dividend. RNAS Culdrose is being rationalised and the number of personnel is being reduced, not by huge numbers. Thank goodness, Culdrose has not been affected as badly as some defence establishments, but a significant reduction has been made. The effect on the local economy, which is already hard pressed, is difficult and damaging.

The area is already identified in Department of the Environment figures as the 17th or 18th worst unemployment blackspot in the United Kingdom. It is identified and highlighted in the Department's index of local conditions. In such circumstances, the rationale which purports to lie behind the SSA would dictate that the district's needs should increase to reflect the need for higher spending, greater social need and the commensurate reduction in the economic base. Instead, the reduction in the population as a result of the reduced number of service personnel, has worked right through the SSA formula to give us less support. I hope that the Minister can examine that issue. It was raised, sensibly in my view, by my local authority officials. I hope that my hon. Friend is at least able to reconsider some of the issues that are raised by that matter.

Two key features of recent Government policy can and will change the face of local provision in some important areas. The first is the private finance initiative. I hope that within the next year or so we in Falmouth and Camborne, particularly in Falmouth in the south of my constituency, will have access to a properly funded and resourced community hospital. We have a hospital, but within the local arguments and toing and froing which is always necessary, we are looking to build a new community hospital in Falmouth and Penryn.

It is my hope that that can and will be pushed forward by the PFI. It is perfectly reasonable to use that type of partnership to reduce the waiting list that often exists for money for such projects. I hope that the private finance initiative can help. I know that there is considerable local support for that.

The second feature is the city challenge initiative. I was interested to read a speech made by the Leader of the Opposition in Southwark cathedral the other night. He welcomed the city challenge initiative as one of the major factors which had helped got rid of the Hulme housing estate in Manchester. A great deal of revisionist rewriting of history takes place on the Opposition Benches. I should point out that the Hulme housing estate was knocked down as a result of a decision made back in 1991 by my right hon. Friend the Member for Henley (Mr. Heseltine), now the Deputy Prime Minister, to push forward with city challenge.

I do not wish to tax the House with the mechanism behind city challenge, which involved trading companies and various other partnerships, but it is fair to say that for the Labour party to claim that it was a huge success for either Manchester council or a new idea from the Labour party in local authority provision is—I am trying not to use the word "hypocritical". It may have been ignorance or simply carelessness. This was a decision made by a Conservative Secretary of State, supported by good, solid, Conservative policy.

I welcome the debate, and I welcome this year's financial settlement for the national reasons that I have identified and, more importantly, for the real benefits that it has brought to my constituency and the county of Cornwall.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South 8:09, 31 Ionawr 1996

Despite Conservative Members' increasingly desperate attempts to cover up what is really going on, we should state quite openly what the proposals represent. They are a continuation of a Government policy that has systematically undermined local government for many years. The orders will further undermine local government's ability to provide vital services for local people. That is the reality of the situation, as exposed today in the contributions of my right hon. and hon. Friends.

I argue that that Government policy is motivated by two basic, and—I believe—flawed, political objectives. The first is a year-on-year reduction in the resources available to local government. I know that the Government would like us to believe that the world began in 1992, but some of us have longer memories than that. We have seen a year-on-year reduction in the resources available to local government, while at the same time the Government have embarked on what can only be described as a propaganda campaign. All hon. Members know that local government resources have been cut dramatically, yet the Government have tried to shift the blame on to local authorities. That is what Government Members have done this evening and no doubt the trend will continue.

The second fundamentally flawed political objective is the Government's desire to take control of local government activities. We hear constantly how Conservative Members are in favour of freedom of choice and of national and local accountability. Yet, over a period of time, the Government have taken control of the activities of local government—they have effectively nationalised local government—in a quite breathtaking manner.

The inevitable result of that systematic Government policy is the on-going crisis in vital services, such as education, social services and housing—to name only three very important areas. Central Government control of local government activities has resulted in historic blunders, such as the poll tax, for which generations in this country will continue to pay. That measure was a direct result of the Government's preoccupation with centralisation and their determination to centralise and nationalise local government activities. The Government's policy is based on the philosophy that central Government are best placed to determine local service provision.

We could compare the efficiency of local authorities, and I readily accept that many arguments could be advanced to develop such a debate. However, we should not allow such arguments to cloud the fact that the Government have made a fundamental mistake: they believe that the mandarins of Whitehall know best what the people of Stoke-on-Trent should have, what they should be doing and how much they should be spending. It has nothing to do with the Government's controlling the national economy—we accept that that is an important argument. However, when more than 80 per cent. of local government expenditure is controlled by central Government, that is not only damaging for local service provision but strikes at the heart of our constitution.

Government propaganda in the past 16 years has sought to discredit local government, and it has forced some very effective local government services into oblivion. The Government have also tried to convince people that the local authorities have caused all of the current problems, but they have failed in that endeavour.

I am particularly impressed by the way in which the Government have been hoist by their own petard. The Government have sought to blame local authorities for the successive reductions in education expenditure imposed on our schools—particularly last year's savaging of the education resource. However, parents are involved in their schools and I am sure that Government Members have been surprised by the way in which parents have turned round and said, "We don't believe the Government any more. We know what is going on here. We know that you are to blame and we are not prepared to tolerate it any longer." The parents know where the responsibility lies for the crisis in our vital services.

The local government finance proposals signal the Government's intention to continue to perpetrate an elaborate confidence trick on the public. The proposals do not suggest ways of dealing effectively with the anomalies in the system. Many such anomalies have been referred to in the debate today, but I shall refer to what I believe to be the most serious and discriminatory anomaly in the present system.

The right hon. Member for Horsham (Sir P. Hordern) referred to the area cost adjustment and the way in which it benefits the southern counties. He argued that it should not be tinkered with. I agree with the right hon. Gentleman: it should not be tinkered with, it should be changed radically. Before I detail that serious anomaly, I make it very clear that I accept that some cost differences must be reflected; no one is arguing that the area cost adjustment should be eliminated.

I have six secondary schools in my constituency, one of which receives £340 per pupil less than a secondary school in Surrey. I do not wish to pick on Surrey, but it has more or less the same urban-rural mix as Staffordshire and it is also very comparable in other ways. When there is a difference of £340 per pupil in the secondary sector and a difference of £220 per pupil in the primary sector, I believe that the system is not reflecting the legitimate differences in the cost of providing given levels of service. It is blatant discrimination, and that abuse should be adjusted—if not removed—as quickly as possible.

I welcome the fact that the Government have established an investigation into the matter. However, I am disappointed that, after all the banging on the Minister's door for three years, he has only now been forced, kicking and screaming, to set up the inquiry. The "Local Government Finance Report (England) 1996/972" contains the education formula: The results of (a) and (b) are added together and multiplied by area cost adjustment for education; That is for primary education. There is another formula for secondary education, the result of which must also be multiplied by the area cost adjustment. The same applies to personal social services, other social services, the police, fire and so on. I estimate that if that serious anomaly were addressed, in my constituency alone, some £15 million would be available for education. One has to multiply by all those other vital services. We are talking about a loss of hundreds of millions of pounds in Staffordshire alone because of such discrimination.

I hope that the Government will tackle that serious anomaly quickly and act on the report. I hope that they do not postpone matters until after the next election. I hope that my cynicism does not get the better of me. It would be a tragedy if the Government were to succumb to that cynical view and defer any action.

As I said earlier, these proposals are a con trick. For example, the Government insist that the proposals represent an increase in resources over the past year. We should examine that claim in a little more detail. According to the Government's publication, there is an increase of 4.4 per cent. in the education SSA control total—that is about £754 million. That does not replace the savage cuts of about £860 million that were imposed last year. How can that be described as an increase? It bears no resemblance to what local authorities have been forced to spend on education simply to maintain the service. Many Conservative Members have claimed that there is to be an increase of 4 per cent. but, when one takes into account the figures I have mentioned, one can see that that is not true.

The hon. Member for Brentwood and Ongar (Mr. Pickles) referred to local authority reserves. I nearly fell prey to the temptation of agreeing with some of what he said—I resisted. However, he made one valid point when he said that his local authority—I believe that he was referring to his authority—had been spending out of its reserves. Presumably, like many other authorities, it was simply trying to maintain services in the face of Government-imposed cuts. It could be argued that using those reserves camouflages what the Government are doing to our services. However, when the resources available to local authorities simply will not maintain those services, they have little alternative but to use those reserves.

In Staffordshire last year, the county council used £7 million from its reserves to maintain something like an acceptable education system. This year, it will face similar problems. Staffordshire county council put in a bid for £17.5 million to maintain school buildings. The Government did not deny that the county council had made a good case. However, they simply drew a pencil line through it and said that the council could spend only £2.3 million to maintain its school buildings. So buildings that desperately need to be improved will continue to fall into disrepair.

Another important point is that, by using those reserves, local authorities show that they are attempting to maintain services in a responsible manner in the face of continued Government cuts in resources. I praise local authorities that do that. Like everybody else, I know that it is no solution, but it compares notably with what the Government did last year when, after agreeing to a teacher's pay increase, they ran away from it. That was a major contributor to the problems faced by local authorities last year.

Local education authorities, schools and parents are only now beginning to realise that the Government's promise of more resources for education is nothing more than cruel deceit. The Government will be made aware of that realisation when parents begin to recognise exactly what is in store for the education service.

I want to talk about social services where, if one could believe it possible, things are even worse. The SSA control total for personal social services is, according to the Government, to be increased by 0.7 per cent.—a miserly £51 million. I accept that there is £647 million of special transitional grant. The Government are actually saying that because they do not intend to provide any more resources for social services—there is to be a cut—local authorities will have to use some of the special transitional grant money to maintain the services demanded by the local population.

Stoke-on-Trent city council is in my constituency. During successive meetings with the Minister of State and others, for which we are grateful, they have accepted that it is a reasonable, effective and efficient local authority. Despite that, its rate support grant is to be cut by 12 per cent. and its capping limit will, effectively, be frozen at last year's figure. When the Minister responds, I want him to explain why, when the Government are talking about a relaxation in capping limits, Stoke-on-Trent has the same figure as last year. That needs to be answered.

We shall ensure that the public are fully aware of who is responsible for the continuing attack on their services and they will not be conned any more by the Government's desperate camouflage. There is only one small light at the end of the tunnel, which is that these proposals, like other Government policies, will hasten the Government's destruction at the next general election.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West 8:27, 31 Ionawr 1996

The nine people in the Strangers Gallery probably share the view that the Labour party's anger over this issue has seemed rather half hearted and that, if things were as bad as it has tried to claim, the debate would have been better attended. In its heart, the Labour party knows that this is really a fair settlement for local government, as it represents an appropriate level of revenue spending for local authorities for next year of £44.9 billion, which is a 3.3 per cent. increase.

It would be a good idea to look at how councils make their budgets. Twenty two years ago, when I was first elected to a council, I could not believe how they made budgets, and I still cannot believe it. I have with me Harrow's budget document. It is very pretty, contains many different colours and is very heavy. I have one recommendation to make to councillors—do not read it.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Does the hon. Gentleman realise—after all, he has not been here all day—that if he votes for the rate support grant settlement it will mean substantial help for Westminster? If his borough of Harrow were to receive the same amount per head as Westminster, it could pay a rebate of £436 to each council tax payer. If it were to receive the same help per pupil as Westminster gets from the education settlement, it could employ an additional 470 teachers this year. Is it really a good settlement for those whom he represents?

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

That is typical of the smug cover story we hear from the Labour party; it is the only act it has. Everyone knows that the cost of running services in central London is very different from that in outer London or anywhere else. If it were not, why would so many Labour boroughs get larger grants?

If the people of Wandsworth received the same level of grant as the people of Tower Hamlets, Wandsworth could rebate £1,000 a head. In Camden, where the SSA for the coming year is £219 million—

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

I shall come to Harrow in a minute and deal with matters there in some detail. When the hon. Member for Holborn and St. Pancras (Mr. Dobson) intervened, I thought he would explain why, in 1994–95, Camden took £4 million out of its education budget to cover bad debts incurred from interest rate swaps—an idea invented by the then Labour party local government officer who now sits in this House. That action had nothing to do with education. Will the hon. Gentleman intervene again and tell us why Camden did that?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

If Camden is so bad in its spending on education, why are its education results far and away the best in inner London and about 10 times as good as Westminster's? Camden came second in the Government's national league table; Westminster came about 91st.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

The hon. Gentleman should keep that information from his Front-Bench colleagues or they will be flocking to Camden. I know of no Labour Member who has taken his children away from a Conservative authority to send them to a school in a Labour authority, although many of them—such as the shadow Home Secretary, the shadow Health Secretary and the leader of his party—have done the reverse.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Does the hon. Gentleman accept that Camden council, with its excellent education service, is a net importer of a substantial number of pupils, including many from the Tory borough of Brent?

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

I am sure that the hon. Gentleman's figures are right, but not many people have the same rosy opinion of Camden. Of course, he has always been satisfied with his own information.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

It is clear what it means. I welcome the hon. Gentleman to the Opposition Front Bench on one of his rare visits.

For people who have never been involved in the local government budget-making process, I should explain that it is a little like the notes my children send to Santa Claus. The difference is that at least their notes have pretty pictures on them. The similarity is quite stark; the budget-making process is a wish list, and everything that is not granted is described as a cut. A council thinks of something that it wants in the coming year and puts it on the wish list. When the Government say that it can have a relatively generous settlement, but not enough to cover everything on the wish list, that is translated as a Government cut. Everybody knows that that is not true.

In Harrow, the controlling Liberal group, with the support of the Labour party, has been banging on about a so-called programme for £20 million-worth of cuts. It is not true and no one believes it to be true. The Liberals are trying to frighten people and they are targeting the vulnerable. For example, they are saying that there will be a cut in the transport service that takes people to handicapped clubs and so on—at a cost of £67,000, from memory. To get people on their side, they are targeting vulnerable people and saying that the services they care about will be cut.

The Liberals are also saying that there will be a cut in the money for schools. Harrow's SSA this year is £147.9 million. For 1996–97, it will be £152.1 million—an increase of £2.8 million. No one is suggesting that that will give Harrow money to throw around, but if it cuts the money for schools on the basis of that settlement, it can only be because the Liberal group chooses to do so.

As a parent, I recognise the importance of good quality education. We all want to ensure that our children receive the best education possible. A starting point is the money that the Government allow councils to spend. For Harrow in the coming year, it will be just over £73 million, a 3.7 per cent. increase on 1995–96. I am pleased that, when money is tight, the Government are giving such a high priority to education.

It is for Harrow council, however, to decide whether to spend that additional money on schools, as I urge it to do, or to retain it at the centre. Some of the items on its great big wish list involve employing more staff at the centre. The council does not have the balance right. It is clear that the new money, as well as a larger share of the existing budget, should go to Harrow schools. It would then be for governing bodies to decide whether to purchase services from the education authority. The most important point to remember is that any cuts made to the delegated budgets for Harrow schools would be the result of the controlling Liberal group deciding to do that. I shall continue to do what I can to prevent it from doing so.

The council's story is that it already spends above SSA on Harrow schools. I am sure that that is right, but if it spends above SSA on education, it must spend below SSA in other areas.

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

I am not quoting Government figures—they come from the Association of London Authorities, a Labour-controlled authority. If the hon. Lady disagrees with it, she must talk to her Labour party friends.

If Harrow spends more on education, it must spend less on other areas, otherwise it cannot get within the capping limits set by the Government last year. With the additional money, there is no reason for the Liberal group not to continue education spending at the same level.

The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) tried to brush over the impact of the special transitional grant for social services. The effect on Harrow is not just the 0.7 per cent. increase in the personal social services element of the SSA—it will have £30.7 million to spend next year, an increase of 6.6 per cent. in cash terms. That is a £17.663 million, or 92 per cent., real-terms increase on 1990–91—a large rise over a short time. In two areas that everybody agrees are priorities, Harrow has been given extra money. It is for the authority to decide how to spend the money and whether to make nasty cuts in transport for the mentally handicapped and delegated school budgets or to review its expenses.

The first act of the incoming Liberal council was to increase councillors' expenses. The council has a choice.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

The hon. Gentleman made a point about personal social services which related to my claim that the Government are trying to hoodwink the public. Does the hon. Gentleman accept that a 0.7 per cent. increase is a cut in real terms, and that to include the special transitional grant required to provide for services transferred to local authorities is dishonest?

Photo of Mr Robert Hughes Mr Robert Hughes , Harrow West

No, not for one moment. In cash terms, Harrow council will have 6.6 per cent. extra to spend on social services this coming year. It is fanciful to suggest that the council will have to cut certain social services. That claim is designed only to scare people.

My hon. Friend the Member for Harrow, East (Mr. Dykes) and I have been in discussion with my hon. Friend the Minister for Local Government, Housing and Urban Regeneration, and I place on record our gratitude for the courteous way in which he listened to our points and for the action that he agreed. Our discussions related not to the coming year's SSA but to Harrow council's belief that there has historically been an underestimate of the amount that it should spend.

Harrow has a large number of children approaching the age of five and the council is concerned about the associated expense of providing new classrooms or a new school. In the 40 years following the last war, the calculation of the number of five-year-olds who would present themselves at first school in the borough was broadly right, but for the past four or five years it has proved to be a gross underestimate. Nobody knows whether we are dealing with a prolonged bulge or a trend, which makes planning difficult. My hon. Friend the Member for Harrow, East and I made the point to my hon. Friend the Minister that that phenomenon should be taken into account in considering the money to be made available over the next few years.

Local authorities are concerned about the effect of changes to the benefit rules—which, when it is convenient to Labour, have cross-party support. Some current Department of Social Security expenditure will be transferred to local authorities. The Social Security Committee report published a week ago stated that local authority associations and the Secretary of State should quickly reach agreement, so that everybody is clear as to the source of the funding required.

Although that development is acknowledged in the SSA for the longer term, it does not take into account an influx of refugees into Harrow or any other borough. Most London boroughs, if not all, suffer from the same problem. My hon. Friend the Member for Harrow, East and I urged my hon. Friend the Minister to take account of that factor and to consider what could be done to help at the front end when local authorities have to meet the cost of persons who are given refuge.

Harrow council believes that the borough has the second largest elderly population in London. There is concern as to whether the SSA takes account of that fact. The cost of children in care seems to have escalated over the past few years, and Harrow's capital calculation is undoubtedly the lowest in London. That is historical, and due to the money spent previously.

I am delighted at yesterday's announcement of the capital challenge pilot scheme, in which all local authorities will start from an even base. They will be able to bid depending on the merit of their schemes. I hope that the pilot scheme proves successful and that a larger proportion of capital will be allocated that way. If Harrow is able to make a strong and technically proficient bid, as I am sure it will, it should do well.

My hon. Friend the Minister has offered a meeting at technical level between officials and representatives of the council, to determine the factual position in considering Harrow's SSA in coming years.

People who rely on local government services and parents with children in schools should be clear about the message from the two main Opposition parties. That message is, "No more money." Opposition Members complain about Government funding and follow the rather disreputable advice that used to be given by the hon. Member for Blackburn (Mr. Straw) when he was Labour's campaigns organiser, which was to describe Government policies in such terms as to lead the public to believe what they thought would be Labour party policy. Labour Members have been indulging in that strategy tonight. When one gets through the mire and sees through the Opposition's criticisms, it is clear that there would be no extra money from Labour or the Liberals. Labour's insistence on scrapping compulsory competitive tendering is disgraceful, and a capitulation to the unions that control the Labour party.

Even Sir Jeremy Beecham realises that substantial savings and improvements in the quality of services have been brought about by compulsory competitive tendering. It is a pity that it must be compulsory. Local government should have realised for itself the benefits that CCT could bring, but it did not and had to be compelled. Labour's irresponsible pledge to scrap CCT would increase bills, or reduce spending in other areas to compensate for the extra money that councils would have to spend on services taken back in-house.

This thinly attended, low-key debate is testimony to the fact that Labour's thin arguments have been rumbled. Everybody knows that the Labour party is embarrassed by its record in local government, that it has no strategy, that it would not put any extra money into local government, and that, after this debate, it will crawl away and hope that people will forget everything that it has said.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby 8:49, 31 Ionawr 1996

I shall not follow what the hon. Member for Harrow, West (Mr. Hughes) said, but I admire his skill in making a little political padding go a long way. It was fascinating to watch him stretch his speech out—presumably in direct ratio to the unavailability of Conservative Members in the Chamber to defend the financial settlement.

The Secretary of State started us on the political track with a speech that was delivered with almost religious fervour. It was religious because so much that was blatantly political was put over in such a sanctimonious fashion. It was the performance of the Elmer Gantry of local government and I do not want to follow him down that road.

The Government are clearly putting extra responsibility on local government, depriving it of the financial means to fulfil those responsibilities, and blaming Labour and Liberal local government for the inevitable increase in council tax—the Chief Secretary to the Treasury estimates that council taxes will rise by 8 per cent.—while presenting themselves as benignly and beneficently cutting direct taxation. That is the tactic: it is as clear as day follows night.

I want to talk about the fate of my authority and of the new unitary authorities, which are a unique and very important feature of local government. We shall be embarking on a brave new adventure come April, to which the Government are committed. Indeed, their reform of local government has created the new unitary authorities. We in Grimsby and Cleethorpes—now North-East Lincolnshire—support that reform. We wanted to control our own destiny and we wanted a local government that was close to the people, so we want the new authority to succeed. I hope that the Government also want it to succeed.

The local government experiment—the brave new world of 13 new unitary authorities which come into being on 1 April—cannot succeed in a welter of redundancies, cuts, debts, recrimination and blame, which the financial settlement has prepared for it. The new authorities are a special case, and need to be treated as such.

I would argue that Grimsby is a special case within the special case because most of the assets of the county of Humberside that are to be divided up are on the north bank. We are trying to find accommodation for 400 council employees and are in a particularly difficult position. On the north bank there is a surplus of offices, but on the south bank, and in Grimsby especially because we did not have the county facilities, there is a dearth of offices.

I do not want to recriminate and attack Humberside. Indeed, I have come to praise it as well as—in effect—to bury it. Humberside did a good job, especially on education and social services, where spending and standards were very efficiently maintained, as befits an area with severe social problems and a high level of unemployment. It fulfilled its responsibility. We also have a high level of single-parent families and Humberside gave them a good service.

It is realistic to say, however, that Humberside has left problems—usually problems which were not its fault, such as those in education. School buildings are deteriorating faster than they can be repaired and maintained. That is no investment in the future of our children and that lack will cause real problems.

In the case of the Havelok school, which I visited recently, the county obtained a grant to remove places—and also asbestos—but the money for that was spent in other schools in other parts of the county. The problem remains, but we do not have the money and we cannot apply again. Such are the problems left in parts of the education provision.

My children went to the Hereford school in Grimsby. I liked them going there; it is the local comprehensive. One should live by one's principles on education matters. That is not at all hypocritical, unlike so many Conservative Members who talk about improvements in state education and send their own children to private schools and public schools out of the state system. The Hereford school, Grimsby is a nice title for a school because it sounds like it should be a public school, but it is a comprehensive.

It is a shame to see the Hereford school nowadays. Some of the one-story buildings that were the house bases when my children were there are deteriorating because the roof is very heavy. The roof is cracking, pressing down on the window frames, which are distorting, and glass is breaking constantly. To support the roof, they have had to put in angle frames, which in turn are cracking. The school roof has needed repair for three years. An expenditure of £200,000 is necessary to make the house bases—still used as kitchens—safe. An expenditure of about £1 million is needed to make the whole school livable in, workable and up to standard, but the money is not available. We have inherited such problems as a new authority, yet it is not our fault. We have not created them, but we have to deal with them.

The other problem that has been left, which is unique to the new unitary authorities, is the lack of balances. Grimsby and Cleethorpes between them have managed to hand on balances of about £1 million, but a local authority needs balances of about £4 million or £5 million if it is to have the necessary flexibility to run things efficiently and manage over time.

The new unitary authorities cannot control their own destiny like an on-going authority because they cannot manage their finances to ensure the maintenance of balances. We have not inherited any balances. Indeed, the balances might be negative because of the verdict on a lawsuit over school meals, which will impose costs on the successor authorities. We could not control that and it is not of our making, so it should be allowed for in the new authorities' financial allocations.

The result is close to disaster. We are inheriting extremely difficult, if not disastrous, circumstances. If North-East Lincolnshire—the merger of Grimsby and Cleethorpes—is to come under the cap limit of £129.7 million, initial calculations mean cuts of £5.9 million in the existing level of services. In other words, there will be a 4.5 per cent. cut in the budget. And that is without allowing for any working balances. That possible £5.9 million overspend is less than recent, more detailed calculations indicate. Allowing for such things as landfill tax, employer's superannuation contributions and other new burdens, the overspend above the capping limit will be £9.8 million.

It is impossible for an authority to take over responsibilities for the first time in April, welcome the new experiment, make it work and make it acceptable to people on the back of cuts of £9.8 million in spending and services. How can it be done? If the Government expect us to do that, they are being unrealistic. This is the Government's reorganisation. We wanted it, but we are partners in trying to make it work. If one partner is to be handicapped by a requirement to impose cuts of £9.8 million—in a new situation for which it is not responsible but which it has inherited—the burden will be too heavy to bear.

What are we to do? Staffing accounts for 60 per cent. of total spending. In a budget of, say, £140 million, social services and education accounts for some £100 million. Are we to have massive cuts and redundancies? If we are to achieve such massive cuts, the number of redundancies will be substantial. The local authority has not talked to the unions yet, but redundancies will have to be made as sure as day follows night, and not in tens or twenties but in hundreds. How can a new authority start by handing out redundancy notices to teachers, employees and others who provide services? How can a reputation and decent service be maintained in that situation? Why should the Government ask us to do that? It is just callous indifference to their own reorganisation. We would have to jettison services and make massive cuts in education. If school budgets are cut less, other aspects of service will have to be cut disproportionately, or we shall have to have redundancies. What a way to begin.

When we ask for help and advice from the Government, we get various suggestions, none of them workable. We are told to involve private finance in local government activity, but that takes time; it cannot be introduced immediately. We are keen to work with local commerce and industry, but developing those relationships, particularly when it is a matter of industry investing money, cannot be done overnight.

The Government tell us that the standard spending assessment has increased, but Humberside was spending over its SSA, so that is no benefit to us. We are told that we have a good deal from the single regeneration budget—we have indeed, and we are very grateful, but we deserved it because of the problems that we had to deal with as a result of the SRB grant; the local authority, which is on a tight, limited budget, has to put up a corresponding amount to secure that grant from the single regeneration budget. If we do not get the money, it is disastrous; if we do, it is increased spending.

I know that the Minister takes our problems seriously, and he has taken time to consider the matter. I hope that he will re—examine it, because the situation is becoming desperate. The new unitary authorities must be treated as special cases. They are not a huge special case—there are 13 of them—but the extra financial help that they need will not be a huge burden. It will not create a gateway that all the other local authorities will use to make demands. The reorganisation is a joint effort by Government and the local authorities, and it must succeed. It will not succeed if the Government continue at the present rate.

The Government have approached this reorganisation in far too mean a spirit. They think that they were too lax in the previous reorganisation, that money was pouring out of the dying local authorities, but it was nearly always for beneficial purposes. Indeed, the people of west Yorkshire are grateful for the West Yorkshire Playhouse, which was one of the beneficiaries of the previous reorganisation. Money was provided by the old west Yorkshire county council. It should be called the John Gunnell memorial theatre, because that was really the source of the finance. Benefits flowed from the previous reorganisation, but the Government feel that they were too generous then, and therefore they will counteract that by being too mean this time. They want to show themselves to be tough. The result will be that new authorities will be strangled before they start.

I ask the Minister to examine the issue again, because we are in a mess. The only way out is to raise the capping limits. If Grimsby had spent to the capping limit, there would not be a substantial increase in council tax. A special case was made last year for the inner London boroughs, so it can be made again for the new unitary authorities. If there is a case for capping limits, it is as a discipline on existing authorities, but a new authority cannot manage its finances in that fashion. The discipline is of no use if there are no balances to inherit. If an authority cannot manage to hit its capping limits this year and the next, capping limits are a form of strangulation, a garrotte, rather than a necessary discipline on local authority spending. Capping limits are totally unreasonable for new authorities.

Another way out, as my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) said, is to raise the SSAs for the new unitary authorities, because that brings in revenue support grant money. It is depressing to see the difference between the consultation SSAs for places such as Grimsby and the settlement SSA. Whereas Buckinghamshire—presumably the last Tory council—saw an improvement of 1.32 per cent., or £5 million, between the settlement SSA and the consultation SSA, we lost £500,000. We lost 0.3 per cent.—and we are a new authority that desperately needs the money. So I ask the Government to reconsider raising the SSAs for the new unitary authorities.

Thirdly, I ask the Government to allow the new unitaries, especially that for north—east Lincolnshire, the authority in which I am passionately interested, to capitalise the overspend. There will be an overspend, so why not allow us to borrow to cover it?

The Government say, and I am sure that they are right, that the reorganisation will bring financial benefits and economies to the areas concerned. They therefore want those areas to pay for it, on the grounds that they will inherit the benefits. Fair enough, but please allow us to pay for them over time, by allowing us an increase in our borrowing to finance the capital overspend. The costs will still fall on the area, and when we get the better times that will come from the greater economy and efficiency provided by the unitary authority, we shall be able to pay off the borrowing.

To allow us to borrow and to capitalise now would avoid disaster. Disaster now would alienate the people from the new unitary authorities. They will not be interested in the performance in five years' time, or in greater efficiency a decade hence; we are talking about now. We are talking about how a public, many of whom, especially the teachers, have been reluctant to accept the reorganisation, can be brought to accept it.

Fourthly, I ask the Government to give us an element of greater flexibility in the spending that is allowed for the costs of reorganisation, such as redundancies. Greater flexibility within the categories would be a small matter, but every little helps.

I have tried to avoid the political knock-about that is almost implicit when the Government begin to try to pass the parcel of blame to local authorities by saying, "Labour increases your council tax, while we cut your income tax." That is what is happening now, but I do not want to get involved in that argument today, because the situation in the new unitary authorities is too serious for that.

The test is: will there be a seamless, efficient transfer that improves the quality of the service offered, and makes it more immediate to the people because they have a more direct say and are more involved with it? Given time, and the ability to make a seamless and graceful transition, that will happen. But we must have that ability and that freedom.

At present the prospect, which must be seen in its full starkness, is of a transition accompanied by heavy redundancies—not in tens or twenties but possibly in hundreds—and by substantial cuts in services. We shall have to lop off entire functions, which we shall not be able to afford—industrial development, for example, which is vital to encourage jobs to an area of high unemployment, but which is financially vulnerable if we must have massive cuts. There will also have to be cuts in areas that I regard as sacred, such as education and social services.

Do not force those cuts on us, Minister. I ask the Government not to sabotage their own creation, the local government reorganisation. Let it work. Help it in its hour of need. It would be awful to see it ruined by the alienation, rejection and hostility that would be caused by massive cuts and redundancies, followed by a long argument between the Government, local authorities and politicians in general about who is to blame—that most unseemly, undignified and unnecessary of political arguments.

Something must be done: only the Government can do it—and they must do it soon.

Photo of Clive Betts Clive Betts Opposition Whip (Commons) 9:08, 31 Ionawr 1996

Last year, the Government got themselves into an awful political mess over the settlement, because ultimately everyone—not only politicians at national and local level but governors, parents and schools throughout the country—believed that the Government were not giving schools a fair deal. People saw the prospect of cuts affecting their children's education, and they reacted and voted accordingly at the local elections.

This year, the Government have from the outset tried to put a spin on the settlement, in an attempt to convince people that somehow, there is extra money for education. The Government tried to spell that out in a series of letters from Tory Members to schools in their constituencies. For local authorities that have education as a function, the education SSA has risen on average by 4.4 per cent., while the actual spending attached to that has risen by about 3 per cent. In total, the SSA for those authorities has risen by only 2.1 per cent., and the extra funding for the authorities has risen by 1.2 per cent.

When the Chief Secretary to the Treasury came to the Treasury Select Committee, he was unable to explain how education authorities would be able to pay for the increase in inflation, the teacher's pay settlement that will be coming soon—which the Government expect the schools to find—and the thousands of extra school children in the next financial year with a funding increase of 3 per cent. Those sums do not add up to 3 per cent.—they add up to an awful lot more.

Even if local authorities tried to spend all the extra money that the Government claim is available for education, they would then have to admit—as the Chief Secretary admitted in the Select Committee—that there will be no extra funding for other important services. During this debate, it has become apparent that no Conservative Member regards any other service as important. Social services, housing, planning, libraries and environmental health are important services that need money, but the Government are not offering that money.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

Would the hon. Gentleman, who has vast experience in local government, care to tell us by how much the settlement is inadequate? Is it £3 billion, or £4 billion? Will he set a figure on what local government needs?

Photo of Clive Betts Clive Betts Opposition Whip (Commons)

If Labour had been in power for the past 16 years, we would not have wasted money as the Government have done on schemes such as the poll tax. That money could have been applied properly to local services that would have benefited local people.

The extra funding for my local authority, Sheffield, next year will be 0.8 per cent. That is a nonsensical figure, as can be seen when one looks at the needs of schools. The Tory argument is that funding should be given to the schools, and not to the central administration of education. Sheffield undertook an independent study of its schools, however, and they came back and said that they wanted no more delegation. Many of them realised—particularly the small primary schools—that having some services, such as psychological support services, funded centrally gave them better value for money.

The reality is that even if the local authority directed every extra penny given to it to education, every one of the schools in my constituency next year will face a cut in funding and a cut in the services that they can provide. Conservative Members do not understand that, in the past few years—when circumstances have been slightly better—schools have been putting away a bit of money for a rainy day. In the past two years, that rainy day has come, and schools are now spending their reserves to keep teachers employed and to buy books and equipment for the children.

Every one of the schools in my constituency is now saying that those reserves are coming to end and—in most cases—have done so already. They will not be replaced next year. Irrespective of what the local authority does, those schools will have a gap in their resources. There will be a cut in services because the reserves that they have will no longer be able to provide services to the children in the form of the employment of teachers, spending on books and equipment and repairs to schools. That is what headteachers and school governors are telling me and, frankly, I am prepared to believe what they say more than I believe the Government's assurances.

On top of that, parents will see their council tax bills drop through the door next month. They must not blame Labour or Liberal Democrat authorities for what will happen. Buckinghamshire—one of the few Tory councils around—estimates that it will have a 9 per cent. increase in council tax. The Chief Secretary admitted that his estimate from the Government's own figures of the increase in council tax is 8 per cent. for the next financial year.

As it is the Government's intention to switch the amounts of money funded locally to provide services from 21 per cent. of the total to 26 per cent. in the next three years, there will be not only an 8 per cent. increase in council tax—on the Government's estimates—in the next financial year, but an 8 per cent. increase in each of the following two years. On the calculations and estimates used by the Chief Secretary, the total increase in council tax will be 25 per cent. cumulatively over a three-year period. Will the Minister answer whether that is the case? There will be a 25 per cent. increase in council tax in the three years, while people get poorer services. Thank goodness the Government will not be in power in the two subsequent years to carry that into effect.

Ministers say that, whatever arguments may be advanced about the amount of money involved, the methodology is all right: it has all been agreed. I challenge that on three grounds. First, there is the issue of capital financing, which I mentioned earlier in an intervention. In a study requested by the Audit Commission, Price Waterhouse concluded that it was wrong to fund capital financing through SSAs and to make use of notional debt. It suggested a different method, involving adjustments to the credit approval levels given to local authorities in the past. Why do the Government not take up that suggestion, which was approved by the Audit Commission—a neutral body, looking objectively at ways of funding local authority services? Is it because some of the biggest gainers would be authorities such as Birmingham and Sheffield?

Secondly, there is area cost adjustment. I welcome the study that is currently in progress. Ernst and Young has already carried out a study for the metropolitan authorities, which effectively demolished the area cost adjustment figures as they stand. An area cost adjustment should be precisely that: it should take into account the difference in the costs of different areas, and accordingly adjust the resources that councils receive from central Government. In fact, however, authorities that bear exactly the same costs receive different amounts of help.

The Minister has commissioned a study, and I welcome that, but, like my hon. Friend the Member for Stoke—on—Trent, South (Mr. Stevenson), I am a little cynical. I fear that nothing will be done as a result of the survey if action would be inconvenient in terms of a general election. I hope that the Minister will assure us that that is not the case.

Thirdly, there is the issue of the shared accommodation figures. They affect the social index, and, in turn, the allocation of money for adult services within the social services budget and for the "other services" block. They also affect funding for children's services. That is an anachronism. Shared accommodation is such a relatively small part of total accommodation that it no longer provides an accurate measure of deprivation in communities. It is not surprising that Westminster ranks so high in the Government's deprivation league tables, given that they are using a measure that has been discredited by every objective observer of their method of calculating SSAs.

My local authority contains two nonsensical features. First, there is the question of Supertram. I support the scheme: I think it important for us to encourage and develop light railway systems, which are environmentally friendly and give people an incentive to use public transport and leave their cars at home. I welcome the funds that the Government have provided. Nevertheless, it strikes me as stupid for the Government to fund Supertram partly through the local authority revenue support grant, in such a way that—although it costs the authority nothing—that spending displaces other spending within the capping limits.

I have to explain to constituents not that their council tax is rising because of the Supertram capital expenditure, but that it will fall for that reason because less money can be spent on education, social services and other important matters. That has always been a reason for grievance, not only in Sheffield but in Rotherham, Doncaster and Barnsley, whose services are being cut although they do not benefit from the tram.

Secondly, the Government calculate the highways SSA on the basis of the number of vehicles that travel down particular roads. Absurdly, they have worked out Sheffield's SSA, and its grant, on the basis of censuses relating to vehicle movements on roads that were dug up so that Supertram could be built. No vehicles could go down those roads. The Government have accepted that that is the case, but they will not accept that Sheffield has lost £900,000 a year—which affects all our services—as a result of that ridiculous way of calculating the highways SSA. Other roads should have been used in the calculation. Sheffield has been particularly badly affected because of the disruption caused by the Supertram works.

Finally, we must also consider the nonsensical way in which fire authorities are funded. It is ridiculous that such authorities can be given a lower capping figure than that required by the chief fire officer to deliver the standard of service required by Home Office regulations. That is a classic case of two Government Departments, each not knowing what the other is doing.

Last year, the Government had to raise the capping level for the fire authority in South Yorkshire because the Home Office accepted the chief fire officer's recommendation that he could not provide a legal fire service within that level. Yet, this year, a fire station in the village of Mosborough in my constituency—one of the largest housing developments in the Sheffield area—will be shut down. That is wrong, and the Minister ought to do something about it.

The settlement does not give any extra resources for education and will mean cuts across the board, not merely in education but in other important services. It will mean large council tax increases of around 8 per cent., according to the Government's own estimates. The grant is not distributed fairly and, in the case of my city, there are clear nonsenses, which I hope that the Minister will consider. Ultimately, if he has no sympathy for the people of Sheffield or for my constituents, he might at least have some for the four remaining Tory councillors on Sheffield city council, who will almost certainly lose their seats at the local elections in May.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson 9:20, 31 Ionawr 1996

We have had an interesting debate. It has certainly shown the difference between the two sides of the House. It was interesting that almost all the Conservative Members who contributed supported the Government's general case, but went on to plead special cases for their authorities and pointed to some unfairness in the way in which they were being treated. That hints at a slight problem for the Government, who are pleading with all the charm, or otherwise, that they have, that everything is fair and a watertight methodology is being used.

The right hon. Member for Selby (Mr. Alison) made a particular plea and I hope that the Minister will be able to deliver the commitments that he gave to his authority because the problems caused by reorganisation there are problems that we want to be acknowledged. We want the Government to live up to those commitments.

We have been discussing a financial settlement that expresses the relationship between central and local government. An effective democracy depends on alternative and competing sources of power, yet the Government have centralised power and enfeebled local government in ways that many people believed would never happen in this country. It is small wonder that many councillors feel that they have become little more than an administrative outpost of central Government.

Time and again, hon. Members have said that the people have given their verdict. Much as Conservative Members complain about who is running councils, it is not the Opposition but the electorate who control that. They will be somewhat bemused that their wishes are so trounced by Tory Members.

Local government has the potential for being the engine of regeneration. It is local government, rather than central, that has a clear awareness of the needs, desires and aspirations of the local community. Local government is best placed to respond flexibly to changing circumstances in the locality. Local government, rather than central Government, works closely locally on a day-to-day basis with other public agencies, such as health authorities, but also with business and community groups.

The way in which some Conservative Members talk about relationships between business and local government shows that they do not know what has been happening. Extremely effective partnerships between Labour local government and business have been forged up and down the country. In Consett in my constituency, they are central to the town's recovery from the closure of the steelworks. The Government fail to understand the benefits to society from the development of a proper working relationship with local government.

One commentator, the former editor of The Times, Simon Jenkins, has said: the Conservatives have concentrated power on the central institution of Downing Street as never before in peacetime…The Tory state is now the most centralised in the western world. He now works for the Evening Standard. Neither The Times nor the Evening Standard is famed for its support of the Labour party, but we welcome his judgment.

Local government is now exceptionally reliant on central Government for its funding. That is why we have these debates. What can be spent in the localities is, in almost all aspects, determined by central Government. Therefore, it is to central Government that we must bring our complaints and concerns. That is no accident. It is not the result of things happening without anyone knowing but of deliberate decisions to disempower local government.

According to the Prime Minister's former trusted adviser, Sarah Hogg, Ministers and Margaret Thatcher were exasperated with local government in the late 1980s. She said that that was continued in 1990 and that More and more Tory MPs thought that the logical solution was for central government to take over completely". We have heard some of those Tory Members today.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

The revenue support grant settlement this year gives councillors little ability to makes decisions that respond effectively to the needs and desires of their local communities. Instead, councillors, Labour, Liberal and even the odd rare specimen of a Tory, are placed in a straitjacket by central Government.

This month's Treasury Select Committee report—I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on his contribution on this—states that to fund an increase in the areas that the Government have recommended, including education, Local authorities are either going to have to make efficiency savings of a level which may be unobtainable in the short, or even long term or substantial cuts in other sectors of their budgets or they will have to find additional revenue from other sources, predominantly the council tax. Most local politicians do not have the choice of whether to cut services or hike up the council tax. As my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said, too many councils are being forced both to cut services and raise the council tax as much as they can. Again, local communities will pay more tax and get less services.

Local government and local communities are having to pay the price of central Government economic incompetence and waste. Central Government still take no responsibility for that. They have not even bothered to apologise for the £4 billion poll tax fiasco. Indeed, they are now set on an another significant administrative waste in the shape of their dogmatic, ideological determination to introduce nursery vouchers.

The Government have not even followed the Environment Select Committee recommendation made in October 1995 that the Department of the Environment should attempt to quantify alleged efficiency savings possible in local government. It said that the Department is certainly mistaken to imply that all that is required is to offset inflation through efficiency savings". The Committee recommended that the Department makes some realistic attempt to quantify the alleged efficiency savings as propounded by the Audit Commission. We have been urging the Government to do that for some time, but they singularly refuse to take it on board.

Several hon. Members have questioned the logic of the SSAs, notably my hon. Friend the Member for North-East Derbyshire, who gave a detailed critique of how the SSA affects his constituency and North East Derbyshire district council.

The Secretary of State claimed that he had always considered me a fair-minded woman. I try to be, but that is why I find the inequities in the current funding system objectionable. Neither I nor my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is alone in objecting to the methodology used in the current funding system. No reasonable person could believe that a system that is meant truly to reflect economic and social need could place Westminster city council fourth in the league table of deprivation.

The Minister and I have had some correspondence about that matter. He may have noticed a recent article by the former local government correspondent of The Daily Telegraph, John Grigsby—again someone not noted for his support for the Labour party.

Photo of David Curry David Curry , Skipton and Ripon

He has said some nice things about me.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

He has said some good things about the Minister, but not about the system. His article states that it is the government which has created the unsatisfactory grant regime … Unfortunately for the government's argument, its indices are not the only criteria of deprivation Bristol university supplies. Turn the page he suggests to the Minister— and there is another list which takes into account economic factors like adult and youth unemployment and single parents. Here, Westminster comes in as the 96th most deprived council. And the second edition of the same publication quotes the environment department's own index of local conditions independently produced for application to local authorities, which rank Westminster as only 25th most deprived. No Labour Member is naive about the difficulties of ensuring a fair system. As John Grigsby goes on the say, however: The Westminster does matter because it is so illogical. He says that what is of fundamental importance is that justice should not only be done, but should manifestly and undoubtedly be seen to be done. Clearly, justice is not being seen to be done.

Photo of John Gummer John Gummer Secretary of State for Environment

Will the hon. Lady simply explain to me why Westminster council did better under a Labour Government than under a Conservative Government if the system is unfair? If she says it is unfair, it was more unfair when Jack Straw drew up the rules.

Photo of John Gummer John Gummer Secretary of State for Environment

I apologise. I should have said the hon. Member for Blackburn (Mr. Straw).

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I am tempted by the right hon. Gentleman's intervention. He has sought to intervene a number of times to lambast Labour Members. At least he resisted this time and did not try to abuse people. That his normal method of intervention is to abuse people says more about him than it says about us. My hon. Friend the Member for Blackburn (Mr. Straw) did not devise the system. My father was the Minister at the time and he certainly did not have my hon. Friend as an adviser. The Secretary of State forgets that I have a little knowledge of what was going on in the last Labour Government. He tries to use figures in his normal way: to confuse rather than elucidate. The figures that I have given are clear. They resulted, as he knows, in rates being levied in Westminster that were nothing compared with the council tax being levied today. There are anomalies. The Government know that, and they should do something about them.

Under the Government's "pay more, get less" policy, council tax payers will have to fork out more for the privilege of receiving fewer services. Council tax payers will have to pay the price of Tory economic incompetence. The gap is widening between what the Government acknowledge that councils should spend and the funding that local authorities receive from central Government. The Tories expect council tax payers to fill the gap.

The Secretary of State might try to con us by claiming that the Government are motivated by a desire to enable local government to raise a greater proportion of its funding, but the Minister said this afternoon—and it has been confirmed throughout the debate—that that is not their intention. Their intention is to hide another tax hike—this time, by trying to hide behind the coat-tails of Labour local government.

The Government have failed to take into account the fact that experience has taught the electorate to trust the word and explanation of local councils in preference to the statements of Tory Ministers.

The Government's original figures, produced at the time of the Budget statement, show that the Government expected council tax payers to fork out a 5.2 per cent. council tax increase next year and an extra £3.5 billion in the next three years—the equivalent of nearly 2p in the standard rate of income tax. The final tax hike is likely to be considerably greater, however, and hon. Members have mentioned the words of the Chief Secretary to the Treasury Select Committee.

The Government claim that they are generously giving new money for education. The figure that is floated by Ministers is the supposedly generous 4.4 per cent. increase in the education SSA. It is not only the British people who are more intelligent and sophisticated than to believe the Government—not even their colleagues believe them.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

No; I will not give way.

Let us consider the facts clearly and objectively. Education authorities will receive an increase in central Government grant of exactly 1.2 per cent. in the year ahead. When Conservative Members speak about money, they need to speak about the actual money—1.2 per cent. The increase in SSAs is 4.4 per cent.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

How wide is the gap? How much extra would Labour give?

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I will not answer questions about how much we shall give until the Government deal with their waste. They should deal with the waste, and then ask us questions about what we shall spend. We know that the Conservatives would not tell us the truth before the most recent general election so, if we try to say anything now, we shall have to change it once we see their cooked books.

It is an illusion that there is more money for education throughout Britain. Parents know that there is not, teachers know that there is not and the Tories know that there is not. That is why the Tories have been blustering and bluffing during the debate.

Photo of Paddy Tipping Paddy Tipping , Sherwood

Will my hon. Friend give way on that point?

Photo of Paddy Tipping Paddy Tipping , Sherwood

I was interested to hear my hon. Friend mention blustering. I wonder what she makes of the fact that, in Nottinghamshire, the Chancellor of the Exchequer has been saying that there is extra money for education in Nottinghamshire. The local authority in Nottinghamshire has spent all the extra money in schools, yet next year, in the Chancellor's constituency of Rushcliffe, teachers' jobs will be lost, and £6.3 million of repairs remain to be done at schools. Is he being economical with the truth?

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

My hon. Friend the Member for Sherwood (Mr. Tipping) will know that if Nottinghamshire received what Westminster receives it would be able to provide an extra 4,000 teachers.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. From where I am sitting, it seems obvious that the hon. Lady is not giving way.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

The Chancellor of the Exchequer, like other Ministers, is saying one thing and doing another. The Government have made commitments on tax which they have not kept. They are not very good at telling the truth about it either, as we saw from Prime Minister's questions yesterday.

This is a pay more, get less settlement. Council tax payers and service users will pay the price of the Government's economic incompetence and waste. Councillors are being placed in an impossible position. They must either cut essential services such as school services, meals on wheels and home helps or they must set the council tax at a level which they know that local people can ill afford. Some councils have to do both. That is not what local democracy should be about.

The Government have made it impossible for local people to determine the level of services or what should be paid for them. Of course, local democracy is not the Government's overriding priority. Their obsession is to stay in power and run the economy into the ground. How can they otherwise afford the income tax cuts that they are looking for?

I believe that the electorate will not be fooled. When they see services cut, they will know that the Government are to blame. When they see their council tax rise, they will blame the Government. That blame will be clearly expressed in the local elections in May and in the general election. I know that people want that election because they are sick of paying the price of Tory obsessions, dogma and mistakes. Instead of the people of this country paying the price, we look forward to the Tory Government paying the price.

Photo of David Curry David Curry , Skipton and Ripon 9:41, 31 Ionawr 1996

It is not often that, in a debate on local government finance, one can begin with Procrustes, but as my right hon. Friend the Member for Selby (Mr. Alison) introduced him, I have taken some affection for him and done my research. He apparently lay in wait on the Athens road and equipped people who came for lodgings with a bed that was not necessarily the right size. If the people were too long, he chopped them. I did not realise that capping had such a distinguished antecedent, but I am encouraged to know that I follow in such a long tradition. I understand that Theseus fastened Procrustes to his own bed and chopped his head off—he had clearly missed his vocation as a local government Minister.

When the hon. Member for North-West Durham (Ms Armstrong) forgot her speech, she said some sensible things. I agree with one thing that she said; that local government should be the engine of local regeneration. I am grateful for that endorsement of our policies. A Labour Government did not introduce city challenge, from which areas such as Sheffield have benefited. A Labour Government did not introduce the single regeneration budget, from which many Labour-held areas have benefited. A Conservative Government brought local authorities and the private sector into play to promote creative regeneration activities in their areas.

I spent this morning in Dudley seeing regeneration by a Conservative Government in practice. What is happening there demonstrates what can be done by local government if it breaks out of the mind-set in which the Labour party would leave it. We want to develop that concept, so I look forward to the endorsement and support of the hon. Member for North-West Durham for the principle of capital challenge. It works on exactly the same principle as asking local authorities to define their priorities and work in partnership to deliver them. I am delighted that the Labour party, belatedly, has woken up to the creative activities of the Government.

I fear that my text for the day has to be based on the hon. Member for Holborn and St. Pancras (Mr. Dobson). I should like to quote him. He may not live to acquire the fame of Procrustes, but his fame will last at least until the election. The hon. Gentleman said, "I don't endorse anybody else's numbers except my own and you're not getting those out of me.". It is not quite the Book of Revelations, but at least we now have "Dobson's dictum" which appears to be: hear all, see all and let nowt out. Does the Labour party intend to go to the next election without revealing what it will spend? Will Labour Members simply say, "We condemn your settlement and our local authorities say that it is £3 billion short"?

Every Labour Member who spoke in the debate said that he or she wanted more money for education, community care, social services and so on, but the Opposition will not add up the cost—and that is what matters. If they claim that expenditure is inadequate, they must know by how much it is inadequate. The Labour party cannot be a lobby organisation: it is supposed to be an Opposition, yet Labour Members simply say what they do not like and refuse to put a figure on the cost of what they want.

The money must come from somewhere, and it can come from only one place—the taxpayer. It can come from more Government grants of taxpayers' money, or more money can be collected from the taxpayer locally. There is no other way of doing it. The hon. Member for Holborn and St. Pancras must tell us how much money the Labour party would spend and where it would come from, otherwise it is simply mystery money and phantom finance. Opposition Members are afraid to say a word to anyone in case we start to add up the sums for ourselves.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

Will the Minister tell us who paid for the £4 billion that was wasted on the poll tax?

Photo of David Curry David Curry , Skipton and Ripon

Why will the hon. Lady not answer one simple question? Everyone who intends to vote at the next election wants to know how much it will cost. Labour Members exhibit an unusual degree of Trappism when it comes to finance: they will not say a word. [Interruption.] The Opposition housing spokesman, the hon. Member for Greenwich (Mr. Raynsford), is guilty also. He has said that he will release capital receipts, but he will not say how many or for how long. It is all shrouded in mystery. We have only gesture politics; none of the arithmetic has been done. At least we know what the Liberal Democrats stand for—sort of.

Photo of David Curry David Curry , Skipton and Ripon

I did say "sort of". I shall give a few examples, but they may not add up to the total picture. The Liberal Democrats would lift the cap completely and remove all safeguards. At least the Opposition would retain some safeguards, with the Audit Commission assuming the curious role of the US cavalry that would gallop over the hill if it thought that people were transgressing. The Liberals offer no such safeguard.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Is the Minister saying that he cannot see the sense in our proposition? We believe that the Audit Commission should set a timetable for improvement and, if councils do not meet that timetable, the Secretary of State could act. Does the Minister think that scandals such as that in Lambeth should be allowed to continue for decades, as occurred under the existing law?

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

Yes, Labour-controlled Lambeth was a disgrace. Something should have been done, but the Government did nothing for a decade. That is why we want to change the law.

Photo of David Curry David Curry , Skipton and Ripon

There is no point the hon. Gentleman saying that he will do this, that and the other if he will not answer the biggest question: how much money will the Labour party spend? What will it cost? The hon. Gentleman talks about sending in the Audit Commission when councils have overspent or underspent. Such a role would take the Audit Commission into completely new territory. I think that we all agree that it is currently playing a useful role setting out objective indicators to assist local government in managing its affairs.

We agree that some councils should be reformed. Where wrong has been done, we condemn it—irrespective of where it occurs—once it has been proved. However, I do not believe that we should send in the Audit Commission to do any old job; it should stick to its present role.

Photo of David Curry David Curry , Skipton and Ripon

I shall give way to the hon. Lady in a moment. She should concentrate on answering the question: how much will a Labour Government cost us? How much would a Labour Government cost the taxpayer, centrally and locally? What is the right amount for the settlement? The hon. Lady can illustrate her point by referring to the current settlement.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

If the Government had taken action against councils that were defrauding their council tax payers, the country would be in a better state and there would be more money for the settlement. For a kick-off, the Minister could have recovered the £29 million from Westminster. [Interruption.]

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. These interventions are very long. The House must settle down. The Minister has a right to reply to the debate. The hon. Member for North-West Durham (Ms Armstrong) was given a reasonable hearing and the Minister must be given the same courtesy.

Photo of David Curry David Curry , Skipton and Ripon

Let me focus on the arguments.

Photo of David Curry David Curry , Skipton and Ripon

Well, the argument is about how much the Labour party thinks it is right to spend on the settlement. I have asked that question a dozen times, but I receive no answer. If the Labour party was to form a Government, all local authorities would parade to its office and ask for more money. They want to know whether they would receive it, but the hon. Member for Holborn and St. Pancras will not give them—or the taxpayer—a clue. It is the most important question in politics.

Photo of Mr Toby Jessel Mr Toby Jessel , Twickenham

Is my hon. Friend aware that the former Labour-controlled Greater London council set up a 30-year contract to transport waste and that that contract still has 21 years to go? The cost now falls on my constituents and others in six boroughs in west London. It amounts to several million pounds a year, which is completely inequitable. Will my hon. Friend look to see whether anything can be done to undo the damage done by the Labour-controlled Greater London council?

Photo of David Curry David Curry , Skipton and Ripon

My hon. Friend is referring to the landfill tax. It is true that some local authorities are locked into long-term contracts that were signed some time ago. They have known the intentions behind the tax for more than a year and I draw my hon. Friend's attention to the fact that, last year, local authorities received £26 million for waste regulation. The responsibility goes to the Environment Agency, but the resources stay with local government and there will be some offsetting national insurance contributions. I promise my hon. Friend that, during the deliberations which must follow the vote tonight, I will pay attention to that issue.

It would be helpful to mention the work on the SSAs that must be done over the next year, because that is important to local authorities. The SSAs must change and develop. Nobody thinks that this is a rigid system that is carved in granite. We make changes and review every year on a rolling programme. People know that that is the case. All the work is shared with the local authority associations and none is done privately.

It is true that interests are not the same. We hear that most obviously in the arguments about the area cost adjustment. Some local authorities have a strong commitment to it, but some think that it is pernicious. There are representatives of each view on both sides of the House. The idea that there is some absolute truth is nonsense. We have to find a system that works well and which people accept as being objective. They must also be able to accept that if they make sensible representations and make a good case, we will try to take it on board.

Our first priority this year is the area cost adjustment review. I do not know what the outcome will be. I have said before that it will have to be intellectually robust and demonstrate a need to spend. If that is the case, we will incorporate it. We are aiming to have the results by June so that they are available for next year's settlement. I hope that local authorities will agree on it, but that is perhaps somewhat optimistic. It is important to be satisfied that it is the best possible intellectual basis for allocating money.

The second area of investigation, which is also important, is the sparsity factor. Here again, many rural areas are concerned about the cost of supplying services in wide open spaces. [Interruption.]

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. The House must settle down and give the Minister a reasonable hearing. That applies to both sides of the House. There has been chattering on both sides of the Chamber while the Minister has been trying to answer the debate.

Photo of David Curry David Curry , Skipton and Ripon

There are equally pressing concerns among urban authorities where the population lives in crowded conditions and where there are problems of health, for example—the Webber-Craig authorities. They are concerned to see the SSA formula adjusted to take account of those problems. The sparsity work is scheduled to be completed in time for next year's settlement.

The children's element of personal social services has a completion date of July. It will have an important effect, especially for some urban authorities. The elderly element is also subject to review. Those are the principal elements of work this year. I do not know what will happen—some may neutralise each other or they may push in the same direction. We will incorporate data where they are demonstrably the most effective and up to date available. We do not want local authorities to fall over the edge of the cliff, so we must not give them too difficult a task on adjustment.

Hon. Members will be pleased to learn that authorities that have to deal with the problems of unaccompanied refugee children will receive a grant in the coming financial year. The Department of Health will consult on the means to distribute that.

The hon. Member for Great Grimsby (Mr. Mitchell) and I have had many exchanges across the Chamber on different matters, but I share his desire that the new unitary authorities should get off to a good start.

Photo of David Curry David Curry , Skipton and Ripon

All of them. Everybody understands that they cannot inherit all the spending patterns of their predecessors. As the hon. Gentleman knows, Humberside has a difficult legacy. I am anxious for the process to work and I shall listen to representations from the new unitary authorities that have a particularly difficult legacy. Of course, one or two of them may get a legacy that they had not expected. Apparently there is an Aladdin's cave in Avon, which had not been anticipated.

I understand the concerns expressed about the fire service. We have taken into account pensions, fire safety and fire prevention. It is a difficult area and it is not easy to find an effective formula. The associations are keen on a particular approach based on fire stations. I have said that I am willing to consider it. Some circularity is involved because it reflects existing spending patterns. Also, certain high costs could fall on metropolitan areas. However, if those problems can be resolved, I am willing to consider objectively whether the formula can be improved.

All these matters are of considerable importance. Many of my hon. Friends raised questions of detail, to which I cannot reply tonight in the short time available. I shall write to them and deal fully with the points that they raised. My hon. Friends the Members for Falmouth and Camborne (Mr. Coe) and for Horsham (Sir P. Hordern) referred to problems in their county areas and difficulties in their district areas.

I understand that the account given by the hon. Member for North-East Derbyshire (Mr. Barnes) was meticulous. I look forward to examining it in the detail it merits.

What happens now is that the preceptors must set their budgets by 1 March and the billing authorities must do so by 11 March. Capping decisions will be taken at the beginning of April and authorities have four weeks in which to decide whether to accept them. If they do, the process ends. If they do not, they have to challenge the cap by the beginning of May. Meetings with Ministers will take place and we will consider the arguments. As I have shown in recent years, where a good case is made, it receives thorough attention. We expect to issue the final caps in late May. That is a traditional timetable and I am sure that local authorities will, as always, avail themselves of the process.

I want to return to the problem that I highlighted at the beginning of my speech—that we do not know where the Opposition stand on these matters. We know that they want to end compulsory competitive tendering and to hand power back to some of the public sector trade unions. We know that they want to end capping, which would impose extra costs on the council tax payer. We know that they want to put business back in the clutches of local authorities by repatriating the business tax, but there would have to be a redistribution mechanism for that. The Opposition say that they will do something about capital receipts, but they do not say what.

The biggest question is: how much would the Opposition spend? That is true of Labour and of the Liberal Democrats. The elector is caught between a rock and a soft touch. I am afraid that the best recourse for them is to support us in voting for this measure.

Question put:

The House divided:Ayes 300, Noes 264

Division No 42][10.00 pm
Ainsworth, Peter (East Surrey)Dicks, Terry
Aitken, Rt Hon JonathanDorrell, Rt Hon Stephen
Alexander, RichardDouglas-Hamilton, Lord James
Alison, Rt Hon Michael (Selby)Dover, Den
Allason, Rupert (Torbay)Duncan, Alan
Amess, DavidDuncan-Smith, Iain
Ancram, MichaelDunn, Bob
Arbuthnot, JamesDurant, Sir Anthony
Arnold, Jacques (Gravesham)Dykes, Hugh
Ashby, DavidElletson, Harold
Atkins, Rt Hon RobertEmery, Rt Hon Sir Peter
Atkinson, David (Bour'mouth E)Evans, David (Welwyn Hatfield)
Atkinson, Peter (Hexham)Evans, Jonathan (Brecon)
Baker, Nicholas (North Dorset)Evans, Nigel (Ribble Valley)
Baldry, TonyEvans, Roger (Monmouth)
Banks, Matthew (Southport)Evennett, David
Banks, Robert (Harrogate)Faber, David
Bates, MichaelFabricant, Michael
Batiste, SpencerFenner, Dame Peggy
Bellingham, HenryField, Barry (Isle of Wight)
Bendall, VivianFishburn, Dudley
Beresford, Sir PaulForman, Nigel
Body, Sir RichardForsyth, Rt Hon Michael (Stirling)
Bonsor, Sir NicholasForth, Eric
Booth, HartleyFowler, Rt Hon Sir Norman
Boswell, TimFox, Dr Liam (Woodspring)
Bowden, Sir AndrewFox, Sir Marcus (Shipley)
Bowis, JohnFreeman, Rt Hon Roger
Boyson, Rt Hon Sir RhodesFrench, Douglas
Brandreth, GylesGallie, Phil
Brazier, JulianGardiner, Sir George
Bright, Sir GrahamGarnier, Edward
Brooke, Rt Hon PeterGillan, Cheryl
Brown, M (Brigg & Cl'thorpes)Goodlad, Rt Hon Alastair
Browning, Mrs AngelaGoodson-Wickes, Dr Charles
Bruce, Ian (Dorset)Gorman, Mrs Teresa
Burns, SimonGorst, Sir John
Burt, AlistairGrant, Sir A (SW Cambs)
Butcher, JohnGreenway, Harry (Ealing N)
Butler, PeterGreenway, John (Ryedale)
Butterfill, JohnGriffiths, Peter (Portsmouth, N)
Carlisle, John (Luton North)Grylls, Sir Michael
Carlisle, Sir Kenneth (Lincoln)Gummer, Rt Hon John Selwyn
Carrington, MatthewHague, Rt Hon William
Carttiss, MichaelHamilton, Rt Hon Sir Archibald
Cash, WilliamHamilton, Neil (Tatton)
Channon, Rt Hon PaulHampson, Dr Keith
Chapman, Sir SydneyHanley, Rt Hon Jeremy
Churchill, MrHannam, Sir John
Clappison, JamesHargreaves, Andrew
Clark, Dr Michael (Rochford)Harris, David
Clarke, Rt Hon Kenneth (Ru'clif)Haselhurst, Sir Alan
Clifton-Brown, GeoffreyHawkins, Nick
Coe, SebastianHawksley, Warren
Congdon, DavidHayes, Jerry
Conway, DerekHeald, Oliver
Coombs, Anthony (Wyre For'st)Heathcoat-Amory, David
Coombs, Simon (Swindon)Hendry, Charles
Cope, Rt Hon Sir JohnHeseltine, Rt Hon Michael
Cormack, Sir PatrickHicks, Robert
Couchman, JamesHiggins, Rt Hon Sir Terence
Cran, JamesHill, James (Southampton Test)
Currie, Mrs Edwina (S D'by'ire)Hogg, Rt Hon Douglas (G'tham)
Curry, David (Skipton & Ripon)Horam, John
Davies, Quentin (Stamford)Hordem, Rt Hon Sir Peter
Davis, David (Boothferry)Howard, Rt Hon Michael
Day, StephenHowell, Rt Hon David (G'dford)
Deva, Nirj JosephHowell, Sir Ralph (N Norfolk)
Devlin, TimHughes, Robert G (Harrow W)
Hunt, Rt Hon David (Wirral W)Powell, William (Corby)
Hunt, Sir John (Ravensbourne)Rathbone, Tim
Hunter, AndrewRedwood, Rt Hon John
Hurd, Rt Hon DouglasRenton, Rt Hon Tim
Jack, MichaelRichards, Rod
Jackson, Robert (Wantage)Riddick, Graham
Jenkin, BernardRifkind, Rt Hon Malcolm
Jessel, TobyRobathan, Andrew
Jones, Robert B (W Hertfdshr)Roberts, Rt Hon Sir Wyn
Key, RobertRobertson, Raymond (Ab'd'n S)
King, Rt Hon TomRobinson, Mark (Somerton)
Kirkhope, TimothyRoe, Mrs Marion (Broxbourne)
Knight, Mrs Angela (Erewash)Rowe, Andrew (Mid Kent)
Knight, Rt Hon Greg (Derby N)Rumbold, Rt Hon Dame Angela
Knight, Dame Jill (Bir'm E'st'n)Ryder, Rt Hon Richard
Knox, Sir DavidSackville, Tom
Kynoch, George (Kincardine)Sainsbury, Rt Hon Sir Timothy
Lait, Mrs JacquiScott, Rt Hon Sir Nicholas
Lamont, Rt Hon NormanShaw, David (Dover)
Lang, Rt Hon IanShaw, Sir Giles (Pudsey)
Lawrence, Sir IvanShepherd, Rt Hon Gillian
Legg, BarryShepherd, Sir Colin (Hereford)
Leigh, EdwardShepherd, Richard (Aldridge)
Lennox-Boyd, Sir MarkShersby, Sir Michael
Lester, Sir James (Broxtowe)Sims, Roger
Lidington, DavidSkeet, Sir Trevor
Lilley, Rt Hon PeterSmith, Sir Dudley (Warwick)
Lloyd, Rt Hon Sir Peter (Fareham)Smith, Tim (Beaconsfield)
Lord, MichaelSoames, Nicholas
Luff, PeterSpencer, Sir Derek
Lyell, Rt Hon Sir NicholasSpicer, Sir James (W Dorset)
MacGregor, Rt Hon JohnSpicer, Sir Michael (S Worcs)
MacKay, AndrewSpink, Dr Robert
Maclean, Rt Hon DavidSpring, Richard
McLoughlin, PatrickSproat, Iain
McNair-Wilson, Sir PatrickSquire, Robin (Hornchurch)
Madel, Sir DavidStanley, Rt Hon Sir John
Maitland, Lady OlgaSteen, Anthony
Major, Rt Hon JohnStephen, Michael
Malone, GeraldStem, Michael
Mans, KeithStewart, Allan
Marland, PaulStreeter, Gary
Marlow, TonySumberg, David
Marshall, John (Hendon S)Sweeney, Walter
Marshall, Sir Michael (Arundel)Sykes, John
Martin, David (Portsmouth S)Tapsell, Sir Peter
Mates, MichaelTaylor, Ian (Esher)
Mawhinney, Rt Hon Dr BrianTaylor, John M (Solihull)
Mellor, Rt Hon DavidTaylor, Sir Teddy (Southend, E)
Merchant, PiersTemple-Morris, Peter
Mills, IainThomason, Roy
Mitchell, Andrew (Gedling)Thompson, Sir Donald (C'er V)
Mitchell, Sir David (NW Hants)Thompson, Patrick (Norwich N)
Moate, Sir RogerThornton, Sir Malcolm
Monro, Rt Hon Sir HectorThumham, Peter
Montgomery, Sir FergusTownend, John (Bridlington)
Needham, Rt Hon RichardTownsend, Cyril D (Bexl'yh'th)
Nelson, AnthonyTracey, Richard
Neubert, Sir MichaelTredinnick, David
Newton, Rt Hon TonyTrend, Michael
Nicholls, PatrickTrotter, Neville
Norris, SteveTwinn, Dr Ian
Onslow, Rt Hon Sir CranleyVaughan, Sir Gerard
Oppenheim, PhillipWaldegrave, Rt Hon William
Ottaway, RichardWalden, George
Page, RichardWalker, Bill (N Tayside)
Paice, JamesWaller, Gary
Patnick, Sir IrvineWard, John
Patten, Rt Hon JohnWardle, Charles (Bexhill)
Pattie, Rt Hon Sir GeoffreyWaterson, Nigel
Pawsey, JamesWatts, John
Peacock, Mrs ElizabethWells, Bowen
Pickles, EricWheeler, Rt Hon Sir John
Porter, Barry (Wirral S)Whitney, Ray
Porter, David (Waveney)Whittingdale, John
Portillo, Rt Hon MichaelWiddecombe, Ann
Wiggin, Sir JerryWolfson, Mark
Wilkinson, JohnYeo, Tim
Willetts, DavidYoung, Rt Hon Sir George
Wilshire, DavidTellers for the Ayes:
Winterton, Mrs Ann (Congleton)Mr. Timothy Wood and
Winterton, Nicholas (Macc'fld)Mr. Roger Knapman.
Abbott, Ms DianeDixon, Don
Adams, Mrs IreneDobson, Frank
Ainger, NickDonohoe, Brian H
Ainsworth, Robert (Covtry NE)Dowd, Jim
Allen, GrahamDunwoody, Mrs Gwyneth
Anderson, Donald (Swansea E)Eagle, Ms Angela
Anderson, Ms Janet (Ros'dale)Eastham, Ken
Armstrong, HilaryEtherington, Bill
Ashdown, Rt Hon PaddyEvans, John (St Helens N)
Ashton, JoeEwing, Mrs Margaret
Austin-Walker, JohnFatchett, Derek
Banks, Tony (Newham NW)Faulds, Andrew
Barnes, HarryField, Frank (Birkenhead)
Battle, JohnFisher, Mark
Bayley, HughFlynn, Paul
Beckett, Rt Hon MargaretFoster, Rt Hon Derek
Beith, Rt Hon A JFoster, Don (Bath)
Bell, StuartFoulkes, George
Benn, Rt Hon TonyFyfe, Maria
Bennett, Andrew FGalloway, George
Bermingham, GeraldGapes, Mike
Berry, RogerGarrett, John
Betts, CliveGeorge, Bruce
Blair, Rt Hon TonyGerrard, Neil
Blunkett, DavidGilbert, Rt Hon Dr John
Boateng, PaulGodman, Dr Norman A
Bradley, KeithGodsiff, Roger
Bray, Dr JeremyGolding, Mrs Llin
Brown, Gordon (Dunfermline E)Gordon, Mildred
Brown, N (N'c'tle upon Tyne E)Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon)Griffiths, Nigel (Edinburgh)
Burden, RichardGriffiths, Win (Bridgend)
Byers, StephenGrocott, Bruce
Callaghan, JimGunnell, John
Campbell, Mrs Anne (C'bridge)Hain, Peter
Campbell, Menzies (Fife NE)Hall, Mike
Campbell, Ronnie (Blyth V)Hanson, David
Campbell-Savours, D NHardy, Peter
Canavan, DennisHarvey, Nick
Cann, JamieHattersley, Rt Hon Roy
Chidgey, DavidHenderson, Doug
Chisholm, MalcolmHill, Keith (Streatham)
Church, JudithHinchliffe, David
Clapham, MichaelHodge, Margaret
Clelland, DavidHoey, Kate
Clwyd, Mrs AnnHogg, Norman (Cumbernauld)
Coffey, AnnHome Robertson, John
Cohen, HarryHood, Jimmy
Cook, Robin (Livingston)Hoon, Geoffrey
Corbett, RobinHowarth, Alan (Strat'rd-on-A)
Corbyn, JeremyHowarth, George (Knowsley North)
Corston, JeanHowells, Dr Kim (Pontypridd)
Cousins, JimHoyle, Doug
Cox, TomHughes, Robert (Aberdeen N)
Cummings, JohnHughes, Roy (Newport E)
Cunliffe, LawrenceHughes, Simon (Southwark)
Cunningham, Jim (Covy SE)Hutton, John
Dafis, CynogIngram, Adam
Darling, AlistairJackson, Glenda (H'stead)
Davidson, IanJackson, Helen (Shef'ld, H)
Davies, Bryan (Oldham C'tral)Jamieson, David
Davies, Chris (L'Boro & S'worth)Janner, Greville
Davies, Rt Hon Denzil (Llanalli)Jones, Barry (Alyn and D'side)
Davies, Ron (Caerphilly)Jones, Jon Owen (Cardiff C)
Davis, Terry (B'ham, H'dge H'I)Jones, Lynne (B'ham S O)
Denham, JohnJones, Martyn (Clwyd, SW)
Dewar, DonaldJones, Nigel (Cheltenham)
Jowell, TessaPrentice, Gordon (Pendle)
Kaufman, Rt Hon GeraldPrimarolo, Dawn
Keen, AlanPurchase, Ken
Kennedy, Jane (L'pool Br'dg'n)Quin, Ms Joyce
Khabra, Piara SRadice, Giles
Kilfoyle, PeterRandall, Stuart
Lestor, Joan (Eccles)Raynsford, Nick
Liddell, Mrs HelenReid, Dr John
Litherland, RobertRendel, David
Livingstone, KenRobertson, George (Hamilton)
Lloyd, Tony (Stretford)Robinson, Geoffrey (Co'try NW)
Llwyd, ElfynRoche, Mrs Barbara
Loyden, EddieRogers, Allan
Lynne, Ms LizRocker, Jeff
McAllion, JohnRoss, Ernie (Dundee W)
McAvoy, ThomasRowlands, Ted
McCartney, IanRuddock, Joan
McCrea, The Reverend WilliamSedgemore, Brian
Macdonald, CalumSheerman, Barry
McFall, JohnSheldon, Rt Hon Robert
McKelvey, WilliamShore, Rt Hon Peter
Mackinlay, AndrewShort, Clare
McLeish, HenrySimpson, Alan
McNamara, KevinSkinner, Dennis
MacShane, DenisSmith, Andrew (Oxford E)
McWilliam, JohnSmith, Chris (Isl'ton S & F'sbury)
Madden, MaxSmith, Llew (Blaenau Gwent)
Maddock, DianaSnape, Peter
Mahon, AliceSoley, Clive
Mandelson, PeterSpearing, Nigel
Marek, Dr JohnSpeller, John
Marshall, David (Shettleston)Squire, Rachel (Dunfermline W)
Marshall, Jim (Leicester, S)Steinberg, Gerry
Martin, Michael J (Springburn)Stevenson, George
Martlew, EricStott, Roger
Maxton, JohnStrang, Dr. Gavin
Meacher, MichaelStraw, Jack
Meale, AlanSutcliffe, Gerry
Michael, AlunTaylor, Mrs Ann (Dewsbury)
Michie, Bill (Sheffield Heeley)Thompson, Jack (Wansbeck)
Michie, Mrs Ray (Argyll & Bute)Timms, Stephen
Milburn, AlanTipping, Paddy
Miller, AndrewTouhig, Don
Mitchell, Austin (Gt Grimsby)Turner, Dennis
Moonie, Dr LewisTyler, Paul
Morgan, RhodriVaz, Keith
Morley, ElliotWalker, Rt Hon Sir Harold
Morris, Rt Hon Alfred (Wy'nshawe)Walley, Joan
Morris, Estelle (B'ham Yardley)Wardell, Gareth (Gower)
Morris, Rt Hon John (Aberavon)Wareing, Robert N
Mowlam, MarjorieWatson, Mike
Mudie, GeorgeWicks, Malcolm
Mullin, ChrisWigley, Dafydd
Murphy, PaulWilliams, Rt Hon Alan (Sw'n W)
Oakes, Rt Hon GordonWilliams, Alan W (Carmarthen)
O'Brien, Mike (N W'kshire)Wilson, Brian
O'Brien, William (Normanton)Winnick, David
O'Hara, EdwardWise, Audrey
Olner, BillWorthington, Tony
O'Neill, MartinWray, Jimmy
Parry, RobertWright, Dr Tony
Pendry, TomYoung, David (Bolton SE)
Pickthall, Colin
Pike, Peter LTellers for the Noes:
Pope, GregMr. Eric Clarke and
Powell, Ray (Ogmore)Mr. Joe Benton
Prentice, Bridget (Lew'm E)

Question accordingly agreed to.

Resolved,That the Local Government Finance Report (England) 1996–97 (House of Commons Paper No. 164), which was laid before this House on 29th January, be approved.

Resolved,That the National Parks Supplementary Grant Report (England) 1996–97 (House of Commons Paper No. 167), which was laid before this House on 29th January, be approved.

Resolved,That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1996–97 (House of Commons Paper No. 166), which was laid before this House on 29th January, be approved.

Resolved,That the Special Grant Report (No. 16) (House of Commons Paper No. 165), which was laid before this House on 29th January, be approved.—[Mr. Brandreth]