Mr. Deputy Speaker, the last time I was involved in a local government finance debate, I think that you were also involved. We both realise how long ago that was. As I listened to the Secretary of State's bluster, I reflected that I had not missed much over the past few years. If it were not for an pressing problem in the city of Leicester—I mention that to ensure that the Minister knows where my constituency is—the Secretary of State might well have driven me from the Chamber. I cannot but believe that his speech, and that of the hon. Member for Bury, South (Mr. Sumberg), had more to do with the coming general election than with the needs of local government. However, like the hon. Member for Bury, South, I am seeking the Secretary of State's assistance, so perhaps I should curtail my criticism and get on with my substantive point.

I think that all hon. Members accept that councils of all political persuasions—even the few remaining Tory administrations—agree that this year's proposed spending limits are inadequate. Despite the vehemence with which Ministers put their argument, local government and local authority bodies believe that, on a like-on-like basis, local authority spending in 1997–98 will increase by 1.5 per cent., not by 2.5 per cent. as Ministers claim. Inevitably, that will increase pressure on service provision and lead to the difficult problems highlighted by the hon. Member for Bury, South.

Nowhere are such problems clearer than in Leicester. The Minister received a deputation from Leicester in December 1996. He knows that Leicester will become a unitary authority in April. Everyone in Leicester agrees that this is one of the most traumatic periods in the political life of the city council. At this traumatic time, the city is faced with the worst budget settlement in its history. The Minister knows that Leicester is the only 1997 unitary authority that is capped at its notional 1996–97 budget plus 1 per cent., even though Ministers accept that inflation forecasts are running at between 2.5 and 3 per cent. The council faces the lowest budget settlement of any reorganised authority, this year or last. If that goes through unaltered, it will have disastrous consequences for service provision and development.

The Minister knows that, as a non-metropolitan district, Leicester is permitted to overspend to the tune of 40 per cent. above standard spending assessment. It gives me no pleasure to say that, because I know that political opponents will seek to attack it, but that is the reality. As part of the agreement with the Government, the council pursues a strategy of managed budget reduction. When it becomes a unitary authority in April 1997, it will be an authority with a spending limit of 2 to 2.5 per cent. above SSA. If the council does not receive additional assistance from Government, it will have to reduce its budget by £15 million to £18 million.

If services transferred from the county council, such as education and social services, are ring-fenced and protected from cuts to avoid the draconian action that the hon. Member for Bury, South described, the consequences for services presently provided by the non-metropolitan district, such as leisure, housing and planning, will be horrendous. The housing renewal strategy in the inner city, which assists owner-occupiers, will be especially hard hit; it will virtually cease. Neighbourhood centres throughout the city will face closure. Leisure service provision in Leicester will be decimated.

There is real disquiet among city council employees who sense the threat of redundancy. They have already seen the present Leicestershire county council issue 600 redundancy notices as a consequence of reorganisation. We hope that many of those redundancies will not occur. Nevertheless, the redundancy threat is having an enduring effect on the morale of staff of the county and city councils, which will persist long after 1 April 1997.

I hope that the city of Leicester and I can convince the Secretary of State and the Minister that it would be disastrous for the new unitary authority to start its life with large service cuts and redundancies as a consequence of the unexpected harshness of the revenue settlement. I realise—I am sure that my realisation will be borne out by experience as the debate continues—that the Government will be subjected to special pleading from hon. Members on both sides of the House. Nevertheless, I hope that Ministers will take further action to ameliorate the consequences of the decisions that they have taken already regarding the city of Leicester. Some of the worst consequences may be avoided if they consider the views and options identified by the delegation that met the Minister. I await the Minister's reply in hopeful anticipation of further assistance for the city of Leicester.