Local Government Finance (England)

– in the House of Commons at 4:22 pm on 3rd February 1993.

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Photo of Michael Howard Michael Howard Secretary of State for Environment 4:22 pm, 3rd February 1993

I beg to move,

That the Local Government Finance Report (England) 1993–94 (House of Commons Paper No. 422), which was laid before this House on 28th January, be approved.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

I understand that with this it will be convenient to discuss at the same time the following motions:

That the Special Grant Report (No. 5) (House of Commons Paper No. 423), which was laid before this House on 28th January, be approved.

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1993–94 (House of Commons Paper No. 424), which was laid before this House on 28th January, be approved.

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) (Amendment) Report (England) 1993–94 (House of Commons Paper No. 443), which was laid before this House on 1st February, be approved.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The four reports, taken together, embody the local government finance settlement for the coming year. They represent the culmination of a long process which began a full 12 months ago. During that time, the Government have held extensive discussions with the local authorities and their associations about the cost of local government services. We have examined at length the methodology and formulae for standard spending assessments. We have also developed a method for calculating each authority's tax base for the new council tax.

Last November, in the light of those discussions, I announced my proposals for the coming year. I made proposals for the total provision for spending and grant, and the methodology for SSAs. I also made proposals for the relevant notional amounts which will be used as the basis for determining whether the increases in authorities' budgets should be capped.

Since then, we have gone through a further formal consultation process with local authorities. We have received 400 letters about the settlement and a further 250 about notional amounts. We have also held 90 meetings with local authorities and hon. Members. We have carefully considered everything that we have heard, and my decisions—in the light of all of this—are set out in these reports. My aim has been to satisfy myself that the settlement which I have proposed is appropriate and realistic, and that the legitimate concerns of local government are taken into account.

We are planning for local government to spend a total of £412 billion next year. That is £1.2 billion more—an increase of 3.1 per cent.—over the provision that we made for the current year, after adjusting for changes in local authorities' functions. We are providing £33.5 billion—an increase of £1.2 billion, which is 3.7 per cent. on the same comparative basis—in Government support. Against a background of inflation at 2.6 per cent. and falling, and with a public sector pay policy limiting increases to a range between zero and 1.5 per cent., that is an eminently realistic settlement.

I suspect that we shall hear ritual protests from Opposition Members that the settlement is inadequate. When they make those protests, I hope that they will tell us how they would finance the additional amounts which they doubtless say they would make available. Perhaps they would increase income tax. Perhaps it will be another penny on the standard rate to deliver an extra £1.5 billion of spending. Perhaps they would have higher council taxes. Every extra £1 billion of spending would mean another £60 on the band D council tax. I invite the hon. Member for Barnsley, Central (Mr. Illsley) to give us his prescription. Which of the two prescriptions does he recommend?

Photo of Eric Illsley Eric Illsley , Barnsley Central

Does the Secretary of State accept that, within the funding available, the difference between the authorities should be reduced? Why does my authority have 70 per cent. less than Manchester, for example, to provide the same level of service? Surely, within the total amount of funding available, there can be a more equitable distribution.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The answer to the hon. Gentleman's question is to be found in the reports which I have referred to and which are available in the Library and the Vote Office. They set out in some detail the methodology which leads to the results which form the basis of the report. If the hon. Gentleman restrains himself for a moment, he will hear even more about how we propose to deal with those matters not only in 1993 but in future.

I give the hon. Gentleman credit at least for saying that he was protesting not about the overall level of the settlement but about the distribution. I hope that no one will participate in any protest against the adequacy of the settlement as a whole without telling us in detail how they would raise the extra money they want.

I have one prescription to offer. All local authorities need to ensure that they make the best possible use of their money. Over the past week or two, we have become all too well aware of just how badly several local authorities are short changing the people whom they were elected to serve. Some of the stories of incompetence and mismanagement are truly dreadful, and time and time again Labour councils are seen to be responsible.

Eighteen of the top 20 community charges this year were set by Labour councils. Seventeen of the 20 councils with the worst community charge collection records are Labour councils. That is little wonder when they have councillors such as the three in Lambeth who owe £3,000 themselves, despite collecting £35,000 in allowances for the year in question.

Examples are legion. For example, Sheffield proposes to spend £54,000 on offices for hon. Members opposite, when it has just lost more than £10 million on the world student games.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman rises to the bait.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Has the Secretary of State read in the Local Government Chronicle of the survey carried out on behalf of the Local Government Management Board, which showed that chief executives of all local authorities throughout the country have named Sheffield as one of the 16 best-managed local authorities in the country? Sheffield has shown that it is an efficient local authority. Other authorities such as Birmingham, Bradford and Islington are included, but not Wandsworth or Westminster. Perhaps the Secretary of State will take account of those findings in what he says about Sheffield in the future.

Photo of Michael Howard Michael Howard Secretary of State for Environment

I am surprised that the hon. Gentleman, who led Sheffield council when it lost the £10 million on the world student games, has the temerity to rise on such matters. I suppose that the best way to describe the study to which he referred is to say that it is little more than a "straw survey". It is totally unrepresentative.

Photo of Eric Illsley Eric Illsley , Barnsley Central

I apologise for rising on a point of order so early in the debate, Madam Deputy Speaker, but the Secretary of State could have misled the House by saying that Sheffield made available finances for "hon. Members opposite". If he checks, I think that he will find that Sheffield makes available finance for hon. Members from both sides of the House.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Whether or not that is correct, it is not a point of order for the Chair.

Photo of Michael Howard Michael Howard Secretary of State for Environment

Not only was it not a point of order—it was not accurate. We have canvassed that matter at length, and the hon. Gentleman is a wee bit behind the game.

I was about to mention Monklands, which is represented in this House by the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition, who has maintained a studious silence over the serious allegations about Monklands council contained in the Sunday Times recently.

Photo of Ian McCartney Ian McCartney , Makerfield

On a point of order, Madam Deputy Speaker. The Secretary of State is making a statement about the rate support grant settlement for England. He should stick to that and give Opposition Members an opportunity to question him about it.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

The Chair normally allows a certain latitude, but that has been considerably extended. Perhaps the Secretary of State would return to the main subject of debate.

Photo of Michael Howard Michael Howard Secretary of State for Environment

Of course—that is exactly what I shall do. It is understandable that Opposition Members should be so touchy about such matters; we quite understand.

I do not intend to predict levels of council tax, but I note in passing that others have not been so coy. The Local Government Chronicle conducted an independent survey of local authorities at the start of the year, which predicted an average tax payable of £505—far less than some of the scare stories bandied about by Opposition Members. What is more interesting, it concluded: Labour councils cost you more. It found that an average Labour band D council tax was nearly 20 per cent. higher than the comparative figure for Conservative councils.

Surely it is significant that, on that evidence, Labour-controlled councils will charge on average nearly £100 more council tax than Conservative-controlled councils, and that Liberal Democrat-controlled authorities will charge nearly £50 more. Time and time again, we find that Labour councils cost more and give little but waste and inefficiency in return.

Photo of Mr Graham Riddick Mr Graham Riddick , Colne Valley

Will my right hon. Friend give way?

Photo of Michael Howard Michael Howard Secretary of State for Environment

As the hon. Member for Sheffield, Attercliffe (Mr. Betts) has already made one intervention, I give way to my hon. Friend.

Photo of Mr Graham Riddick Mr Graham Riddick , Colne Valley

Is it not the case that one reason why council tax bills will be higher in Labour authorities this year is that last year many Labour authorities grossly overspent, in the hope and expectation that an incoming Labour Government would bail them out? Is it not the case that the chickens of Labour's incompetence and profligacy are coming home to roost?

Photo of Michael Howard Michael Howard Secretary of State for Environment

My hon. Friend is entirely right. That was the attitude taken by many councils controlled by the Labour party. The sadness is that those people whom they were elected to serve are having to pay the cost of their profligacy because of those expectations.

The settlement is designed to ensure that the burden on local tax payers can be held down to fair and reasonable levels. Overall there should be no need for councils to raise any more in real terms in the coming year from their local tax payers than they have budgeted to raise this year, but clearly it will help if one lives in a Conservative-controlled authority.

Of course, the introduction of the council tax will mean some differences in the burden on individual households. I understand the concern which many hon. Members have expressed on that score. We have therefore provided for a scheme of transitional relief to give protection to any household which would otherwise face an excessive increase in its local tax bill. I estimate that the scheme will cost about £340 million in the coming year.

Our grant scheme is designed to ensure that different authorities, however different their circumstances, are able to deliver the same standard of service for broadly the same level of council tax. The function of standard spending assessments is to measure the differences between authorities, so that those differences can be properly reflected in the grant that they receive.

With that system, it is inevitable that many authorities will feel that their particular circumstances are not being properly reflected. In other words, they want a larger share of the cake, and they are not short of good arguments why they deserve more. But there are more than 400 local authorities in England—excluding parishes—from Cornwall to Northumberland, taking in London, the metropolitan boroughs, the districts, the joint police and fire authorities, each with their own individual characteristics and their own, often very divergent, views. When I came to make my proposals for standard spending assessments, last November, I knew in advance that I could not satisfy everyone.

But the world does not stand still. In the coming year, there will be changes in authorities? functions and a change in the method of local taxation. New sources of data, such as the 1991 census, have become available, and other sources of data have also changed. My proposals for the coming year will ensure that all these changes are properly reflected in standing spending assessments.

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

I am very glad to hear that my right hon. and learned Friend will take a flexible view in the forthcoming year. While I support entirely his tight control of local government expenditure, I have to say that the area cost adjustment factor is very unfair. This militates very much against certain counties, to the benefit of others. It is quite ridiculous that Cambridgeshire does not benefit, whereas Bedfordshire, Oxfordshire and Hertfordshire do. This creates great ill feeling. I do not believe that it can be rectified by the Association of County Councils, as all councils have vested interests; the Government themselves will have to do something. Perhaps my right hon. and learned Friend will look at this grievance in the forthcoming year.

Photo of Michael Howard Michael Howard Secretary of State for Environment

I understand very well the concern that my hon. Friend expresses. Indeed, it has been expressed to me very often by several of my hon. Friends. I understand the strength of feeling on this issue, and I can give my hon. Friend the undertaking for which he has asked. We shall certainly look very carefully indeed at this matter.

Photo of Mr Anthony Coombs Mr Anthony Coombs , Wyre Forest

It appears that, over the past three years, the amount of grant allocated to the area cost adjustment has increased from £837 million to £1,314 million, despite the fact that the differential in cost increases—for instance, between Greater London, where the area cost adjustment has meant the standard spending assessment's having gone up most, and the west midlands, where the increase has been far smaller—has lessened continuously. The spending authority in Hereford and Worcester is very frugal. Indeed, its spending used to be under the standard spending assessment. It is wrong that its assessment should increase by only 2.5 per cent., whereas the figure for East Sussex is 7 per cent., and the one for Hampshire 5 per cent.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The point that my hon. Friend has made reinforces one that was made a few moments ago. I shall certainly look at those factors, amongst others, when I come to consider the way in which the standard spending assessments for next year are to be constructed.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

I do not want to labour this point, but I have to say that there are other data of particular local significance, which my hon. Friends the Members for Uxbridge (Mr. Shersby) for Hayes and Harlington (Mr. Dicks) and I, as well as local authority representatives, have sought to bring to the Secretary of State's attention. I refer to the data concerning the inflow of refugee children to Heathrow airport, which is in our borough. It has been costing the borough about £1 million a year to look after these children, and the cost will probably be greater in the future. What help can my right hon. and learned Friend give us towards carrying this burden?

Photo of Michael Howard Michael Howard Secretary of State for Environment

If my hon. Friend restrains himself for a few minutes, he will find that I have some comfort for him.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman has just come into the House, so he will have to wait a while.

Many councils have come to me and my colleagues with arguments for further changes. I have considered everything they have said—often, I am bound to say, in direct opposition to one another—but, on balance, I have not been convinced that I should make any further changes for the coming year. Accordingly, the SSA methodology as set out in the local government finance report is unchanged from the proposals I made for consultation.

However, as a result of more recent data becoming available, there have been some changes since the start of consultation on the SSAs for individual authorities. I have placed copies of a set of tables, listing the SSAs far all authorities, in the Library and the Vote Office, alongside the settlement reports, and my Department has written to councils individually with full details of all the calculations in each case.

I know—it has been made clear by some of today's interventions—that many hon. Members still regard the standard spending assessments with the deepest suspicion. Of course the formula is complicated—local government is complicated. It performs a wide range of functions against widely differing backgrounds and circumstances. We have to have a system which reflects those differences in the distribution of grant. I hope that all hon. Members will at least agree that some sort of formula-based distribution is inevitable. However, I know that many hon. Members feel keenly on behalf of their local authorities. I know that they will be keenly disappointed that I have decided not to make the changes which they have pressed me to make.

I am acutely aware of their concerns. Over the next year, my Department will be working on the findings of the 1991 census and how best to incorporate them into the SSA formula. I intend to take that opportunity to look again at some of the more fundamental issues that have been raised with us this year, including the area cost adjustment, which was mentioned by some of my hon. Friends. Hon. Members and local authorities who have not been able to persuade me to their point of view this year will, I am sure, want to take advantage of the opportunity which this will give them to exercise their powers of persuasion again next year.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

Does not the Secretary of State realise that, despite what he has said, the fact that he plans to revisit the formulas next year fills local authorities up and down the land with trepidation? The Government introduced the area cost adjustment in order to doctor the figures. What scheme will the Secretary of State come up with next to doctor the figures again? Does he realise that he has brought the entire system and Government into total disrepute?

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman cannot have it both ways. If he does not want me to revisit those matters next year, it can only be because he is entirely satisfied with the money that Coventry has received this year. If he is prepared to say how thankful he is for the amount of money that we have been able to make available to Coventry this year, I shall be happy to give way to him again. If he is complaining about the amount of money that Coventry has received this year, I should have thought that he would be delighted that I intend to revisit those matters next year.

Photo of Stephen Byers Stephen Byers , Wallsend

Will the Secretary of State confirm that, in respect of the SSA and the relative poverty and deprivation of local authority districts, the Government still intend to use the all-ages social index? That index shows Cheltenham as poorer than Rotherham, Tunbridge Wells as poorer than Doncaster, Gloucester as poorer than North Tyneside, and Basildon as poorer than Bolsover. How can there be any confidence in a system of local government finance that is so fundamentally flawed

Photo of Michael Howard Michael Howard Secretary of State for Environment

I shall certainly not go into detail on the sort of settlement that we may see next year. The hon. Gentleman knows, from the reports, the basis on which we have reached our conclusions this year.

I have sought this year to be as helpful as I can to local authorities on another matter. As in previous years, councils may be designated for capping if they increase their budgets by more than certain amounts and in doing so set budgets which exceed their SSAs. However, in a year when local authority functions are changing, and when a new system of local taxation is being introduced, it is not appropriate to use councils' actual budgets for 1992–93 as the starting-point for capping. Those budgets need to be adjusted so that the changes in functions, and in the local government finance system, can be allowed for in the capping calculations. The relevant notional amounts, which are set out in the report, are in effect adjusted budgets for individual councils.

These notional amounts relate directly to the real budgets set by authorities for the current year. Therefore, it is important to ensure that the authorities are fully involved in the process. When I announced my proposals for notional amounts last November, I also made it clear that we would listen carefully to the views of individual authorities on the figures that we had calculated for them, and on the methodology in general.

We have had many representations on both counts. I could not say that we have done exactly what every council wanted us to do. In particular, we have had to remain true to our original purpose, which was to adjust the budgets made by authorities when they set their community charges for the current year, and not to reflect changes that they may have made in the course of the year. But, as a result of our consultations, we have made changes both in the methodology and in the calculation of notional amounts for many individual councils.

As a result, the aggregate of notional amounts is now £250 million higher than we originally proposed, and for many councils the effect will be directly to permit a higher budget in 1993–94 without the fear of capping. I know that councils have welcomed our willingness to listen to them, and I hope that the House will today endorse that welcome.

Notional amounts are a demonstration of my commitment to use my capping powers in a way which is fair both to local authorities and to their local taxpayers. It was for that reason that, in my statement to the House last November, I set out the capping criteria that I had in mind to apply for the coming year.

I reaffirm that those are the criteria which I intend to apply. I shall not detain the House by reading them out in full, but I shall remind hon. Members of the broad principles: first, that budget increases—increases over the notional amount—may be subject to capping if the resulting budget exceeds the authority's standard spending assessment; secondly, that a budget is excessive in absolute terms if it is more than 12.5 per cent. above the SSA; and thirdly, that, notwithstanding the 12.5 per cent. criterion, an authority may not be designated if it sets a budget which represents a cash freeze or, in certain circumstances, a minimum cash reduction on the notional amount.

The significance of my announcement last November was that it gave authorities advance warning of what they had to do in order to avoid being designated for capping. I am pleased to say that the great majority of those who have written to us, or come to meet us, during the consultation process have accepted that discipline. I hope that, when they come to set their budgets in the next few weeks, they carry through their intention.

I do not want there to be any doubts on the issue. We want to be fair to councils, so we have listened to their views on notional amounts, but we must also hold faith with the local taxpayers, for whom capping is an important protection. I hope that all councils will act responsibly, and that I will not need to use my capping powers, but I will not hesitate to do so if necessary, in order to restrain excessive spending and hold down council tax levels.

The third of the reports for which I am today seeking the approval of the House is the special grant report. In particular, I wish to draw the attention of the House to two of the items contained in the report: the special grants for population loss, and in respect of displaced persons from the former republic of Yugoslavia.

A few minutes ago, I explained that SSAs this year need to reflect the availability of new data. In particular, we are now able to use population data from the 1991 census. That is a change from previous years, for which we have used 1981 census data, updated, each year by the Office of Population Censuses and Surveys. We are bound to use the more recent data, but for a few authorities, that means a significantly lower SSA—which means less grant—than would have been the case if we had continued on the old basis.

It would be unreasonable to expect them to accommodate this reduction in a single year. I have therefore decided that, for those authorities whose SSA is more than 5 per cent. lower than it would have been if the old basis of estimating had continued, we should provide a special grant to compensate them in full for the excess over 5 per cent. Sixteen authorities will benefit, and a total of £3.5 million will be paid out under that scheme.

The special grant in respect of displaced persons from the former republic of Yugoslavia was announced by my hon. Friend the Minister for Housing and Planning on 16 November. The intention is to compensate authorities which face sudden unexpected additional expenditure as a result of the arrival in their area of the displaced persons. We have modelled the scheme on the more familiar Bellwin scheme, which applies to emergency expenditure following severe storms.

The principles are the same. Authorities can reasonably be expected to hold contingency reserves against minor emergencies, but in exceptional circumstances those reserves will simply not be enough to meet the case. Therefore, under the scheme, expenditure above a threshold qualifies for grant at a high rate—85 per cent. My Department invited authorities to submit estimates of expenditure on displaced persons from the former Yugoslavia. Three authorities have qualified, and will receive a total of £80,000 under the scheme.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

Personally, I welcome the principle and practice of allocating a special grant to those authorities with a substantial number of displaced persons—as, I am sure, do most hon. Members. We certainly have people from the former Yugoslavia very much in mind. However, has the Secretary of State thought about the case of displaced Somalis, a substantial number of whom have come to the United Kingdom during the past 12 months and more—and people from other communities? Is he prepared to consider the extension of the principle to other displaced communities that impose substantial costs, particularly on London?

Photo of Michael Howard Michael Howard Secretary of State for Environment

I think that the problems that arose as a result of the entry into this country of displaced persons from the former republic of Yugoslavia related to this year's settlement; but I can certainly give the right hon. Gentleman the assurance for which I think he was asking—that, in the context of our thorough examination next year, in the light of the new information available from the census, we will consider the point that he has raised, among many others.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

The displaced persons in London are certainly not Yugoslavs: they come from countries such as Eritrea, Somalia, Zaire and other African states. Hillingdon, which contains Heathrow, has had to deal with the problem of displaced African children. Will my right hon. and learned Friend ensure that the Bellwin formula applies to them?

Photo of Michael Howard Michael Howard Secretary of State for Environment

My hon. Friend need wait only a matter of seconds before he has the answer to his question.

The scheme in the special grant report to which I have referred relates to expenditure incurred in the current year—1992–93. I am pleased to be able to announce today that we intend to operate a similar scheme for 1993–94. My Department will shortly be writing to local authorities, and I shall be seeking the House's approval for next year's scheme in due course.

I am pleased pleased to announce today—this will be of particular interest to my hon. Friends the Members for Ruislip-Northwood (Mr. Wilkinson), for Uxbridge (Mr. Shersby), for Hayes and Harlington (Mr. Dicks) and other hon. Members—a related scheme to apply for the coming year in respect of another small group who place a disproportionate burden of costs on a small number of authorities. That may also be of interest to the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I refer to the unaccompanied refugee children who arrive from time to time at the major ports of entry into this country and who become an immediate burden, usually on the authority in whose area they arrive.

Over time, the presence of these children in an area is reflected in the SSAs, but those assessments rely on data collected nationally and are therefore subject to inevitable time lags, whereas the costs imposed by these children are at their highest immediately after their arrival.

We therefore think it right to introduce a special grant scheme, also along the lines of the Bellwin scheme, to assist authorities in these circumstances. My Department will be writing to authorities shortly to obtain the information that we need as the basis for the scheme, and I shall bring a special grant report to the House in due course.

These special grants are one more token of the Government's commitment to ensuring that local government is properly—not extravagantly or disproportionately—financed for the coming year. We have provided for overall levels of spending and grant which reflect the constraints on public spending overall, but which should be sufficient to ensure that efficient authorities can continue to provide a good standard of service for their local people. We have gone to great lengths to ensure that the distribution of revenue support grant will be fair. We have listened hard to authorities' views on their notional amounts, and have taken them into account whenever we could. We have also borne in mind the impact of the overall settlement on council tax payers. I commend the settlement to the House.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment) 4:52 pm, 3rd February 1993

The speech that we have just heard was remarkable for one extraordinary omission: at no stage during the course of a half-hour speech did the Secretary of State refer to the serious loss of public services which will occur across the country or to the thousands of jobs that will unquestionably be lost as a result of this settlement—a matter to which I shall return in a moment.

Central Government in Britain now have more complete control over local government than at any time this century—more than is exercised in almost any other western parliamentary democracy. As other nations seek to draw strength from the diversity of their local communities and go down the path of greater devolution of power, in Britain since 1979 the process has inexorably worked the other way. In thirteen and a half years, 152 Acts of Parliament affecting local government have been introduced by the Conservative Administration. Not only has power over levels of spending been transferred to Whitehall; so, too, have many functions. We are moving, by means of this process, from the elected to the unelected state.

The Conservative party, once committed to cutting down on non-elected quangos, has made them stronger than ever before. Elected councillors have been removed from any role in health authorities, water authorities, further and higher education, most of training and probably soon the police. Instead, we have boards of cronies, appointed by Ministers and usually unaccountable either to Parliament or to local people. A recent survey by the Financial Times showed that unelected members of quango boards are now responsible for a fifth of all public expenditure—at £42,000 million, more than the total spending of local government, and a figure which has increased three times since 1979.

Ministers themselves know that this process has led to a considerable loss of local democracy. That is why, at each stage of the process, they have tried to play down the full impact of the powers that they have sought. Thus, the Secretary of State when he was a Minister of State had this to say on the capping powers taken in the 1988 Act: We have made it clear on more than one occasion that we see the capping power introduced in the clause as a reserve measure". He added that there was a need for a reserve power, rarely if ever to be used, to protect charge payers in an area against extreme cases of extravagant or irresponsible local authorities, but went on, for good measure:

The people of an area certainly will be able to vote for a relatively high-spending authority if they so choose."—[Official Report, 25 April 1988; Vol. 132, c. 51.] Five years on, the capping regime now affects not just a handful of allegedly reckless, extravagant or irresponsible local councils but virtually every council in the land—Conservative, Labour, Liberal Democrat or Independent—the vast majority of whom are responsible, diligent and careful.

Photo of Mr Patrick Nicholls Mr Patrick Nicholls , Teignbridge

In the light of the hon. Gentleman's concern, will he, as a resident of Lambeth, take this opportunity to condemn Labour councillors who are content to take their attendance allowances but do not get around to paying their community charge?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

Yes, I condemn any councillor who does not pay the community charge, as I always have done and always will do.

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

Does the hon. Gentleman agree that the greatest benefit that a local authority can give its constituents is value for money? That is the best possible service. Will he therefore condemn local authorities under Labour control which appear to regard providing value for money as bottom of their list of priorities?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The desire for value for money is shared across the political spectrum. As they learned to their cost last Wednesday, Conservative Members should stop trying to remove the mote from other people's eyes and examine the beam in their own. When it comes to inefficiency, lack of services and many other less acceptable practices, the Conservative party in local government—and, above all, in national government—knows no peer.

The Secretary of State quite reasonably asked me what the Opposition would do in the circumstances. I shall set out our case against the position that he has outlined. The consequence of the universal capping regime is a loss of local democracy and discretion, and this year the loss of key services to the public and of the jobs which underpin those services. I shall deal with the effects of the cuts in a moment, but I wish first to ask whether the loss of local democracy and discretion and the high degree of central control are justified in terms of the good management of public spending and the overall conduct of economic policy. The contention that they are so justified, after all, lies at the heart of the Government's case.

What central Government provide to local authorities by way of revenue support plainly has to be cash limited, and should be distributed fairly under a formula which takes proper account of local needs and resources. That is not at issue here. In our view, however, the local tax base should be wider and should include the non-domestic rate, as it did before 1990. Secondly, what each council raises from its local tax base should be a matter between it and its electors, but with greatly improved mechanisms, such as those that we have proposed, for annual elections and for holding councils properly to account before their final budgetary decisions are made.

Three arguments are used against this proposition. The first is one of definition. It is said that what local government spends from its own resources is part of overall public spending. Central Government have a responsibility to control all public spending. Ergo—so the argument goes—central Government must control local authorities? total spending. That is a circular, tautologous argument in which the definition determines the policy. I wish to consider the underlying policy. Is there any need, even in narrow national accounting terms, for local authority self-financed spending to be part of total public spending for control purposes? The answer—not just from the Opposition but from none other than the Prime Minister when he was Chief Secretary to the Treasury just a few years ago—is no.

In 1988, as part of a reform of public spending, the Prime Minister, then Chief Secretary, published a White Paper quaintly titled, "A New Public Expenditure Planning Total". In that, as a matter of policy, he said that self-financed local authority expenditure was to be excluded from the planning total. The arguments in the White Paper were extremely cogent. The document said that mixing central Government spending with local government self-financed expenditure ?blurs the status of the various aggregates … and leads to insufficient attention being paid to central Government grants.? Paragraph 9 said that the purpose of this and other changes proposed in the White Paper was to increase local responsibility and accountability.

Paragraph 20 of the White Paper dealt with the issue of what might happen if central Government felt that overall local government expenditure was growing too rapidly. It stated: ?the Government would need to consider whether to take action to moderate the growth of spending within the planning total, whether its own spending or grants to local authorities?. There was no suggestion in the scheme set out in the White Paper that capping would have any role to play.

The White Paper also gave the lie to the second and more substantial argument in favour of control—that a failure by central Government to exercise control could lead to excessively high local taxes which in turn, to echo the Secretary of State a few years ago, would drive away businesses and jobs through higher rates. That was a familiar argument in the last decade and it led to the fiasco of the poll tax and to the Conservative party almost falling on its sword. There was never any evidence to support it, nor is there such evidence from any of our competitors.

Much of the disparity in the level of rates and council tax has reflected not differential levels of spending, but bias and distortion within the grants system which magnify those differences out of all proportion. Even where higher tax rates accurately reflect higher spending, it does not follow that the higher spending and higher tax rates will have a detrimental effect on the local private economy.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman is engaging in a completely misinformed tirade against capping. Why was it his party's policy at the last general election that the expenditure voted by the assembly which Labour proposed for Scotland should be capped while spending for local government would not?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The answeer is simple. It relates to judgments and the degree of discretion—[Interruption.] We are arguing about the discretion that particular institutions should be allowed. There is no point in the Secretary of State trying to avoid the issue. His Prime Minister put his name to the White Paper from which I have quoted. It objected to any capping and said not only that the amounts should not be collected, but that local authorities? self-financed expenditure should not be subject to central control.

The evidence against the Secretary of State?s case includes a major study conducted by the Department of the Environment in the mid-1980s. The Department objected to our claim that there was no necessary connection between higher rates and jobs, as Conservatives claimed, and spent £50,000 on a major study by the university of Cambridge. It then tried to suppress the study's conclusion that there was no connection between the level of rates and job losses and that in manufacturing there was some evidence the other way.

Photo of Mr Graham Riddick Mr Graham Riddick , Colne Valley

The hon. Gentleman spoke of value for money, but I recognise that he may not want to answer questions about that. Did he see the article in Saturday's issue of The Times, which reported that Hackney council had rejected a bid from Costain plc which would have saved the council £2 million over three years in favour of a bid from its own direct labour organisation? Can the hon. Gentleman possibly justify that?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I did not see that issue of The Times or that report. Has the hon. Gentleman seen the well-publicised report about Conservative-controlled Brent, which shows that the district auditor has roundly criticised Brent council for awarding, without proper explanation, a tender for refuse collection which was £1 million above the lowest tender?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

No.

A large part of local council spending, either directly or indirectly, underpins the local private economy. If one is reduced, the other is reduced—especially at times such as this when there is enormous spare capacity in the economy and when no "crowding-out" arguments can possibly be made.

Contrary to what the Secretary of State thinks, I asked the present Chief Secretary to the Treasury what judgments the Chancellor of the Exchequer made about the effects on employment, prices and the balance of payments of an additional £2 billion of local authority revenue expenditure financed by local taxation or, for example, by additional revenue support grant. If the Treasury's view is the same as that of the Secretary of State—that any increase in spending is bound to undermine the local economy—the Chief Secretary would reflect that view.

However, from the Chief Secretary on 11 of January came a piece of classic gobbledygook. The Treasury has no view on this. He stated: ?The effects on levels of employment, prices and on the balance of payments of the measures mentioned would depend on a number of assumptions about economic behaviour at both national and local level as well as the precise effect of these measures.?—[Official Report, 11 January 1993; Vol. 216, c. 547.] There was no suggestion whatever that higher spending by local authorities would somehow undermine the local private economy. The Secretary of State and the Treasury know that, in general, higher spending by local authorities, particularly during a recession, supports the private economy and does not undermine it.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

My hon. Friend talks about expenditure by local authorities. On 22 November in replying to an Adjournment debate, the Minister did not deny my charge that a £10 million fraud was perpetrated on the London borough of Newham due to the statutory arrangements for SSAs. The borough has to pay about £30 million in loan charges and the SSA is about £18 million, leaving a deficit of more than £10 million. As education is roughly half the cost of local authority services, we are having to cut the education budget by about £5 million below the standard level of service SSA that even this mingy Government think necessary. That £5 million is just money, because the greater part of the capital expenditure was given the okay by the Government, so the £5 million cut is to the detriment of the children and the people of Newham.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

My hon. Friend makes a cogent case. His example in Newham is one more example of the way in which the SSA system has been stacked against inner-urban and Labour authorities. I shall return to that.

It does not remotely follow that cutting local authority expenditure in the midst of recession will save the Exchequer any money. The Secretary of State was studious in his refusal to mention jobs during his half-hour speech, but we know that thousands of jobs will go as a result of the settlement. For every 10,000 job cuts in local government, which will lead to an equivalent rise in unemployment, the Exchequer cost—not the saving—will be £900 million in benefits and lost taxes, to which must be added additional cost to local government as demand-led services such as free school meals and housing benefit come under further pressure from families whose breadwinners no longer have jobs.

Overseas evidence overwhelmingly supports our case and not the Government's. That was confirmed by the White Paper about which the Secretary of State looks so puzzled. As I have said, the White Paper was issued five years ago, was signed by the present Prime Minister and argues against the Secretary of State's case. Paragraph 8 states: ?Very few other industrial countries plan public spending in this way?— that is, by including local authority self-financed spending. ?For federal states, such as Germany, the United States or Canada, this would conflict with their federal constitutions. But even in other unitary states such as France or the Netherlands the Government generally makes budgetary plans only for central government expenditure.?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

No, I will not give way. I think that I have given way enough for the moment. If they catch my eye later, I will give way to both hon. Gentlemen.

Although the local authority spend of the other countries that I have mentioned is not controlled, there is no evidence that they have done less well in terms of output, growth, exports or employment. How could there be such evidence when, since 1979, virtually every other OECD country has performed better than the United Kingdom according to every indicator that matters?

The third argument against the Secretary of State?s policy of centralisation is that it has not worked in its own terms. In any one year—as in this year—an unrealistic settlement can and will produce severe cuts in jobs and services, and considerable local dislocation. There is little evidence, however, that over time the panoply of controls has kept spending below its trend line—very much the reverse.

In July, the Local Government Chronicle—a paper whose views the Secretary of State is keen to quote when it suits him—published a detailed research study carried out by the London school of economics research unit, which showed that budget capping had ?led to higher spending by councils, the opposite result to that intended?. It went on to give a number of cogent reasons for that apparently perverse consequence.

For instance, had the Government left well alone, there would have been a normal, broad distribution of spending patterns, with some councils spending above the norm and others spending well below it. The removal of local discretion has now put pressure on all authorities to spend at least at SSA levels in each service; when they do not, other Ministers—such as the Secretary of State for Education—are often the first to complain, thus adding to the incentives for councils to spend up to the norm even if they do not wish to do so.

I will quote the views of two Conservative councils. In The Independent of 28 January, Ernest Mallett, leader of Elmbridge district council, described the capping system as a ?joke? which encourages councils to ?spend up.? He added:

?If there was no capping our spending would probably be about £1 million lower?. A curious position exists in Conservative-controlled Northamptonshire. Some county councils have done extremely well out of the SSA system: they are all Conservative-controlled. Northamptonshire is providing for 200 extra jobs and growth of £4 million as it seeks to spend up to SSA level. Central controls have undermined local accountability in two ways: power over budgets has been removed and, with that removal, the responsibility of local councillors to their electors has become "seriously blurred", in the words of the White Paper.

A third Conservative authority, Woking, says: ?Capping has removed the ability of elected councillors to pay for services that local residents want and have voted for.? We want local accountability to be increased. The amount of grant should be transparent; more important, the budget process should amount to the striking of a bargain with the local electorate in each and every year. For that reason, we want annual elections to be held in every council, on a three-year cycle, with a much-extended budget period. Such a system would restore local democracy, and would be unlikely to lead over time to larger increases in total spending than would otherwise result.

Photo of Mr John Bowis Mr John Bowis , Battersea

Does the hon. Gentleman accept that local government is there not as a job creation scheme but as a provision of service scheme and that the efficient provision of services comes from efficient spending of resources? Lambeth, the borough in which he lives, receives 50 per cent. more central Government grant than neighbouring boroughs, including my own borough of Wandsworth. Does he accept that he receives lower levels of service in Lambeth because some £10 million has been wasted in fraud, because £185 million has been wasted in the non-collection of rents, rates and charges, and because 40,000 community charge bills have not even been sent out? Does he accept that the rest of us are not prepared to subsidise Lambeth and that that is why Lambeth needs to be capped—so that the charges can be kept down for everyone's benefit?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I want to see efficient councils everywhere, whether they are Conservative, Labour, Liberal or independent. We defer to no one in our pursuit of efficiency, and in our endeavours to root out corruption and fraud.

The hon. Gentleman has made an important point. However, we have argued for years—indeed, about four years ago my right hon. Friend the Member for Copeland (Dr. Cunningham) and I introduced a Bill to this effect—that capping is not the way to increase accountability. Nor can it be increased by the use of SSAs which, even in a perfect world, are bound to involve a large arbitrary element. I am thinking particularly of London boroughs, which hold all-out elections only every four years, without the intervening elections which used to be held under the old Greater London council. The answer is to hold annual elections on a three-year cycle, which would enable the electors of Lambeth to vote their council out of office if they felt that they were not receiving appropriate services.

I should point out to the hon. Member for Battersea (Mr. Bowis) that in 1990, when Lambeth last held elections, the electors—contrary to all his predictions—voted in favour of Labour's retaining control.

Photo of Eric Pickles Eric Pickles , Brentwood and Ongar

The hon. Gentleman said that we must consider the number of redundancies in local authorities, and talked specifically of tens of thousands. Will he give us his estimate of the number of redundancies that local government will face?

Photo of Eric Illsley Eric Illsley , Barnsley Central

Recently, we have heard comments about London boroughs subsidising other London boroughs. Why should local authorities such as mine subsidise the Wandsworths and Westminsters, which charge practically no community charge? Never mind Lambeth—what about the Wandsworths and Westminsters that my local authority is subsidising to a far higher tune?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

My hon. Friend is right. No one who believed in a fair system of grant distribution could possibly justify the outrageous position that has arisen in Wandsworth and Westminster. Wandsworth charges no poll tax at all, and Westminster only a tiny one.

The fact that the current system of centralised control serves no economic utility makes the consequences of the Secretary of State's policy all the more gratuitous, and all the less acceptable. Make no mistake: there will be cuts in services, and many jobs will be lost. Local economies will suffer, and unemployment will rise in the areas affected. This afternoon, the Secretary of State tried to make light of the coming cuts: he referred to ritual protests, in words similar to those that he used on 26 November. I see Secretary of State nodding in agreement.

Fifteen months ago, as Labour's education spokesperson, I said that cuts already taking place in local government resources would lead to larger classes in schools. At the time, Ministers—including the present Home Secretary, who was then Secretary of State for Education—derided my claims. Who was correct? An article in Monday's Financial Times reported that secondary school class sizes had "increased sharply", and that ?in 48 metropolitan local education authorities … the pupil-to-teacher ratio … worsened by 0.5 or more pupils per teacher between January 1989 and January 1992. In only seven metropolitan LEAs has the ratio remained steady. In not one has it improved by more than 0.5. In some inner-city areas?— in Knowsley, for example— ?the deterioration in the three years completely wiped out the gains of the previous 15 years.? In Newham, north Tyneside, Rochdale and Walsall, class sizes have worsened as a direct result of the Government's policy.

Photo of Michael Howard Michael Howard Secretary of State for Environment

Has the hon. Gentleman noticed that the dates covered by that article are not those covered by his prediction?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

No. My predictions were based on what was already happening in 1990, as the Secretary of State well knows.[Laughter.] I do riot know why the Secretary of State is laughing; it is not a laughing matter. The situation is becoming worse and worse.

There is a similar picture in the shires, with 14 shire counties showing large increases in class sizes, the largest being in Derbyshire. The author of the research report on which the official figures are based commented:

?Restrictions on local authority spending seem to be the main cause of the sharp deterioration.? One of the Secretary of State's great weaknesses is his capacity for self-delusion. It has been one of the few consistent characteristics of his political career. When he trumpeted his settlement to the House last November, he may even have believed what he was urging on the rest of us. His message then was that there would be no job losses, and he repeated it in a letter to me dated 17 December. He stated categorically: ?There is certainly no need, as you suggest, for authorities to cut their staff as a result of my proposals for the 1993/94 settlement.? Nothing could be more categorical. He said that there was no need for cuts, but there will be cuts. They will be worse in Labour areas, but they will also be bad in many Tory areas. The list is endless.

This morning I published a list covering 80 authorities. One thousand redundancies were announced in Birmingham yesterday. Many thousands of jobs are bound to go. So will the Secretary of State retract what he said? Is he now saying that the levels of employment in local authorities will be the same next year, as he said in the letter? In the light of the overwhelming evidence, is it not time for him to admit that what he told me in December was wrong?

Photo of Michael Howard Michael Howard Secretary of State for Environment

Will the hon. Gentleman withdraw the statement that he made a moment ago, that 1,000 redundancies were declared in Birmingham yesterday? That is not what happened. It was a prediction by Birmingham city council of what was likely to happen as a result—it said—of the budget that it had set. It made it clear that it was not expecting compulsory redundancies. The prediction falls into exactly the same category as, for example, the county of Avon which began by predicting that the settlement would cost 4,000 council employees their jobs but now says that there might be 170 voluntary redundancies.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I notice that the one point that the Secretary of State did not answer was whether he now stands by the declaration that he made in December that there would be no job cuts.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

No. I have already given way.

The Secretary of State's argument is as absurd as if the Secretary of State for Trade and Industry had told the House that the 31,000 job losses in the mining industry did not matter because most could be implemented through voluntary rather than compulsory redundancy. A job lost is a job lost: it represents one more person on the dole, and the Secretary of State should know that.

It is no good the Secretary of State trying to pretend that the settlement is sufficient, doing his usual three-card trick with the numbers and telling us that if one compares last year's settlement with this year's there is obviously enough money. It is no good because the base figures have no reality. To decide whether authorities will have to make cuts, one must compare what authorities are spending this year with what they are to be allowed to spend next year. On that basis, authorities are £200 million short in cash compared with this year.

Many are worse off than the figures imply. It is time that the Secretary of State understood that. If he does not want to listen to the Opposition and to Labour authorities, he should at least listen to other Conservatives. For example, he should listen to John Vereker, the Conservative leader of Warwickshire county council, who, when asked on Radio 4 on Monday night whether local authorities should not consider their bureaucracy, said that it was fine for the Government to lecture but that it was ?just a pity that the government itself couldn't do the same. For example in the Department of Education and Science their figures have gone up and up?— for central Government spend—

?far higher than the rate of inflation. They've been able to move into three huge gold plated office blocks in the most expensive parts of London. at the same time as putting quite unrealistic pressure on the classroom and in schools where money was really intended by the taxpayer or the ratepayer to be spent.? In complete contradiction of what the Secretary of State has been trying to tell the House, the Conservative-controlled London Boroughs Association said in the opening paragraph of its commentary on the settlement: As a result of the government's proposals for the 1993–94 revenue support grant … most Londoners will face the prospect of reduced services and/or higher bills for those services.? That is the truth of the settlement.

I deal now with the distribution of the standard spending assessment. Labour controls virtually every large city and town in the country, including all the areas of greatest social need. In view of that, we might have expected some even-handedness in the grant distribution but that was not to be.

On average, the 120 Labour-controlled authorities are to receive an increase of only 2.5 per cent. in their SSA while the 115 Conservative-controlled authorities will receive 3.3 per cent. Surprise, surprise—with the county council elections coming up in May, what do we find? Of all the categories of authorities, the disparity between Labour and Conservative county councils is greatest. The eight Labour councils receive only 2.2 per cent. extra. The 19 Conservative-controlled shire councils receive 3.7 per cent. There is not one Labour county council with an SSA increase above the average in the first 18 in the list.

Staffordshire, Northumberland, Derbyshire, Humberside, Lancashire, Cleveland and Durham are all Labour-controlled and all face acute budget difficulties because of discrimination. In none of those areas are the difficulties of their own making. The Secretary of the State has the cheek to suggest that it is those councils' responsibility that the council tax there will be higher. He is the man responsible for the fact that council tax there will be higher, because of the way he has gerrymandered the SSA system.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman must know that by far the biggest factor in those changes is population change. Is he seriously suggesting that we should not have used the latest population figures from the 1991 census?

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The Secretary of State was the master of the poll tax, and he was the one who went around the country—

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I am, I am. The Secretary of State should know that one of the consequences of the poll tax—the tax that he said would be the fairest and the best—is that the number of people registering for the electoral register and for the census is down. The right hon. and learned Gentleman knows that. There has been massive under-registration for the census. That evidence is known to his Department, but he refused to take it into account.[Interruption.] The Secretary of State says that that is so in counties controlled by the Labour party; it is a matter of record that the problem of under-registration is most acute in larger cities and towns—and we control the larger cities and towns and the counties with the largest urban populations.

Photo of Michael Howard Michael Howard Secretary of State for Environment

Will the hon. Gentleman calm down and consider the facts? We are talking about counties, not inner-city areas. Is he seriously suggesting that people have removed themselves from the register in Labour-controlled shire counties but not in other counties? That is an absurd proposition.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

It is not absurd at all. If the Secretary of State had any knowledge of the geography of this country, he would know that Labour-controlled shire counties are more urban than the Conservative-controlled shire counties. They contain major cities such as Bristol, Hull, Leicester, Derby, Nottingham and Preston. There is a much higher propensity not to register, especially among young people, in those areas than in areas with more stable populations. That is a fact.

The Secretary of State mentioned population loss. There has been an element of population loss but—surprise, surprise—Richmond and Wokingham, which are both Conservative controlled, receive a population loss grant while Islington and Camden which are Labour, do not.

The all ages social index rates Bournemouth as more deprived than Barnsley, Watford as more deprived than Wigan, and suggests that the Prime Minister's Huntingdonshire has poorer social conditions than Chester-le-Street. Is the Secretary of State going to say, on that evidence, that it is a fair system in which there has been no political gerrymandering? Dudley is told that it has £1,722 to spend on each primary age pupil, but Bedfordshire is allowed £250 more. Barnsley is allowed only £1,793 per pupil, but the Secretary of State's Kent—on no basis more deprived or in greater need than Barnsley—is given almost —100 more. I could go on and on. There is scarcely a service area where the data and methodology used are sufficiently robust to run a grant distribution system simply.

What makes matters so much worse is that the convoluted, contrived and politically distorted system is then used as a control on total spending, as the base line for capping and, through gearing, becomes one of the principal factors in the level of the council tax. We do not yet know what the level of the council tax will be in each authority, but we can be certain of one thing—it will be far in excess of what the Government pretended that it would be during and before the general election campaign.

In 1991, the right hon. Member for Henley (Mr. Heseltine) predicted the council tax levels for each council area. He said that the average for the country would be £400 for band D. That was the basis of the Government's claims for the council tax before the election. Uprated for inflation, that £400 will be £428 in April of this year. However, as the Secretary of State is aware, since he quoted the Local Government Chronicle survey with great approval, the band D figure will not be £428 or anything like it. According to the Local Government Chronicle, the band D figure will be £550. That is £122 more—nearly a quarter more—than the figure that the right hon. Member for Henley and his right hon. Friends were peddling around the country before the election.

Higher council tax bills will be a consequence of the settlement. A second consequence will be further centralisation of power and a loss of democracy. Thirdly, many thousands of jobs will be lost. Fourthly, and most seriously, there will be a reduction in the public service that councils provide to individuals and communities across the land. That will mean shorter hours of libraries, the closure of residential homes for the elderly, higher charges for meals on wheels and home helps, larger classes and fewer policemen on the beat than what is necessary.

That is a policy without purpose—a policy so wrong-headed that it will increase unemployment and the borrowing requirement, worsen the recession and harm the very services on which the victims of the recession most rely. The policy is partisan and prejudiced, and we oppose it: it will not do.

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow 5:31 pm, 3rd February 1993

I do not pretend for a moment to be a great expert on local government. In fact, I last made a speech on the subject 10 years ago—[HON. MEMBERS: "Sit down, then."] Hon. Members may say, "Sit down," but I know injustice and unfairness when I see it. I know when my town faces a total catastrophe because of the complete and utter incompetence of Labour-controlled Harlow council.

For years, I, the district auditor and my colleagues on the Government Front Bench have been warning the local authority members that, unless they gained control of their spending and put it on a gradual downward path, there would be job losses, capping and a disaster for the services in my town. Just before the general election, they capitalised £17 million-worth of receipts. Their standard spending assessment is approximately £7 million, but they have been spending a budget of £26 million. Because, for some amazing reason, they believed that the Labour party was going to win the general election, they blew their reserves and spent all the money.

Photo of Roger Berry Roger Berry , Kingswood

Will the hon. Gentleman give way?

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

No, the hon. Gentleman must be patient. I have some very important points to make, which involve jobs and services that may be lost. If the hon. Gentleman will forgive me, it is my job to try to support the people in my town. I do not want to make general party political points. I want to deal specifically with Harlow and how it is being affected by the Labour party there.

It was particularly interesting that the hon. Member for Blackburn (Mr. Straw) spoke about value for money. He and I were born and bred just a few miles from each other. From his knowledge of the history of the area, he knows that Harlow council has been spending year after year.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Just like Lancashire.

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

As my hon. Friend has said, just like Lancashire.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

In the first eight years of Labour control, Lancashire increased its spending by 176 per cent., and it is still rising.

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

As usual, my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) has made her point eloquently. She always looks after her constituents with great aplomb.

I would like to consider what is actually happening in Harlow. The truth of the matter is that the sky is black with Labour chickens coming home to roost. It might be helpful if I were to paraphrase some of the points made in a report by the Conservative group on 15 December 1992. The report stated: The Labour run council have built up a reputation for its quasi welfare state, in that it has to provide everything in the town … The result is that virtually every service in the town has a Council influence. All primary health facilities are provided in designated health centres, now owned by a Council funded trust. Apart from a bingo hall, a night club and the sports centre, all leisure facilities are council owned and run. A high profile Harlow Council for Voluntary Services … has almost nationalised the voluntary sector. I wholeheartedly support that splendid organisation. I do not want to see it go to the wall because of the incompetence of the Labour party in Harlow. The report continues:

Most voluntary organisation are Council-funded and have councillors involved in their running, to the extent that many voluntary bodies are reliant on district council funding to pay their salary bills. I will now deal with the recent financial position. The report continues:

For the past three years, since the introduction of the Community Charge, the council has funded approximately half of its General Rate Fund expenditure of around £24 million (against an SSA of approximately £7 million) through the use of capital receipts, interests and reserves. By 1993–94, the available reserves will be all but exhausted. The majority party do not have a strategy for dealing with this situation, apart from a very strong belief that Labour were going to win the general election. Never mind what I and the Tory party say; what did the district auditor say in his most recent report? He said: The financial health of the Council continues to be a cause for concern. If ever there was an understatement, that is one. The district auditor continues: In recent years, revenue expenditure has been supported by the use of reserves with the result that the general reserve balance has been reduced to some £12.2 million at 31 March 1992. Use of reserves at the current rate will exhaust the general reserve by 31 March 1993. That spells total and utter disaster. It means the possibility of hundreds of decent people losing their jobs.

In the face of that, what does the Labour group in Harlow want me to do? The members of that group want me to go to my right hon. and learned Friend the Secretary of State and say, "Let's have some more money." They want me to ask for more money, after so much has been squandered over the years. If any money is forthcoming, it will not be money from my right hon. and learned Friend or from the Treasury: it will be money from people in Harlow. The whole point of the cap is to protect the people in Harlow. They will have to pay.

I would love to be able to go to my right hon. and learned Friend the Secretary of State

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

I ask the hon. Gentleman to be patient. Although Barnsley may be very close to Harlow, I want to raise some important points that directly affect my constituency.

If the people in Harlow Labour party, who are entrusted with controlling the finances for the people in the area, had not spent their reserves in keeping the community charge down, it would have been £543 per person as opposed to £301. If my right hon. and learned Friend said, ?Right: we won't have a cap—I?ve changed my mind, because of the disaster that might happen,? the community charge this year would be much more than that figure. The council tax for a band D household would be more than £1,300 this year. That would completely crucify people who are on the breadline.

I do not mind going to my right hon. and learned Friend and his Front-Bench colleagues and saying, ?Look, the cap will have a tremendous effect on many of my constituent—on those who have worked hard for the community, on the voluntary and front-line services, and on the playhouse. Many important organisations are at risk. We need some breathing space.? I cannot ask my right hon. and learned Friend for that breathing space unless I have radical proposals from the Labour members who are in control.

Let us bring in the consultants. I asked councillors to do that years ago, but they refused. They said, ?We are one of the finest-run councils in the country. We don't need to bring in consultants.? I said, ?Let us listen to what the district auditor said and let us bring value for money,? but, no, none of that was to happen.

There have been damning reports from the district auditor, and there have been damaging reports from the treasurer who was mysteriously sacked. There were damning reports from the general manager, who said that no one has a grip on management in Harlow town hall. There have been restrictive practices after restrictive practices, and the trade unions have had far greater sway outside than they should have had.

I have been trying to urge Labour, Conservative and Liberal Democrats groups to put aside their party politics and sit round the table.[Laughter.] Opposition Members laugh, but, heavens, I have been trying to do that without much help. Let us have some radical solutions—but, no,all Harlow councillors want is more and more money. If I were a compulsive gambler who had just lost all my winnings on the last horse, it would be like going to my bank manager and asking for an overdraft so that I could put the rest of my money on a horse. How can my right hon. and learned Friend do that? We must get round the table and put forward radical solutions. ?Impossible, absolutely impossible,? they say. It is not impossible.

I shall make one or two suggestions. Of course they are pooh-poohed in the local newspapers every time I make them, but the councillors have something called democracy and—what is it called?—decentralisation, which means mini-town hall. Of course that saves lots of money, so we are told, but what does the district auditor say? He says: ?The Council is currently undergoing a period of reorganisation with the proposed creation of the Neighbourhood Committees and Offices. Although the General Manager has assured us that the reorganisation will generate savings, costings have not been produced to show how this will be achieved. Any additional costs will place extra pressure on revenue budgets.? You bet, Madam Deputy Speaker. It has cost £1.2 million.

We hear that the Labour group is to set a budget which will be well above the cap. We know, although we cannot prejudge anything that happens in court, that there is a very good chance that the cap will remain as it is. It means that people in Harlow will have to be re-billed. It will cost £200,000 to re-bill people because of a hopeless political exercise.

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

The hon. Gentleman has been most patient. Of course I give way to him.

Photo of Eric Illsley Eric Illsley , Barnsley Central

Does the hon. Gentleman recall that, when the Chancellor reduced community charge bills by £140, every local authority in the country had to re-bill at a similar cost? It seems rather silly the hon. Gentleman complaining about re-billing, when the Government brought about re-billing in every local authority throughout the country.

Photo of Mr Jerry Hayes Mr Jerry Hayes , Harlow

I knew that I should not have given way to the hon. Gentleman. He is a great expert on local government; he could have done much better than that. The hon. Gentleman knows that there was a great shout of relief in respect of that £140. People did not begrudge it. They were very pleased indeed, and they were certainly very pleased in Harlow.

What makes me so angry is that we have emotive campaigns about Kingsmoor house, a magnificent institution which looks after children who have been abused. It gives excellent support to people who are most in need. We are told that, because of the wicked Tory Government, it will be closed. Do you know, Madam Deputy Speaker, how much it costs to keep Kingsmoor house open? It costs £200,000 a year—precisely the same amount of money that is to be squandered on a silly party political exercise by the Labour party in Harlow. That is the depth that those councillors are sinking to.

Let me deal briefly with the report to which I alluded on the recent financial position. It goes on to state: ?by 1993–94, the available reserves will be all but exhausted.? We have heard that from the district auditor. It goes on: ?The majority party do not have a strategy for dealing with this situation, apart from a very strong belief that Labour were going to win the general election. Financial reviews by the Council have occurred over the past two years in order to contain spending at £24M, which has only served to prevent inflation from increasing its actual expenditure. Efforts at saving £1.5M (90–91) and £2.0M (91–92) were only partly successful, as a result of additional monies becoming available during the year. There has been no sustained effort to reduce or moderate expenditure.? The local Labour party is saying that, because my right hon. and learned Friend has quite sensibly introduced the unified business rate, money is being stolen by the Government. Of course, business men remember the days when Harlow council used to fleece them. Until the introduction of the community charge UBR, Harlow had the highest poundage rate in the country—91p. That is what it meant to businesses in my constituency.

Let us deal briefly with the capital position. The auditor?s report—it is not disputed by the district auditor—states: ?In 1988–89 and 1989–90 housing maintenance costs were capitalised to the extent of £17M.? We are talking about a political authority with an SSA of approximately £7 million. The report goes on: ?The overall effect of this was to transfer Right To Buy proceeds from housing capital to revenue reserves, to support revenue spending in future years. With the current financial regulations, this was resulted in £4.2M of debt charges falling to the? general rate fund ?instead of £0.771M.? That is the amount of money that we should be paying.

The hon. Member for Blackburn has sensibly left the Chamber and is doing other things. He said that he believed in value for money in local authorities, and that local authorities under Labour control did exactly the same thing. We should hear about what Harlow Labour party has been doing for compulsory competitive tendering. The report states: ?Although a number of Council services have gone out to tender, the Labour Group have ensured that the contracts are unattractive to external bidders. Many bids received have been inflated to cover the cost of monitoring the work carried out, an excess which was not applied to the in-house bid. The use of Council facilities and vehicles have been denied to prospective bidders. Leisure facilities have been block booked to community groups at prime times when they could attract premium rates.? That is what is going on in Harlow at the moment. The hon. Member for Blackburn talks about value for money. The Labour party in Harlow would not know value for money and decent management if they ran into it and bit it on the leg with a large gin and tonic.

I have suggested time and again that consultants should be brought in, and that there are ways in which savings could be made. We know that the Labour group will have to set up another bidding operation which will cost £200,000. We hear about what is happening with front-line services, we hear about Kingsmoor house and all the great things that the Conservative group and I believe in, but we do not hear about what will happen to the policy unit. Of course the policy unit is party political; it costs only £1 million a year, and the council does not intend to scrap it. That is what is happening.

We must remember the spending that should be going on in Harlow. How much do you, Madam Deputy Speaker, think that Labour councillors spend on information technology? It is £3.5 million a year in Harlow council, with an SSA of about £7 million—just on information technology. [Laughter.] I am sorry that Opposition Members think that that is funny. I suppose that it would be funny if hundreds of people were not going to lose their jobs as a result of that incompetence. The hon. Member for Sheffield, Attercliffe (Mr. Betts) is new to the Chamber, but the squandering that he used to get up to on his local council is well documented. I said that just in case the camera above my head zooms in on the hon. Gentleman laughing—as we can now have reaction shots—at the misery that is being caused by members of his party who purport to look after the interests of ordinary people. Well, they do not.

Having dealt with the policy unit, let me briefly deal with the other excesses. For example, Harlow Labour party gives property rent-free to its pet causes, and council members have all sorts of facilities. I cannot complain too much about that, but I object to the trade union resource centre getting free property at the expense of the poor old charge payer. I resent organisations such ds the workers? rights project getting £80,000 a year out of the hard-pressed people of Harlow.

We spend £400,000 a year on the Harlow playhouse, a wonderful institution where I take my children regularly. It is under threat of closure. The board of management has proposed very sensibly, saving nearly £300,000 a year by putting it out to private tender and creating a joint relationship between private and public enterprise, but the council will not consider it. That is the sorry state of Harlow council.

I support the front-line services, the playhouse, Kingsmoor house and the tremendous work that ordinary people are doing to help those who are frail and vulnerable. Of course it is the frail and the vulnerable who will suffer. We do not hear about the old people's homes that are to close, about Kingsmoor house having to close and about those most in need who will suffer, but they will suffer simply because of the complete incompetence of the Labour-controlled council—[Interruption.] Will the hon. Member for Attercliffe please contain himself? He may think that it is all tremendously funny, but many of my constituents will suffer because of some of the policies of his party that he supports.

I hope that members of the Labour party in Harlow will listen to some of the things that I have been saying and to some of the things that the general manager and the district auditor have been saying. If they do not, they will cause widespread misery to ordinary, decent folk in Harlow who are hard pressed enough.

Photo of David Clelland David Clelland , Tyne Bridge 5:53 pm, 3rd February 1993

The hon. Member for Harlow (Mr. Hayes) asked Opposition Members to contain themselves, but the House will understand their amusement. I was sympathetic with only one point he raised: his suggestion that there should be less party political point scoring at the expense of local government. The fact that he continued at great length with a tirade against his own local authority gave the lie to that remark, but I shall return to that point later.

This year's revenue support grant settlement once again exposes the partisan nature of the Government's local government finance regime. Indeed, it goes further; it exposes the whole nature of the Government's approach to local democracy and the sinister way in which our traditional system of government is being undermined. One instrument which is used for those purposes is the standard spending assessment or SSA, a system which owes more to the prejudices of the Tory party than to any honest attempt properly to assess the needs of individual localities. It is a system which allows the Secretary of State to pick off individual councils and reward others.

Most casual observers would surely conclude that the needs of the people of Tyne and Wear in terms of local government services are likely to be at least as high as those living in the heart of the capital. In fact, given the level of unemployment, the decline of industry and the continuing work to remove the scars of our industrial past, most would conclude that our needs are somewhat greater; yet, according to the Government, Tory-controlled Westminster's needs amount to £1,200 per head of population, while the needs of Labour-controlled Tyne and Wear authorities range from just £661 to £750.

A good example of the partisan nature of the system is the fact that, if Labour-controlled Gateshead were allocated the same level of SSA as Tory-controlled Westminster for just one year, Gateshead's council tax could be set at zero for the next three years. It is not a matter of more and more money, as the hon. Member for Harlow suggested earlier. All we want in Gateshead are the same resources that are being applied to Westminster.

The SSA system provides increased help to areas of higher pay and prices, which would appear to conflict with the Government's policy to restrain public sector pay, yet no recognition is made of the need for better public services in areas such as Tyne and Wear, where low incomes and high unemployment are much more prevalent than in Westminster.

If car ownership is low, there is a need for better public transport, and if people cannot afford golf club fees and private health clubs, there is a greater need for public recreation facilities. However, the system turns that logic on its head, so that the Tory party can direct resources to areas in the south to try to prevent the haemorrhage in its support. The comparison with Westminster demonstrates political manipulation of the system; my hon. Friend the Member for Blackburn (Mr.Straw) drew attention to other examples.

There are other anomalies in the system. For instance, how can a Government who have acknowledged the similarity of the problems faced by Newcastle and Gateshead by creating a partnership area covering both, calculate that Gateshead needs £44 per a head, or £9 million less than Newcastle, to deal with the same problems? When one takes into account the fact that the great city of Newcastle is being forced to cut expenditure by £8 million this year and £12 million between 1994–96, the full scale of the effects of the settlement and the system is realised.

That is due to the inadequacy of the SSA and the fact that it has been reduced by £9 million following the removal of further education responsibilities from the city of Newcastle, although expenditure on those facilities last year was only £6 million. All that will mean reductions in services and increases in unemployment as yet more jobs are lost. The settlement means that more job losses are inevitable.

The magnitude of cuts when male unemployment runs at 40 per cent. in the city challenge area makes the so-called additional funds provided by such special measures woefully inadequate. What is the sense in recognising the special needs of an area by awarding city challenge and then forcing huge cuts in expenditure? The Government are about to correct that illogical scenario by scrapping the urban programme, a measure that will force the closure of thousands of voluntary projects throughout the country and reverse any progress which has been made in the attempts to improve the standard and quality of life in our inner cities over the past 20 years.

Photo of Eric Illsley Eric Illsley , Barnsley Central

Is my hon. Friend's authority in the same situation as mine, as a city challenge authority now having to spend money on implementing city challenge, which is a charge against its rate support grant and its budget, and finding it difficult to maintain now that the urban programme money is being withdrawn?

Photo of David Clelland David Clelland , Tyne Bridge

My hon. Friend draws attention to yet more inconsistencies in the system.

A system which gives with one hand and takes with the other is not helping our localities, and the people who live in the inner-city areas recognise that. People who are active in the inner-city challenge areas recognise that the money that is being given to them is being taken away from others who may he just as needy. It is not a fair or just system.

One of the overriding concerns of people in the city challenge area, on Tyneside and in Britain in general, is the high and increasing level of crime, yet the SSA and capping limits placed upon the Northumbrian police authority in this settlement, will put at risk the effect of combating crime in the area.

The 4.5 per cent. increase in SSA, which itself understates the spending needs of Northumbria, is expected to absorb the full effect of the 1992 police pay award approved by the Home Secretary at 6.5 per cent. It is expected to absorb the increase in the cost of police pensions, which is 10 per cent. of the authority's budget, the increase in insurance premiums, and the increases in national insurance from 1 April.

In a letter to the Secretary of State for the Environment, the police authority has said: ?The implications for policing levels in Northumbria of the provisional RSG settlement are dire. It is no understatement that the progress achieved in recent years is at risk.? Add to this the ending of the urban crime fund and the full scale of the very serious situation now facing our communities is frighteningly obvious.

All this has been pointed out to the Secretary of State, but little or nothing has changed. All the warnings and arguments have fallen on the deaf ears of the right hon. Gentleman, whose Cheshire cat smile perhaps arises from the amusement that he derives from the Chancellor of the Exchequer?s claim in the autumn statement that the RSG settlement should be totally adequate for local government.

The right hon. and learned Gentleman asks where the money would come from to meet the improvements we call for. For a start, he could correct the anomalies to which my hon. Friend the Member for Blackburn and I have drawn attention. Also, he might look at the millions of pounds currently being spent on unelected quangos appointed by him and his right hon. Friends throughout the country.

The inadequacies of the SSA system are now compounded by the anomalies of the council tax system, incidentally. How can it be right that a disabled person living in a property valued at over a quarter of a million pounds can benefit from a reduction in council tax, yet someone else with perhaps even more severe disabilities living in a property valued at only £30,000 gets no reduction? This has serious implications for people living in my constituency, where 65 per cent. of properties are in hand A. It would be the economics of the madhouse if it were just about economics, but of course that is not what it is about, is it?

The overall effect is staggering, with an estimated 33,000 job losses in local government as a result—equal to those which caused such a public outcry, and justifiably so, when the closure of 31 pits was announced last year. Like the threatened job losses in the mining industry, these 33,000 redundancies will have a knock-on effect, so that the overall impact on localities and the national economy will be severe.

All this is part of the Government's strategy to run down local government replace locally accountable elected councils by quangos accountable only to the Government; the octopus method of government, whereby Whitehall extends its tentacles into every corner of the country, eliminating political opposition and strangling local needs and priorities. It is entirely ideological. There is no case for the kind of strict control of locally raised finances which this Government imposed, other than unbridled dogma.

The attacks on local government finances are accompanied by appeals and incentives to opt out of the local government structure, and by restrictions on the eligibility to stand for election by the introduction of the concept of politically restricted posts, compulsory competitive tendering, and so on. The result is that local authorities can no longer respond to the wishes of the people they are elected to serve, but serve instead central Government and the priorities and prejudices of central office. It is a system more at home in pre-war Russia than in 1990s Britain. No wonder all political parties are finding it difficult to attract candidates in local elections.

There is a deliberate campaign by Tory Members to discredit and denigrate local government at every turn. We saw it again last week, when they leaped so eagerly and gleefully on the news of maladministration in Lambeth, and the Secretary of State has been at it again today.

Never in the history of culinary metaphors have so many frying pans called the kettle black. Tory Members could fake virtue for Europe, but if it is their objective to damage Labour local government, it does not work. All that happens is that some of my hon. Friends are provoked into responding with examples of Tory malpractice. These tit-for-tat exchanges, which rarely rise above the debating level of the school playground, result only in damaging all local democracy by grossly exaggerating the extent of malpractice in local authorities, which is no worse than in any other sector of society, especially the Tory party.

It all suits the purpose of those who would further diminish the role of democracy in this country—the real enemies within, who have done more to undermine the faith of the British people in their system of government than could any sinister, well thought out KGB or CIA plot.

New and unaccountable power bases have been encouraged and asssisted to develop over the past 14 years. They can be seen throughout our towns and cities, planning the lives and futures of millions of our people, without any mandate to do so. I remember well the occasion of the Northumberland Plate at Gosforth park racecourse a few years ago. I asked what the small groups of local gentry were gathered together to discuss, and was told that they were deciding who should be the chairman of the training and enterprise council. And so they did, in between the Brown Ale handicap and the Federation cup. How about that for open government?

That is but one minor example of the goings on throughout the country, as the only question that needs to be answered satisfactorily for certain people to be appointed to often well-paid sinecures is: ?Is he one of us??

The RSG settlement continues this centralist trend and the opportunities for real corruption are extended yet again as democratic scrutiny is further watered down. It will do nothing to improve and extend the services on which so many of my constituents rely. On the contrary, the further attack on local government which this package represents will further weaken its ability to tackle the problems faced by communities, businesses and individuals on Tyneside and elsewhere.

The system of local government finance now in place in this country is unfair, unjust and deliberately tailored to shackle, rather than free, local priorities and local enterprise. It is discriminatory and prejudiced, and brings no credit to this Government or its architects.

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North 6:06 pm, 3rd February 1993

On two issues I agree with the hon. Member for Blackburn (Mr. Straw), who opened the debate for the Opposition. The first is his support for Blackburn Rovers, which is highly commendable. The second is that for many years he has said that the solution to the problem of some of the lunatic councils in London is annual elections. I believe that we will have problems in London until we have annual elections. In the gap of four years between elections, those councils can get carried away and the response to the electorate is weakened. I commend to my right hon. and hon. Friends the introduction, at some stage, of annual elections in London. It would be good for all the party systems and for the response to the electorate.

Reference has been made to the £140 that was taken off the community charge and put on VAT. I would have liked the community charge to remain once that £140 had been taken off, because the objection to the community charge was basically its size, not the principle. I realise that that is water under the bridge, but I put it on record.

I am concerned particularly about London and the south-east—the area which includes the constituency that I now represent. The Conservative-controlled London Boroughs Association and other bodies in London considered, when the council tax was brought in, that it would be unfair to London and the south-east. That is because it is a modified property tax and houses in London and the south-east are very expensive, not because they are bigger than houses elsewhere or because people in the area are earning more, but simply because of land shortage. One does not buy a house; one buys a plot of land on which the house is built.

The LBA thinks that London loses about £200 million and the rest of the south-east about £175 million because of this change to a property system. Similarly, it has been calculated that for people in London and the south-east to live at the same standard as people in other parts of the country, they must earn about £6,000 a year more because of travel and housing costs in the area. This is something that I have to remind my right hon. and hon. Friends about in connection with the difficult issue of sharing out the money that is available. That is why the London Boroughs Association—I and other London Members went along with it—pressed for a separate set of bands for London and the south-east, because the house price gap between London and the rest of the country was wider than it was between Wales and England and between England and Scotland, where separate bands were inserted.

The recession in London is really a slump. I grew up in Lancashire during the depression when, at one stage, unemployment in the cotton industry in my own town was higher than unemployment in Jarrow. But although Lancashire was in a terrible state in the 1930s, London was prosperous. That is when all the houses were being built. One would have to go back more than a hundred years to encounter anything like the situation that we have now. It means that the depression is greater. Those of us who were born in the north knew that the good times would not last. We invested in the local Co-op, we bought saving certificates, and we put the rent money on one side. We hid our nuts against the bad times that were coming. But in London it had been assumed that the prosperity would continue.

Unemployment is now 10 to 12 per cent. in my constituency and the figure is rising faster than in practically any other constituency in the country. I am not against capping and I recognise the difficulty of sharing the money out, but a high council tax in London will increase the number of repossessions when people who are struggling to pay mortgages find that they have to pay more because of the introduction of council tax.

The greatest losers under the council tax are single people in three or four-bedroomed properties with limited resources, not the rich or those with no resources, but those in between who have saved. People say that they should sell their houses, but a widow who has lived in the house all her life and who wants her children and grandchildren to visit her at Christmas and other times will find her present life style disappearing if she has to sell the house.

I know that there is transitional relief, but it is less overall, from what I have worked out, than it was with the community charge, and one wonders how long it will last. When the Minister replies to the debate, I would welcome a statement that it will be reconsidered each year according to the circumstances prevailing.

There are advantages with the council tax, I know. It is easier to collect. That is the great advantage of any form of property tax: one cannot hide a house when someone comes up the road. The history of window tax and similar taxes shows that people return to a property tax time and again because of ease of identification. Three million people on low incomes will get a rebate, 6 million will get a 25 per cent. discount, and I am glad that 600,000 students will also be exempt. It all helps.

One of the things that sank the community charge was the great increase in expenditure that went with it. On my statistics—and the Department will know them better than I do these days—it went up by about 31 per cent. in one year. But the new tax has been introduced in a way that will not break the bank, and I commend the Department on the way in which it has handled it.

Brent last year had £254 million. This year it had £258 million. Last week it got about £750,000 more, an increase which is still less than 2 per cent. The problem in Brent£and it is not the only London borough which has it—is the accuracy of its registers and of the census on which they are based. People just disappeared. Interestingly enough, there have been so many objections to the registers in Brent that people are now knocking on doors to find out who is there, which seems to me the right way to do it rather than sending questions out with junk mail which just disappears. In the past three or four weeks they have discovered many thousands more people. As far as I know, they have not come from outer space; they must have been there for a long time and they have been identified. We know that people came off the registers because of the community charge: they feared a cross-check. There is something of a mystery as to how big a population some London boroughs have.

Reference has been made by Conservative Members to the refugee problem, which is intense in London. I have large numbers of Somali refugees in my constituency, and the numbers increase all the time. It is not a question of small numbers; they arrive in their hundreds.

The Secretary of State has worked hard to get the council tax right, and I pay tribute to him and the Minister of State for that, but it would be very good if Brent could bring them evidence to show that the real population is higher than the number which has been accepted in the past. I believe that there may be as many as 10,000, 20,000 or 30,000 people who live there but who have still not been identified. If we could also get accurate numbers of refugees, and if I could bring my council leader to the Minister to see what can be done—

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North

Let me finish this point and then I will give way.

I am warned by my council leader in Brent that, as things stand, the cuts will have to be made in education. It means that about 90 teachers will lose their jobs. That is why I am concerned to bridge the gap. I have always worried about education, and the one thing that will upset all families is a threat to their children's education through what they see as a change of system. So I would like to bring my council leader to the Secretary of State or to the Minister of State with more information. The more accurate we get the registers, the better it will be, for possible boundary changes and everything else. All the information is suspect at present.

Photo of Eric Illsley Eric Illsley , Barnsley Central

The point that the right hon. Gentleman makes about registers strikes a chord among Opposition Members. I have read of the work done by Brent to increase the numbers on the register, but will the right hon. Gentleman agree that more resources ought to be given to improve the electoral registers, in view of the shortfall identified not only by the right hon. Gentleman but also by my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes), who is sponsoring a Bill on that point? Surely it would be better for all local authorities to have adequate resources to improve the registers.

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North

I agree with the hon. Member Registration in Britain is supposed to be compulsory. In the United States it is still voluntary, but in certain parts of Brent registration has become voluntary. I do not know whether they go into the loft when one goes round, whether they have cellars or whether they go on to their allotments. I go out every second Sunday with people on the knocker to see what is happening. I take the registers with me and I find that the discrepancy is about 15 or 16 per cent. A house is supposed to have only two inhabitants, but when the door is opened I find a veritable feast going on inside—to which, of course, I am invited, as hon. Members would expect. But I cannot then ask who has registered or who has paid the poll tax. Far be it from me to do so. A little Christian charity is required on such occasions.

Once upon a time registers were reliable, but I do not believe that they are reliable now. Despite my support for the community charge, I believe that if it had one disadvantage it was the fact that it put an end to the accuracy of the registers and encouraged people to stray into error, something that legislation ought not to do, as I am sure all hon. Members would agree. That temptation has now gone, and people are coming back on to the registers. The greater the pressure that the Department can bring to bear to put the registers right, the better, so that we know how many people there arc in this country. It might be interesting to know how many people are living here and whether the whole country is sinking or coming up according to the total population.

Whatever anyone's views might have been at the beginning about the council tax, the council tax must now work. The battle between national Government and local government has done no good to either national Government or local government. I have always believed in the dispersal of power. The centre of power should not be in one area. There is a risk of centralising power, regardless of which party is in Government. Because the Government has the numbers, the Departments and so on, there is always a permanent risk to corrupt Ministers, to put it that way, to the idea that they can run local government better than anyone else.

The battle has run for the past 15 to 20 years. There has been a strong tendency for local government elections to go the other way, whatever the Government's colour. When the Labour party was in Government between 1966 and 1970, it almost disappeared in local town halls. I remember that Islington became Conservative controlled. Hackney came under Conservative control, although it had not had one Conservative councillor before.

As soon as we get a certain party in government—my hon. Friend the Minister of State has good experience of local government—local government goes the other way which tempts the Government to battle with local government. We must get the council tax right because the battle must not be allowed to continue. We must have a spread of power, otherwise it will be dangerous for everybody.

I shall vote with the Government tonight. I have had to wrestle with my conscience on the matter. I admit that I should have the habit of voting with the Government from time to time. After the Maastricht debate and so on, it will be exciting to go into the Aye Lobby. I told my wife that today will be a strange day.

I shall vote with the Government because they have done their best to clear up a difficult matter. At the same time, I remind the Minister that I should like him to help me to force my council to get it right and get the 60 councillors to knock on doors nightly to see who is there. He should then know that there are problems in Brent with under-registration and an increased number of refugees so that I can help the people in my constituency at the same time. The last thing I want is any cut in schools which would damage education in Brent.

Photo of Mr Nigel Jones Mr Nigel Jones , Cheltenham 6:23 pm, 3rd February 1993

We have had some vintage performances today. I especially enjoyed the performance of the hon. Member for Brent, North (Sir R. Boyson) who raised the important matter of the Government's tendency to centralise everything. I always complain that the Government's policy on local government control is based on the three Cs-centralise, centralise and centralise. That has certainly happened recently.

We had a vintage performance from the hon. Member for Harlow (Mr. Hayes). Madam Deputy Speaker, I am grateful that you did not call me immediately after his speech, because I was laughing so much internally that I got the hiccups, but I have recovered now. We also had a vintage performance from the Secretary of State. Like the hon. Member for Blackburn (Mr. Straw), I was astonished that the Secretary of State did not mention jobs.

What is the settlement all about? It is about jobs and cuts. We have all seen the Local Government Chronicle of 15 January, which reported that the number of non-teaching jobs to be lost is estimated at more than 32,000. I hope that that projection is wrong. I hope that 32,000 non-teaching jobs will not be lost. To get anywhere near the promise made by the Secretary of State in the debate on 26 November, local authorities will need to go through economic contortions to set budgets which are somewhere near the capping level. When the revenue support grant figures were originally announced in the debate on 26 November, the Secretary of State said: ?I am confident that this settlement will provide local authorities with the resources that they need to deliver the wide range of local services of the quality which people expect and deserve?. When I pressed him about jobs, he replied:

?If local authorities manage their resources sensibly and adhere to the public sector pay policy guidelines … there will be no need for job losses.?—[Official Report, 26 November 1992; Vol. 214, c. 1011, 1015.] I must declare an interest as an elected councillor in Gloucestershire. We will be setting our budget next week. One of the guidelines that we will be examining is our ability to set a budget without job losses. At this stage, it is unlikely that we will be able to come anywhere near the capping level if we adhere to the Secretary of State's advice.

What are the cuts which we are examining? Four out of five social services directors in England expect a reduction in their budget, despite having new community care responsibilities. The Association of Metropolitan Authorities estimates that the Government are under funding the new community care responsibilities of local authorities by £135 million.

Much of the problem stems from inaccuracies in SSAs. Standard spending assessments are to accuracy what. Evil Knievel is to road safety—not relevant. Standard spending assessments are not a mechanism to calculate the spending requirement or needs of an area; they are a mechanism to divide a predetermined amount among authorities. That means that local councils are assumed to spend a certain amount on a certain service, when the reality is much different.

Standard spending assessments are the consequence of Whitehall bureaucrats pondering inadequate data, bogus statistical analyses and subjective judgments to devise a system which bears little relation to reality. How can the system be justified when, according to SSAs, children in Richmond upon Thames are classed as more in need than those in Barnsley? I am pleased that the Secretary of State will review the workings of SSAs. Pending that review, he might like to relieve councils of their caps, so that they can set the budgets which they would like to set this year.

I shall give three examples of cases in which SSAs are causing difficulty. In Warwickshire, the fire and rescue budget for 1992–93 was £2.4 million over SSA. The Department of the Environment said that the amount was excessive, yet the Home Office said that it was insufficient to meet minimum standards.

On the Isle of Wight, the fire service budget for 1993–94 is £1 million over SSA. To get the SSA, the island would have to close stations or reduce staffing. Such factors are controlled by the Home Office, which sets SSAs, but it is saying that the island should spend £1.5 million more on fire.

In my own county of Gloucestershire, the chief constable has been asked what spending at SSA will mean to him. It will mean keeping 40 officer posts and 73 civilian posts vacant. I went out with the Gloucestershire police one Saturday evening a few weeks ago. They have a difficult job to do. They are undermanned and do not have enough facilities. There is a growing crime rate in the county. It is wrong that two Government Departments are saying different things. The Home Office is saying that the chief constable needs so many men and the Department of the Environment is saying that the SSA is the amount which can be spent.

According to the Association of County Councils, 69 out of 108 local education authorities spend above SSA. That is important, because education is a large proportion of the spending of local authorities. It is not merely local education authority schools that want standard spending assessments for education, but also grant-maintained schools. A joint delegation from Gloucestershire met the Minister to press the case for SSAs to be funded at a realistic level.

Even if the SSAs were accurate—I contend that they are not—they would not take into account the problems that the recession is causing local authorities. For instance, Harrogate, where Liberal Democrats recently took majority control, is facing an additional bill of £452,000 for housing benefit. Sutton is facing a loss of £547,000 in reduced income from car parking and increased spending on free school meals, due to the recession.

Bournemouth, like other seaside resorts, has suffered a drastic reduction in income, and has lost £1 million out of a total £19 million budget because of reduced trading income. Cornwall has had to add £750,000 to its free schools meals budget, which is at an all-time high. Richmond is facing a bill of £2.5 million extra because of the costs of homelessness due to repossessions and arrears. None of those costs has been reflected in the settlement, and they will all cause cuts in services and job losses.

The Secretary of State has said that, as long as local councils stick to the 1.5 per cent. pay policy, they will not have to make cuts. However, police and fire service pay are not subject to that limit.

I shall compare central and local government spending. The former is set to rise by 6.6 per cent. during the next financial year. The Secretary of State said today that local government spending is rising by only 3.1 per cent., which is less than half the amount that central Government are allowing themselves. With the latest cuts in interest rates and the devaluation of the pound—let alone the knock-on effect in the 1993–94 budget of the 1992–93 pay round—there is every chance that inflation may well be higher than 3.1 per cent.

In a letter to parents dated January 1993, Mr. Gardiner, the head teacher of a school attended by many children in my constituency, said: ?The amount of money that the County Council is allowed to spend is controlled by central government. This year the money that will be available to schools is well below what is required to run schools effectively.I estimate that since 1991 our budget has been cut by about 10 per cent. in real terms. For the coming financial year the school budget is to be reduced by approximately 6 per cent. and the prediction for 1994–95 is equally gloomy … A cut in our budget of 6 per cent. next year will mean that, in common with other schools in the County, class size, resources and staffing will all be affected.? He urges parents to write ?to County Councillors, local Members of Parliament and the Secretary of State?. I know that many of them are doing so.

I do not get letters in my post bag asking me to keep the council tax low, but I receive bucketloads of letters asking me to protect services, education and social services, and to improve policing, in the face of the current crime wave.

Local authority spending should be based on need, and standard spending assessments do not reflect that. The settlements mean that local authorities are bearing the brunt of public spending cuts. Services are set to be hammered, and thousands of jobs will go. The responsibility for that will lie not with local councillors, who are jumping through hoops trying to find savings, but with the Secretary of State and the Government.

Capping is undemocratic. Even the Conservative-controlled London Boroughs Association has opposed universal capping. I repeat what the hon. Member for Blackburn (Mr. Straw) said when he quoted the Secretary of State as saying of capping, in 1988: ?It is not a measure to be used as a matter of course.? It is important to remember that, as it is being used as such.

?The people of an area will be able to vote for a relatively high-spending authority if they so choose.?—[Official Report, 25 April 1988; Vol. 132, c. 51.] Many local authorities feel hard done by, including many that do not receive area cost adjustments. I asked the Secretary of State for Education for some figures on average teacher salaries in councils that have area cost adjustments compared with areas that do not. I was surprised to find that Dorset, which does not benefit, has a higher average teacher salary than Hampshire, which does benefit. My county has a higher teacher salary average than Hampshire, the Isle of Wight, West Sussex or the Isles of Scilly, which all receive area cost adjustments. I was pleased to hear the Secretary of State say that he would reconsider area cost adjustments, because they seem unjust.

I am in a difficult position over my local authority's budget. Hon. Members will know that in many cases the notional amount has been adjusted since the original estimate at the end of last year. The notional amount for Gloucestershire has increased by almost £5 million—I am grateful for that—because the Government have admitted that they made a few errors in their original calculations. It therefore came as some surprise last Friday to discover that, instead of being increased by £5 million, the Gloucestershire SSA has been reduced by £0.4 million, which will cause severe problems when we set our budget.

Many councils will feel hard done by, and many will wish to appeal against their cap. Will the Secretary of State consider carefully before designating authorities for capping, and be open to persuasion by councils that decide to appeal against their cap?

Liberal Democrats believe that local people have the right to choose whatever local administration they see fit. If they choose an incompetent administration, they have the right to throw them out, and I support the right hon. Member for Brent, North (Sir R. Boyson) and others who have suggested that annual elections are one way to achieve that.

Fortunately, given the way the Government are going, there is every chance that the Conservatives will be thrown out of county halls throughout the country on 6 May, and that they will be thrown out of government in 1996, or perhaps even earlier. Frankly, when that happens, local government will breathe a huge sigh of relief.

Photo of Eric Pickles Eric Pickles , Brentwood and Ongar 6:37 pm, 3rd February 1993

It is a great pleasure to follow the hon. Member for Cheltenham (Mr. Jones). He and I served on the Committee on the Housing and Urban Development Bill, and as he was not a frequent attender it is nice to remind ourselves of exactly what he looks like.

There can be no doubt that the settlement is tight and will challenge some authorities; nor can there be any doubt that some authorities will be in difficulties. But the settlement certainly is not a surprise as it was well flagged in the local government press and is within the area of expectation. The level of settlement is considerably higher than was predicted in many quarters.

Prudent councils which care about their local communities would and should have been taking the necessary reforms already, and starting to reduce their expenditure gradually, to minimise the effects on services and to plan sensibly. After all, reductions in growth taken out over a long time minimise the effects on services.

Over the past few weeks we have seen a number of Labour councillors and Labour councils shroud-waving to the press, predicting thousands upon thousands of redundancies. The hon. Member for Blackburn (Mr. Straw) talked in terms of tens of thousands. The hon. Gentleman kindly allowed me to intervene, and I asked him to give me his estimate, as he said that this was central to the Labour party's programme. Sadly, he failed to give me any figures. I tried again to intervene, but without success. As the hon. Gentleman is a courteous person, he apologised to me outside the Chamber.

I have no doubt that this matter is central to the Labour party's strategy. I see on the Opposition Front Bench the amicable and urbane frame of the hon. Member for Leicester, East (Mr. Vaz) and the hon. Member for Newcastle upon Tyne, North (Mr. Henderson). If either of them cares to tell us what redundancies they anticipate, I shall be happy to give way. After all, these figures are central to the case that they make. I am not surprised that neither hon. Gentleman wishes to intervene. We have already seen the considerable fall-out that Labour authorities have suffered from estimates.

This morning we heard the figures from Birmingham city council, which has reduced the level of expected redundancies by about 70 per cent., to 1,000, all of which the council says can be taken care of without any compulsion. One does not expect estimates to be precise, but an error of 70 per cent. suggests to me that the council was trying to frighten the trade unions—a practice that I obviously deplore.

Photo of Bob Ainsworth Bob Ainsworth , Coventry North East

Does the hon. Gentleman know that between the November statement and the previous one there was a considerable increase in the spending allowance for Birmingham? Did not that increase give rise to the revised estimate?

Photo of Eric Pickles Eric Pickles , Brentwood and Ongar

I am very pleased about the increase. It shows that the Government listen to sensible points put forward by political parties. Perhaps it gives the lie to the suggestion that the Government are conducting a vendetta against Labour councils. One cannot in one breath complain about a vendetta against Labour councils and in the next breath talk about an increase in the Government's notional amounts.

Local government takes care of about 25 per cent. of public expenditure. That being the case, it is not unreasonable that councils should play a part in ensuring that settlements are in line with what the public can afford. Central Government support has increased by about 3.7 per cent., and I am very pleased to say that the notional amounts have been increased by about £150 million.

We are starting to move into a different kind of debate on the revenue support grant. I believe that the quality and spending options will be matters of the greatest concern in future debates, as they are in this one.

I come to what the hon. Member for Blackburn called a question of judgment. Because of the decisions on value added tax and on capping powers, but particularly because of the effects of gearing, the irresponsible rate and community charge increases of the latter part of the 1980s will no longer be possible. The differential will continue to exist.

I am grateful for figures produced recently by Tony Travers, which show that Tory propaganda was right all along: ?Conservative councils cost you less?—nearly £ 100 less. However, because of the trends in the Audit Commission and the introduction of the citizens charter, councils will increasingly look to performance indicators, and electors will increasingly know the cost of refuse collection in one borough as against another and will start to ask difficult questions. Councillors will no longer be able to hide behind the mystique of local government finance; they will be brought to account and will have to justify their spending arrangements.

Let me give an example. There is no doubt that the good people of Hackney will want to know why their council decided to forgo savings of £2 million. I refer to a recent decision of the council to award its own direct labour organisation £2 million more in expenses. I expect that, right at this moment, the whole borough of Hackney is shaking its head in wonder. The awarding of this maintenance contract to the council's own workers goes against all ideas of normality in local government. This is a lot of money to be slushing around. There is no suggestion that Hackney pays its work force competitive rates; I think that there is some suggestion that it pays slightly more.

I should like to deal with a matter that has arisen in this debate and about which the House has heard before. I refer to corruption in local government. It must be said loudly that the majority of councillors in this country are honest, decent people who work hard for their local communities. That applies right across the political spectrum. Councillors put in long hours for virtually no pay. They put something back into their communities, and I believe that local government service is honourable service. But corruption allegations touch every councillor. They obviously touch the dishonest, but they also hurt and damage the honest. It is not good enough to produce tatty pieces of paper or to make suggestions about meetings at racecourses when, as the hon. Member for Blackburn said, there are people who have their hands in the till and their snouts in the trough.

Photo of Keith Vaz Keith Vaz Shadow Spokesperson (Environment, Food and Rural Affairs)

The hon. Gentleman is talking about the Government.

Photo of Eric Pickles Eric Pickles , Brentwood and Ongar

Cheap remarks from a sedentary position are not good enough. Such comments let down Labour councillors, as well as councillors of all other political parties, throughout the land. We need to stand together to ensure that corruption is wiped out.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Will the hon. Gentleman condemn his colleagues who, in this Chamber last week, asked for investigations by the police and the Audit Commission into Labour local authorities in general? Was not that a slur on all the honest Labour members of those authorities who are doing an excellent job on behalf of their constituents?

Photo of Eric Pickles Eric Pickles , Brentwood and Ongar

I understand the hon. Gentleman's remark. I know that he was bruised by the revelations about his office accommodation. However, it seems to me legitimate to have discussions about options—whether it is more desirable to provide offices for Members of Parliament or to provide lollipop ladies. In any case, any allegations of corruption must be investigated with the utmost rigour.

I should like to make a suggestion about how all this might be put behind us. A common thread runs through the incidents and allegations of corruption and maladministration, both of which are equally damaging to local authorities. That thread involves a blurring of the responsibilities of councillors and officers; councillors start to take on responsibilities that properly belong to council officers. That problem has not suddenly occurred. The House was unwise not to heed the warning in the Redcliffe-Maud report many years ago, which referred to the role of the officer and the member.

The report stated that if we were to attract a higher calibre of officer and a better quality of member, there should be a clear demarcation of responsibility between the two. The member should concentrate on devising and monitoring the policy; the officer should concentrate on implementing the policy and on general managerial issues. When one considers all the problems lately, one sees that the councillor has started to assume the role of the officer.

There is currently a working party in the Department of the Environment studying good practice. I hope that the Minister will be able to advise us on how that working party is progressing. It seems sensible that it should look specifically at the role of the officer and the role of the member.

This country certainly deserves good local government which can respond to, and meet the needs of, the people. The role of the officer and the role of the member deserve serious consideration.

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

A practice seems to be developing in the Chamber whereby hon. Members from both sides of the House are bringing in communication devices. On two occasions this week when I have been in the Chair, an hon. Member's speech has been disrupted by such a gadget. It would help our debates if people did not bring such gadgets into the Chamber.

Photo of Eric Illsley Eric Illsley , Barnsley Central 6:52 pm, 3rd February 1993

I agree with the right hon. Member for Brent, North (Sir R. Boyson), particularly about under-registration, which is a problem that affects every local authority district, and I am pleased that he has been able to tackle the problem of under-registration in Brent. However, I repeat the call that the Government should consider a nationwide system to improve registration for elections. All three constituencies in my region are well under-represented in the current electoral register.

Having said that, I intend to speak about the standard spending assessments used to formulate revenue support grant, in particular as those assessments apply to my local authority, Barnsley metropolitan borough council. Barnsley's standing spending assessment has been set at a level well below the amount that the authority needs to spend to maintain its services. This is not the first time that I have complained about SSAs and the Government's ridiculous treatment of mining areas, particularly with regard to SSAs and determining grants. Three years ago I complained that Barnsley had been poll-capped—it was one of the 21 authorities to have been capped, one third of which were coal mining districts. That shows where the Government have targeted their cuts in local government expenditure.

When we complained about the cuts that would have to be made in local government expenditure the predecessor of the present Secretary of State spoke of a parade of bleeding stumps. I have listened to the latest version, in which the Secretary of State spoke of ritual protests from the Opposition. The Government simply do not believe that the cuts are being made. I have no reason to believe that the present Secretary of State understands the position any better than his predecessors.

Three years ago the music centre in Barnsley, which taught music to a very high standard, was closed as a result of cuts. Such a high standard of music teaching has never returned to my district. Unfortunately, there are further cuts to come this year. However, it appears that some of the Opposition's arguments are perhaps beginning to register. Recent meetings with the Minister have achieved some results and there are signs that the SSAs will be reorganised in future. Perhaps we can look forward to a new regime. I hope that when the Minister winds up the debate he will say that the new regime will encompass not only new data from the 1991 census returns, but a new formula for SSAs.

I have complained about SSAs on a number of occasions, and before rehearsing the arguments again I shall make a few general remarks. In the 1994–95 financial year, a new system using up-to-date data may be introduced, but that still means that my authority will have three to four years on a low revenue support grant. I should hate to think that my authority will have to start from that position when the new regime is implemented. I hope that we shall look at the matter afresh and consider Barnsley?s needs as a whole, rather than using the current financial year?s budget as the starting point for any new system of calculation.

We need a more accurate assessment of need. The Minister said that unemployment could be taken into account as a sign of need in a district. Perhaps he will confirm that in his winding-up speech. In my region, that factor is most apparent as Barnsley has a higher than average level of unemployment. It has been affected by the decision of the President of the Board of Trade to close more collieries. If those closures take place, my district will be badly affected. The Minister has heard from hon. Members on both sides of the House about the number of redundancies throughout the nation which could result from the cuts in local government finance.

This year, my authority will still be capped at an artificially low level. The standard spending assessment does not take account of my district?s needs. Future restructuring will repeat the errors of the past as the lion?s share of the funding will go to large conurbations such as Manchester, Liverpool and Merseyside, once again leaving the metropolitan districts at the bottom of the pile when funds are allocated. Future restrictions will also continue artificially to inflate the Conservative-controlled London areas, such as Wandsworth and Westminster.

For the past three years that I have spoken in these debates, I have asked why Barnsley—my authority—always figures at the bottom of the list for metropolitan districts. I have never received an adequate response. The last time I asked the President of the Board of Trade, who was then the Secretary of State for the Environment, he said that someone had to come bottom of the list. I appreciate that, but why is it my authority rather than anyone else's? The right hon. Gentleman could not see the problem with the formula for calculating SSAs, which counts against medium-sized and mining authorities, classing them as low-need authorities when they should be assessed as authorities with moderate needs, especially after the recent decisions affecting coal mining districts.

Every time I have spoken in these debates I have mentioned the research undertaken into the calculation of SSAs. Initially we commissioned research from Coopers and Lybrand; then we commissioned more from Newcastle university. The latest research comes from Salford university. Each time, the research has been presented to the Department with a request that the Department consider it and its implications for the SSAs. The research shows clearly that the formula discriminates against some authorities. I refer particularly on this occasion to the so-called Webber-Craig authorities—seven authorities of similar size and make-up. I believe that Ministers are well aware of them.

Time and again the Government have ignored this research and have carried on using the same formula for the SSAs. One can only conclude that they are quite happy to discriminate against Labour-controlled mining authorities and quite happy that we should continue to receive levels of grant lower than those to which we feel that we are entitled.

One of the problems is that the formula uses proxies as indicators of need. Ethnicity, for example, is one such proxy. The incidence of one-parent families is another. These are looked at instead of looking at actual need—at poor health, unemployment and economic need. The ethnicity factor used in the calculation appears in eight different blocks. That means that if a local authority has only a small number of ethnic inhabitants in its area—mine has only a small number—that fact is taken into account eight times over, and the SSA will register correspondingly low— despite the fact that this is a proxy indicator which bears no relation to the real need of an authority.

I believe that the Secretary of State acknowledged my next point following my intervention earlier. I refer to the wide gap between the top authorities and the lower ones. The Secretary of State asked where we would find the extra money. I say that we do not need ?extra? money. Manchester, Liverpool and Birmingham gain far more grant than metropolitan areas such as mine. On average, Manchester receives 70 per cent. more grant than Barnsley, as I have pointed out year after year. The gap is far too wide. Why are Manchester, Birmingham and Merseyside allowed 70 per cent. more money to provide a standard level of service? It is crazy.

Birmingham does not even spend up to its SSA. I understand that it spends £35 million per year on its publicity budget alone. That is equal to a quarter of Barnsley's entire budget. Something must be wrong with the calculations. SSAs should be based on indicators of need, to provide a standard level of service. I remind the Government what the then Secretary of State for Health said on 20 February 1990, when he pointed out that the standard spending assessment is not a target at which local authorities should aim, nor is it a level to which they are obliged to reduce if they want to spend above it: it is for local government to determine what it will spend on its services, and it will be answerable to the electorate for the resulting charges.

Fine words, but they have now been proved rubbish, as the Government will not allow local authorities to be answerable to their electorates for their charges. SSAs have become the method by which the Government cap local authority expenditure. So the Government determine what local authorities spend.

The Salford university research was the latest piece of research that my authority submitted to the Government. I confess that I do not understand it—its statistical language is beyond me—but I am assured by those who do understand it that it is cogent, logical and correct.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

I do not think that the hon. Gentleman should be shy or reticent about admitting that he does not understand all the figures. I am sure that many of our colleagues in the House feel exactly the same. I am sure, too, that the sentiment that he has just expressed will be echoed throughout the length and breadth of this country. We must therefore work to make the figures comprehensible. I hope that I may have the chance to say a few words on that subject later in the debate.

Photo of Eric Illsley Eric Illsley , Barnsley Central

If the hon. Gentleman would like a copy of the research from Salford, I should be happy to give him it. If he can find his way through it and understand it, perhaps he will drop me a line to explain it. I agree with him that the information is complicated, and the research submitted by Salford university to the Government is even more complicated than the SSA calculations. It is a highly detailed mathematical document which I do not confess to understand, any more than I understand everything about local government finance. I agree with the hon. Gentleman that some of the jargon in these reports should be clarified.

I should like to offer one or two examples of how these calculations are arrived at. The additional needs calculation runs as follows: ?The sum of:

  1. (i) 1.5 multiplied by CHILDREN OF LONE PARENTS (as defined below); and
  2. (ii) 1.5 multiplied by CHILDREN OF CLAIMANTS (as defined below); and
  3. (iii) The proportion of children aged under 18 in private households who were born outside the United Kingdom, Ireland, the USA or the Old Commonwealth, or whose head of household was born outside these areas, calculated using information from the 1981 Census.

CHILDREN OF LONE PARENTS The proportion of children aged under 18 in private households containing a lone parent family, calculated using information from the 1981 Census.

The children's social index is calculated thus:

CHILDREN'S SOCIAL INDEX The sum of the following factors (each of which is calculated to 4 decimal places):

(i) CHILDREN OF LONE PARENTS (as defined above for the Education block); minus 0.1305, and then divided by0.0358; and?—

Photo of Mr Robin Squire Mr Robin Squire , Hornchurch

I am enjoying the hon. Gentleman's speech, but I ask him to bear in mind that these SSAs are less complex than their predecessors. That much, I think, is conceded all round. Secondly, most of an SSA is backed up by independent research which will sometimes produce some fairly complex calculations.

Photo of Eric Illsley Eric Illsley , Barnsley Central

Is that why the Government are thinking of altering the SSAs in 1994–95? Perhaps all the research has not been wasted in that case, and we may look forward to a better system.

Photo of Clive Betts Clive Betts , Sheffield, Attercliffe

Does my hon. Friend agree that one of the main findings of the Salford study was that, in changing from the grant-related expenditure assessment system to the standard spending assessment system, the Government sacrificed accuracy for the extra simplicity to which the Minister referred?

Photo of Eric Illsley Eric Illsley , Barnsley Central

My hon. Friend is an expert in local government finance and I defer to his greater knowledge. I am sure that what he says is true. In simplifying the GREAs we have perhaps lost out somewhere along the way. In any case, perhaps the Government will now realise that the indicators used are wrong. They must be more closely targeted on the needs of particular areas.

Photo of Mr Kevin Hughes Mr Kevin Hughes , Doncaster North

Does my hon. Friend agree that the figures are ridiculous, based as they are on information 12 years out of date? That information does not relate to the needs of the present day. Things have moved on a great deal since the 1981 census—one thinks of care for the elderly and care for children. I am sure my hon. Friend agrees that the assessments are nonsense.

Photo of Eric Illsley Eric Illsley , Barnsley Central

I do entirely. I hope that when the Government examine the 1991 census data they will also consider different economic indicators for the SSAs—and that they will not accept 1992–93 as the starting point for authorities which have been badly affected by their SSAs in the past three years. My hon. Friend's constituency of Doncaster, North contains one of the authorities which has been the subject of initial capping. We have been pegged low over the past three years because we started low. I hope that when the new formula is introduced we shall not be left at the bottom of the pile.

According to Salford university research, the SSAs are based on information which is narrow, unrealiable and of questionable relevance. They fail to recognise the problems facing coalfield areas: relatively high unemployment and relatively low educational attainment. I do not know why the university uses the word "relatively". Educational attainment in my area is low and I make no apology for saying that. I disagree with the Government's figures because I think that they are poor indicators of educational attainment, but school examination tables and results on the testing of seven-year-olds show that my authority is at the bottom. More help in education should be used as an indicator of need.

My area suffers from industrial dereliction and needs economic regeneration. The problem will be made worse if the collieries close this year. It is a low-income area with relatively high mortality and a high incidence of chronic illness. The Salford university study states: ?A degree of error … consistently disadvantages a number of authorities. The indicators used to characterise need come from a narrow and highly intercorrelated range. There is a strong case for the replacement, removal or downgrading of several indicators.? I shall give some examples of how variation affects my authority. I stress that there is an enormous variation between the top and bottom ranked authorities in terms of SSA, especially in metropolitan areas. For the first time this year, my local authority has moved from bottom place. I repeat that I am asking not for increased total funding for local government but for a reorganisation of funding.

Surely Manchester does not need 70 per cent. more funding than my area to provide the same services. I will give a concrete example. The implied spending on a 300-pupil primary school in my constituency is £534,000 but in Manchester it is £662,000. The implied cost for an 800-pupil secondary school in my area is £2,082,000 but for Manchester it is £2.5 million. Those are large differences. Does Manchester really need 24 per cent. more than my authority does to fund a 300-pupil primary school? The difference would pay about seven additional teachers.

I have spoken about the Tory-controlled boroughs of Westminster and Wandsworth. The SSA for a primary school pupil in Westminster is £2,741 while in Barnsley it is £1,793. The implied spending on a 300-pupil primary school in Westminster is £822,000 but in Barnsley it is £534,000. For a secondary school in Westminster the amount is £3,193,000, while in Barnsley it is £2,082,000. That shows that the school in Westminster costs £1,111,000 more than the one in Barnsley. Why does Westminster need that much more to fund a similar school? I have been asked for three years why London boroughs have far more funding than mine.

The same disadvantages apply in social services. I shall use as a basis the social services SSA per child at risk. The figure for Manchester is £2,168,000 per annum and for Barnsley it is £1,202,000. Why does Manchester need £1 million, or 80 per cent., more than my authority to provide a standard service? The first two pages of the RSG report states that the SSAs are designed to show the funding for a standard level of service.

We have complained time and again about these enormous differences. I spoke about ethnicity being used as an indicator in eight sub-blocks. If a borough is low in one block, it is deemed to be low in all eight. We are at the bottom of the table. Proxies are also used. There has been a fall in employment in my constituency since 1981. We witnessed the 1984–85 miners strike and the run-down in employment has been mainly in mining. Some 20,000 to 25,000 jobs have gone. Data from 1981 are no longer relevant, but we are receiving grant based on the 1981 census.

Research shows that Barnsley is not a low-need authority as the Government tend to believe. It has at least moderate needs. We rank low on ethnicity and on people over the age of 85. Barnsley has a history of mining, which means that the number of people who live to the age of 85 is lower than in other comparable areas. In addition, because of mining, there is a high incidence of respiratory diseases among people between the ages of 50 and 65. However, the SSA takes no account of that. We rank high on standardised mortality rates because there is a high proportion of ill health in the age groups that I have mentioned. In my area, long-term illness and unemployment are well above the national average.

Ethnicity is a component of a number of indicators. The additional educational needs indicator shows that ethnic minorities do better than local people. I mentioned that in the corresponding debate last year. Research has shown that there is no longer a need to overcompensate for ethnic minorities. The all-ages social index leads to a classic finding. That index, which is a measure of social deprivation, gives a lower score to Barnsley than to Hampshire and Oxfordshire, and the children's social index scores Barnsley's needs lower, for example, than Hampshire, Oxfordshire and West Sussex. Who are we kidding? How could anyone be convinced that my authority has less social deprivation than Hampshire, Oxfordshire and West Sussex? That is a classic example of SSAs being completely wrong.

I shall skip the health indicators because many hon. Members are waiting to speak and simply mention standardised mortality rates, limiting long-term illness, and low birth-rate indicators. Much research has been carried out in my constituency and the results are there if the Government wish to consider them. Audit Commission studies have shown that my authority is not a high but a moderate spender, but its needs are simply not covered by the SSA.

I shall now deal with the budget for the fire and civil defence authorities. The Minister nods. I know that he is aware of my concern, because I have made representations to him. He knows that the fire service in my area—and, indeed, throughout South Yorkshire—has again been given an SSA lower than that of any other fire and civil defence authority. It is lower than those of Greater Manchester, Merseyside and Tyne and Wear.

I know that you have an interest in this, Mr. Deputy Speaker. West Yorkshire and South Yorkshire fire authorities have the lowest SSA per head, and that is proving detrimental. We have met the Minister, and representatives from the Home Office; only last week, South Yorkshire's chief fire officer visited the Minister to try to convince him of our needs. We are now approaching the levels recommended by the Home Office: we do not want to fall below those levels, and we hope that the Government will take fire authorities into account when setting SSAs.

I am reluctant to talk about cuts. I well remember the Secretary of State?s reference to a parade of bleeding stumps in 1990; I shall never forgive him for that comment, which has remained in my mind ever since. We had to make severe cuts in Barnsley. Now we shall have to cut £11 million from our budget, which will be rather difficult. I have a document listing the authority?s own suggestions for cuts; I will give just two examples.

Every local authority residential home in Barnsley is to close in April, and a complete ending of the school meals service is being considered. In an area of high unemployment such as mine, that is a desperate measure. I am not pleading, or parading bleeding stumps; I am past that stage—I have been here for three years, pleading for better funding for my authority.

These will be serious cuts, which will affect my constituency greatly. I hope that there will be a different SSA calculation for 1994–95; I also hope that we shall receive additional help for 1993–94.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown , Cirencester and Tewkesbury 7:22 pm, 3rd February 1993

Thank you for allowing me to catch your eye at a comparatively early hour, Mr. Deputy Speaker. I am delighted to follow the hon. Member for Barnsley, Central (Mr. Illsley), and to take part in the same debate as the hon. Member for Cheltenham (Mr. Jones), who is a neighbour of mine: I completely surround his constituency. With respect, I am glad that I do, because I hope to contain the spread of the Liberal tendency in the area.

There is no doubt that this is a tight settlement. It needs to be, if we are to contain the alarming rise in PSBR. The settlement, which amounts to £33.45 billion of central Government support, will enable local government to spend some £40 billion this year; that is the largest amount that local government has ever spent in this country. It is roughly a quarter of our total gross domestic product. Any talk of cuts from Opposition Members simply does not ring true.

A week or two ago, in answer to a question, my hon. Friend the Under-Secretary of State told me that the total local authority debt now stood at £54.4 billion. That is a fantastic figure, which has risen at an alarming rate since the 1980s. We shall have to do something about it.

Many hon. Members on both sides of the House have mentioned the way in which SSAs affect various authorities. A number of my constituents have written to me about the problem, which has also been raised by the hon. Member for Cheltenham. As I shall demonstrate, one of the main reasons for it is the indebtedness of those authorities.

I am aware that local authority treasurers can do clever things with debt swaps and swapping money from one account to another and back again, and lending money in one account to another account at a higher rate of interest. Nevertheless, that £54.4 billion must be serviced each year, by each local authority that is in debt. My authority, Gloucestershire county council—which was mentioned by the hon. Member for Cheltenham—is complaining that this year's SSA is roughly £10 million short of what it thinks it needs to spend. Having obtained some statistics from my hon. Friend the Minister, I have discovered that Gloucestershire's debt is £124.4 million. Gloucestershire is a comparatively small shire council.

Photo of Ken Purchase Ken Purchase , Wolverhampton North East

It is all very well to talk about local authorities? debt, and Gloucestershire may be a good case in point. However, the hon. Gentleman really ought to take into account the considerable assets of local authorities. When we draw up a balance sheet on the assets and liabilities of an organisation, we look at the net result—and I opine that the ratio of local authority assets to local authority debt is probably 10 or 20 times the amount that the hon. Gentleman has mentioned. That puts local authorities in a very strong position. The hon. Gentleman must remember that the debt to which he refers was incurred to accumulate capital assets for the benefit of local communities.

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

I was coming to that. The £124.4 billion of debt must be serviced. The hon. Gentleman is right: Gloucestershire county council has considerable assets. It has some 7,000 acres of valuable agricultural land.

As the hon. Member for Cheltenham has told us, he was part of a joint delegation that complained to my hon. Friend the Minister about the SSA. I was not there, but I was given a report of what took place. One of the questions that my hon. Friend asked the delegation was what would be the expected savings from capital sales of assets this year. The authority was not able to give a figure, although it had prepared its proposed budget. In his autumn statement, my right hon. Friend the Chancellor of the Exchequer allowed local authorities great flexibility for this financial year in the way in which they spend their capital receipts; yet that authority had not calculated the amount that it would save this year. Debts are an on-cost, which local authorities must service.

From another parliamentary answer that I received the other day, I discovered that some 14 local authorities were debt-free. There was a slight contretemps over the figures: another source said that eight of those authorities were indebted to some extent. However, 14 are listed in the answer. I looked up the authorities, to establish their political complexion. It so happens that 11 are Conservative; the City of London is non-political—[Laughter.] It is non-political as listed. The others are hung councils. The only one that is not Conservative-controlled—even in the overall sense, as a hung council—is Ryedale, which is controlled by members of the SDP, whoever they are. [HON. MEMBERS: ?They are all in the Lords.?] I think that they have disappeared to another place.

In an effort to enlighten the hon. Member for Wolverhampton, Nort-East (Mr. Purchase)— I am glad to see that he is enjoying my speech; he may not enjoy it quite so much in a moment—I decided to try to find out which party was most effective at running local government. I came up with some interesting statistics, which I have not pulled out of mid-air. I discovered that 16 of the 20 authorities with the highest community charge were Labour controlled. I then discovered which were the top 20 worst collectors of the community charge. Not surprisingly, 15 of them—

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

The hon. Gentleman is very good at anticipating. There is a good long list that he can anticipate. When I give him a category, he can tell me how many of them are Labour.

I decided to discover which were the bottom 20 authorities for rent arrears, and 16 out of the 20 were—

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

Thank you. I also discovered which of the bottom 20 had the most vacant dwellings.

Photo of Ken Purchase Ken Purchase , Wolverhampton North East

If I were you, I would take the money and not open the box.

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

If I was a betting man, it would be a certainty. I would not have to open the box; there would be no point. Seventeen out of the 20 were—oh, the hon. Gentleman has gone quiet all of a sudden.

I also considered manpower. The hon. Member for Barnsley, Central (Mr. Illsley) is very keen on employing more people. I wanted to see how effectively local authorities are run, and whether that depends on the level of manpower. I discovered that the six authorities employing the most manpower per 1,000 of the population were, needless to say, Labour. Manchester is at the top of the list, employing 52 full-time workers per 1,000 head of the population compared to Wandsworth's mere 17. The message is that Labour is inefficient.

The indebtedness of local authorities is an important factor, so I also looked up the 20 most indebted local authorities; needless to say, I discovered that 18 out of the top 20 were Labour. That includes the city of Birmingham, which was originally going to announce 3,000 redundancies, then 1,000, and now I do not know how many. The Labour city council has a staggering debt of £1.8 billion.

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

You did, you were very clever at anticipating.

It shows that large city authorities have to spend more than they need to because of years and years of mismanagement. Conservative councils, especially if they are debt-free, are superbly run and offer a high level of efficient local services. However, Labour councils cost you more—they are very liberal with your money.

I listened carefully to the hon. Member for Cheltenham (Mr. Jones). I hope that I shall not misquote him, but I am sure that he will tell me if I do. He said that he would be very reluctant to set a budget which would involve job cuts. Surely, no local authority will set the same budget every year, allow a bit for inflation, add a little and then say that it must implement huge cuts when it cannot get that amount. It must consider the services that it has to provide, decide what it needs to spend and see whether it can provide the services more efficiently.

I use Gloucestershire county council?s figures as an example. The Conservatives lost control of the council in 1985, when it had a debt of £26 million, but, when the Liberals took control in 1985, the debt almost doubled, to £46.5 million in one year.

Photo of Mr Nigel Jones Mr Nigel Jones , Cheltenham

May I correct the hon. Gentleman who entirely surrounds me? Gloucestershire county council has never been under Liberal Democrat control. It has been a hung council since 1985 and currently operates the rather curious arrangement of a Conservative-Labour alliance.

I have two questions. First, there is an outstanding school capital programme of £65 million in Gloucestershire. It increases every year, as we are not building the schools and school extensions. What projects in the hon. Gentleman?s constituency does he think we should delete from that capital programme? The quotation that I read to the House was from the headmaster of a school in his division.

Secondly—

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

Order. Interventions are getting rather lengthy. Bearing in mind the fact that many hon. Members want to catch my eye, it is not fair for hon. Members who have already spoken to take up the time with long interventions.

Photo of Mr Nigel Jones Mr Nigel Jones , Cheltenham

I shall ask a brief second question. What does the hon. Gentleman have to say to the Conservative chairman of the education committee, who says that Gloucestershire?s SSA for education is entirely inadequate?

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

I am grateful to the hon. Gentleman for correcting me. Gloucestershire county council is hung, but the Liberals had control between 1985 and 1991, so the increase in the debt occurred entirely under their control. We chucked out the Liberal controlling group in 1991. We now have the absurd situation in which the Conservatives and Labour alternate every six months, but we have been able to start to tackle —[Interruption.] It is absurd, because no one party has control without the other party?s agreement.

In view of what I have said about Gloucestershire county council's indebtedness, I have no doubt that, come May and the next local elections, we shall regain control. It would be much more sensible to have Conservative control of Gloucestershire county council to tackle the problem of indebtedness and offer a realistic level of service to the people of Gloucester, which is what we all want.

Before the hon. Member for Cheltenham intervened, I was saying that he spoke about setting a budget for his authority. I have the indebtedness figures for his authority, which we both represent. It is a very small local authority, but has a debt of a staggering £40 billion—[Interruption.] —£40 million. Even so, it is £40 million on a comparatively small budget. It is no wonder that the hon. Gentleman could not set a budget that would provide the local level of services that he wants.

I suggest that the first thing that the Liberal controlling group on that authority should do is reduce that level of debt, so that it does not have to pay the servicing costs on it and will be able to provide a true level of service to the people of Cheltenham.

Despite what the hon. Member for Wolverhampton, North-East (Mr. Purchase) said, indebtedness is a serious problem which must be tackled. If authorities such as Gloucestershire had the capital receipts that they should have, they would be able to provide a perfectly good—indeed, a superb—level of service within their SSA limit, and there would be no need for the fuss that they are currently generating. Local authority debt is huge, and it means a continuing on-cost to service that level of debt.

Photo of Mr Colin Pickthall Mr Colin Pickthall , West Lancashire 7:38 pm, 3rd February 1993

This has been a curious debate because, although most of us have been rightly concerned to study the figures and the damage being done to our local authorities by the settlement, hints of a wider debate on the nature of local government have emerged from time to time.

The hon. Member for Brentwood and Ongar (Mr. Pickles), the former leader of Bradford council, raised the issue of councillors and officers and the difficulty of maintaining a distinction between them. He suggested that councillors were for ever trying to take over the role of officers. I am sure that other hon. Members with experience of local government will, on occasion, have found exactly the opposite to be the case. Many officers will feel highly insulted by the hon. Gentleman?s remarks. However, the hon. Member for Brentwood and Ongar made an important point in that regard.

The hon. Member for Brentwood and Ongar also made an important point about not allowing the debate to become a slanging match about who has the worst councillors. As he said, all councillors would be tarred in such a debate.

I agreed with about 50 per cent. of the speech made by the right hon. Member for Brent, North (Sir R. Boyson). He made some important wider points about the nature of local government which, at some point, we will have to debate at greater length. I hope that members of the Government Front Bench noted his remarks about centralisation and the great damage that the Government's centralising tendency is causing in what to many people appears to be a systematic attack on the very nature of local government. The right hon. Member for Brent, North also made important points about registration; I am sure that my hon. Friend the Member for Derbyshire. North-East (Mr. Barnes) will wish to take them further.

I want to refer particularly to Lancashire to illustrate what I believe is happening to local government. I accept that some of my colleagues and some Conservative Members have made similar points about their authorities. Fortunately, my hon. Friend the Member for Barnsley, Central (Mr. Illsley) has already made half my speech for me.

Many authorities in the north and west of the country —indeed, all authorities other than London, Bedfordshire, Berkshire, Buckinghamshire, East and West Sussex, Essex, Hampshire, Hertfordshire, the Isle of Wight, Kent, Oxfordshire and Surrey, which benefit from the area cost adjustments—are suffering badly. That issue has already been referred to several times in the debate.

In a reply to a question of mine, the Under-Secretary of State for the Environment, the hon. Member for Hornchurch (Mr. Squire), told me that if the area cost adjustment was redistributed to all authorities in the country, it would amount to £15 per adult. In my case, that would be £15 for every adult in Lancashire. That is a not inconsiderable subsidy from the provinces—if I can call them that—to the south-east. The key point to bear in mind is that that subsidy has continued year after year and has increased each year.

Referring to shire counties for the moment, and trying to compare like with like, if we consider the counties of Essex, Kent, Hampshire and Lancashire, which are more or less the same size—I noted the Secretary of State's comment from a sedentary position that it is all about population—in 1989–90, Essex received £3.5 million from the ACA; in 1992–93, it received £64.2 million. In 1989–90, Kent received £3.5 million from the ACA; in 1992–93, it received £64.1 million—not bad going. In 1989–90, Hampshire received nothing from the ACA; in 1992–93, it received £62.6 million. Obviously, at some point it was discovered that Hampshire was being deprived and that was corrected: good for Hampshire.

In 1989–90, Lancashire received nothing from the ACA. In 1992–93 it received nothing from the ACA, and the same will apply in the coming year. The same applies to Nottinghamshire, Cumbria, Durham, Northumberland, Staffordshire and many others.

In 1986–87, the area cost adjustment was 1.5 per cent. of standard spending assessment. By 1992–93, it had grown to 3.5 per cent. We are talking about tremendously large sums of money. Between 1989–90 and 1992–93, the SSA of Essex has increased by 36 per cent., Kent?s by 37 per cent. and Hampshire?s by 31 per cent. Lancashire?s has increased by 24 per cent. The disparity is even greater for other authorities.

That enormous difference has a ratchet effect. It consistently renders shire counties like Lancashire worse off. I noted with some pleasure the Secretary of State?s comments about considering the matter again this year and I hope that that happens. However, concomitantly, councils in the south and east will become better off relatively speaking.

In 1988–89, Essex, Kent, Hampshire and Lancashire received, within about £10 million, the same SSA. Since 1990–91, the gap between the three southern counties and Lancashire has been growing to the point that at the moment Lancashire's SSA is £100 million below Kent's SSA; –80 million below that of Essex and –25 million below Hampshire's. I suppose that that could be called the politics of envy. If it is, I plead guilty: I am envious of those levels.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

The point made by my right hon. and learned Friend the Secretary of State about population is that this year and next year population change has a big influence. The hon. Member for Lancashire, West (Mr. Pickthall) must consider SSAs per head. He must explain why Lancashire will receive £615 per head next year while Hampshire's figure is £568. The story is not quite the one that the hon. Gentleman is telling.

Photo of Mr Colin Pickthall Mr Colin Pickthall , West Lancashire

My hon. Friend the Member for Barnsley, Central has already examined the nature of the authorities to which the Minister has referred. He referred to the large urban area in a county like Lancashire which must be considered alongside the ethnicity problem.

In the settlement for shire counties this year, Lancashire?s SSA is increased by 2.1 per cent. In the league table of shire counties, in that respect Lancashire comes 35th of 39. Kent has received a 4.8 per cent. increase and that makes Kent third in the league of 39. Essex has received a 3.9 per cent. increase and is ninth in the league. Hampshire has received a 5.1 per cent. increase and is second in the league.

My hon. Friend the Member for Blackburn (Mr. Straw) has made it clear in figures that he has published in recent weeks that, in all shire authorities, Conservative-controlled authorities have received increases averaging 3.7 per cent.; Liberal Democrat-controlled authorities have received increases averaging 3.7 per cent.; authorities with no overall control have received increases averaging 3 per cent. Labour-controlled authorities have received increases averaging 2.2 per cent.

The area cost adjustment is not the whole problem, but it is a substantial part of it. The figures, which are always difficult to extract from the documentation that is being worried over, show a deliberate discrepancy in funding which it is hard not to see as deliberately designed to penalise Labour-controlled authorities and to reward the Tory heartlands. That is corrupt in the same way that pork barrel politics is corrupt in the United States, although the latter is rather better hidden.

The practice signals a Government who are so consumed by vanity and arrogance that they believe that they can shift large amounts of public money away from Labour or non-Tory authorities to Conservative authorities and consistently get away with it. They may be right, because they have got away with it so far.

That practice also signals a fundamental dismemberment of local democracy which is as offensive to many local Conservatives as it is to local and national Labour politicians.

I do not suggest that funding for counties in the south and east should be cut. I believe, as Conservative Members believe—in theory, at least—in levelling up. Obviously, special measures must be taken to take into account the special problems of London. That part of the ACA could be justified, but it should surely come from outside the total SSA settlement. In so far as the ACA allows for supposed extra costs to the south-east shires for items such as police wages, fire service wages and so on, the figure is bogus, as was revealed earlier. In fact, it is a subsidy that is paid by the rest of us to half a dozen Tory shires.

Yesterday, in relation to DAF, the hon. Member for Amber Valley (Mr. Oppenheim) made it clear what Conservative Members think about subsidies. He said that if we give DAF money to save that firm, we will have to take money from other firms and destroy them. That is precisely what is going on in local government. I am sorry that the hon. Gentleman is not here to make the same case tonight.

The ACA is in the front line in the system of bad distribution of public funds, and that system needs to be corrected. Within that system there are many other anomalies. In my county of Lancashire, year after year SSAs for personal social services have been systematically below the average for the country and they become slightly worse each year.

One matter that has niggled me for a considerable time is the funding element in SSAs for under-fives education. It is calculated—I have mentioned this matter in every possible forum—on the basis of the population of under-fives in an authority, not the educational provision for those children. Wild anomalies are apparent. Some of the same counties are involved—is not that strange?

In Lancashire, in 1992–93 21,172 under-fives were provided for in terms of nursery education. Its SSA allowance for that is £22.9 million. In Hampshire, 13,207 under-fives are provided for, and the SSA is £22.7 million, almost the same amount as for Lancashire. In Kent, about half as many—11,100—under-fives are provided for. The SSA for Kent is £22.1 million—very little less than Lancashire's. In Essex, 12,900 under-fives are provided for, and the SSA is £21.63 million. If we take Lancashire's SSA per pupil as £100, we see that Hampshire has £159, Kent £184, and Essex £155. Incidentally, West Sussex would have £230 on the same basis.

The problem is that that is active discouragement for local authorities to provide nursery education, which might be part of the plot—I remember what the previous Secretary of State for Education thought of nursery education. It is a disincentive for a bad provider to provide more, and it is a disincentive for a good provider to continue being a good provider if it is to receive the same amount of money anyway, depending on the number of under-fives in its area. If the under-fives element of SSA were funded equally, Lancashire would get £5.6 million more than it presently does. That would go a long way to solving some of the county?s problems. In every authority in Lancashire, education accounts for more than half its expenditure.

On 16 January, my hon. Friend the Member for Hyndburn (Mr. Pope) received an answer from the hon. Member for Hornchurch, comparing expenditure per school pupil in those four counties. Boiled down to its essence, the answer showed that, on the basis of expenditure per pupil aged five to 16 inclusive, Essex receives £110 per pupil more than Lancashire does. If funding were level, that would be £20.97 million more for Lancashire. Hampshire receives £33 per pupil, and Kent receives £119 per pupil. If Lancashire were funded on the same basis as Kent, we would be £22.7 million better off —and; yes, we would like it, please.

Wherever one looks in the miasma, one finds such anomalies. Before I became a Member of the House, I used to believe in the cock-up theory of politics. I no longer believe it. The SSA calculation, which gives off an air of technical neutrality—a system that was invented by robotic accountants, remorseless but pure—is in fact subject to arbitrary judgments and adjustments which all too clearly reflect the Government's attitude to people who have the temerity to elect Labour authorities.

A delegation from Lancashire secured a meeting with the Minister at which we debated the problems and raised several anomalies. To save time, I shall not refer to them, but the anomalies have already been mentioned—for example, in relation to the further education adjustment, nursery provision and other elements of ACA. We were able to lift the capping limit by £6 million. It would have made a difference, had our case been upheld, of £47.3 million for Lancashire, given that we would have had to have made virtually no cuts this year. Unfortunately, at the same time, as the hon. Member for Cheltenham (Mr. Jones) pointed out happened to his authority, our SSA was reduced. The capping limit went up and the SSA went down.

The state of affairs that I have been trying to sketch is not a one-off punishment; it is one stage of a progressive process that is forcing Lancashire to its knees. Cheered on by the hon. Members for Lancaster (Dame E. Kellett-Bowman) and South Ribble (Mr. Atkins), through capping, the Government forced through £40 million-worth of cuts last year and they are forcing close to another £60 million-worth of cuts this year. That means many redundancies—of course it does— and cuts in discretionary grants which we had to make last year.

I took part in that decision as a county councillor, and I hated it—we all did. It means cuts in home helps, schools, lollipop ladies—you name it. In particular, it means a cut in essential school build in my constituency, and that causes me great agony.

Yesterday, the hon. Member for Lancaster called Lancashire bureaucratic. I remind her that the central administration costs for Lancashire are much less than they are in most private industry. However efficient, no local authority can withstand for long the steady cutting of its income and of its allowable spend. The Government know that better than anyone. The nub of their strategy is to make local government impossible.

The bureaucracy we fear is not that of counties and town halls but that of Whitehall, and Marsham street in particular, steadily drowning the country in a sea of red tape and formulae in order to centre all power in the Government. The country will wake up in the not-too-distant future, if it is not careful, and find itself in a centralised tyranny— although perhaps a smiling one—worthy of somebody such as Erich Honecker.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight 7:58 pm, 3rd February 1993

I thank you most sincerely, Mr. Deputy Speaker, for calling me at such a late hour. I know that you have squeezed me in against all the odds because you recognise the peculiar circumstances that the Isle of Wight faces. I should be remiss in my duty if I did not place on record the undying thanks of all my constituents on the biggest of England's offshore islands for the opportunity that you have afforded me this evening.

I wonder whether I might call upon the hon. Member for Lancashire, West (Mr. Pickthall) to do me the great favour of standing up for a moment and looking at the Liberal Democrats Benches to see whether one of the Liberal Democrats is lying on the floor. I should not like to accuse the Liberal Democrats of being absent. Perhaps the hon. Member for Blackburn (Mr. Straw) will confirm that no Liberal Democrat Members are here this evening.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I am saddened to have to confirm that news, which will bring tears to the eyes of Conservative and Labour supporters alike in the Isle of Wight and across the country.

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

I shall develop that theme in due course.

The hon. Member for Lancashire, West (Mr. Pickthall) mentioned the Isle of Wight more times than anyone else has this evening. It is the only county council controlled by the Liberal Democrats—and where are they? They are nowhere to be seen. The Labour Front-Bench spokesman, the hon. Member for Blackburn, has confirmed that there is no one on the floor hiding behind the Benches, so they are not present here this evening. That is an extraordinary state of affairs, particularly as the Liberal Democrats are forever telling us that they are the guardians of local government and how they always champion the cause. It is deplorable that none of them is here this evening.

You have heard me say on many occasions in the past, Mr. Lofthouse, that the Isle of Wight is renowned for its dinosaurs and fossils. You may think that I am going back in time, but I have heard a number of hon. Members on both sides of the House make various points about local government finance and the way in which SSAs work. My claim is well established that we on the Isle of Wight have probably been longer at this than any other constituency in the United Kingdom. In 1965, the Edwards committee reported to the equivalent of the Department of the Environment in those days—I think that it was the Ministry of Local Government. I see that my hon. Friend the Member for Bromsgrove (Mr. Thomason), a former chairman of the Association of District Councils is here this evening and I am sure that he will correct me if I am wrong.

The Edwards committee concluded that there was a need for an adjustment in local government finance for the Isle of Wight. I have been here for six years and I have mentioned it on every opportunity. I do not apologise to the House for keeping up this tirade because, as we hear so often—and we have heard it again,Mr. Lofthouse —

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

Order. I hesitate to intervene in the hon. Gentleman's speech and I recognise that the House has spent a lot of time in Committee recently, but on this occasion I am not addressed as Mr. Lofthouse.

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

I apologise, Mr. Deputy Speaker, and in future I shall not refer to you by the name by which your dear lady normally refers to you. I apologise for that apparent discourtesy to the Chair. You know me well enough, Mr. Deputy Speaker, to know precisely how contrite I am.

This is a long-running saga that I have mentioned at every possible opportunity. I make no apology for that, because I disagree with some Opposition Members who say that we are not dealing with a listening Government. The Isle of Wight has been recommended for unitary authority status by the Local Government Commission. It is something that we have been after for many years. It is necessary to reform the structure of local government on the island, particularly when one considers that it is conservatively estimated that it would result in a saving of £1 million to £1.5 million per annum.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

We are as interested as the hon. Gentleman is in the proposal for a unitary authority for the Isle of Wight. Does he share my concern that the Local Government Commission has proposed that there should be all-out elections once every four years and does he agree with me, with the right hon. Member for Brent, North (Sir R. Boyson) and with many other Conservative Members that accountability on the Isle of Wight and elsewhere will be strengthened if there were a cycle of elections each year with a third of the councillors retiring?

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

During the beef scare I was pictured eating the last plate of English roast beef in the House of Commons. When there were particularly poor political comments about the quality of water in the Solent, I took part in a swim and was seen by the BBC drinking the sea water from the Solent. Following those events, there appeared in my local press a short letter which said, ?He eats the beef, he drinks the sea water, now we know what is wrong with him.? Local government needs elections every year like it needs a hole in the head. Controlling parties need a four-year term in order—

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

Order. We are talking about local government finance this evening and not elections. Will the hon. Gentleman get back to finance?

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

I have got the message, Mr. Deputy Speaker. I wanted to answer that point, and I am sure that you would not want me to neglect to point out who started it.

We are dealing with a listening Government. We have had the interim results from our Local Government Commission suggesting that the Isle of Wight should have a unitary authority. Of course, we do not yet know what is in the Secretary of State's mind or whether he will accept the recommendation, but if it does not happen there will be disappointment in all parts of the political spectrum. It will lead to more user-friendly and efficient local government on the island.

The great bedevilment of local government—I know that hon. Members representing metropolitan authorities do not suffer from it as they are already unitary authorities —is that district councils or borough councils get the money and county councils spend it all. The chap who puts the little cross on the little piece of paper with the little pencil, as Winston Churchill said, cannot understand that. The connection between raising income and expenditure has for too long been disjointed in local government and I hope that a unitary authority will resolve that and produce better accountability.

It is easy in such a debate to make political points. I am as tempted as anyone to give a long list of the misdemeanours, as I see them, of the Liberal-controlled county council on the island and the opportunities that would be afforded by a change of administration. However, I do not intend to do that. [HON. MEMBERS: "Shame."] My hon. Friends may say, "Shame," but I have built my reputation on representing the whole of the island and all its views.

I note that the standard spending assessment has been changed as a result of a change in pupil numbers. We often see the Opposition opposing grant-maintained status and then leaning on the education budget to try to balance the books. I find that quite unacceptable.

We have suffered as a result of the 1991 census. Throughout the 1970s and 1980s there was tremendous population growth on the island. That was interpolated and carried forward, but the 1991 census revealed that the rate of growth had not continued. That caused us some concern. It will come as no surprise whatever that some of my political opponents have tried to blame that on the Government.

I should like to place on record my gratitude and that of the councils on the island for the way in which my hon. Friend the Local Government Minister saw us so promptly just before Christmas, a difficult time of the year for us all. He saw two deputations from the island and we had an extremely good meeting. As a result, I received a letter from my noble Friend the Minister of State, Home Office, who wrote on 27 January confirming that

?Ministers are prepared to consider proposals for changing the distributional arrangements of the SSA, and I know that fire distributional arrangements are on the programme of work for the 1994–95 SSA Working Group. I would urge you to voice your concerns through the Association of County Councils which is represented on the Working Group.? I have told my hon. Friend in private as well as in public that the Association of County Councils has never supported the Isle of Wight's case and I do not believe that it ever will. Of course the island is something of an anomaly in county council terms, and if the Association of County Councils supports one special case it will set a precedent and have to support many special cases. We understand that, but we had hoped that we were quite exceptional and that we might get the association?s support.

Today, Sir John Banham, the Chairman of the Local Government Commission, has journeyed to the Isle of Wight, where he wished to meet His Excellency the Governor of the island, the chairman of the county council, the local borough council representatives, the chief executives and me. I was unable to be there because I wanted to take part in this debate this evening.

I shall not take up the time of the House by going through a long list of anomalies and their peculiar effect in our unique constituency. However, I invite my hon. Friend the Minister, in winding up, to confirm to the House that he and I have had conversations about this, that I have written to him, and that in due course he will be writing to me. It is a subject to which I, like many hon. Members in all parts of the House, will be returning on a number of occasions—I hope, ere long, with a unitary authority on the island. I believe that there is a fundamental mismatch in the way that the formula works, as was highlighted as long ago as 1965.

Thank you so much for squeezing me in, Mr. Deputy Speaker.

Photo of Paddy Tipping Paddy Tipping , Sherwood 8:11 pm, 3rd February 1993

There are thousands of local councils all over the country which are determined to provide good quality services that meet local needs. They are committed to that task, and it is important that we stick with them and that there is a partnership between local and national government to make that happen. I do not think that talk of corruption within the councils, of whatever type, helps that relationship. We ought to be looking at the positive areas and rewarding and praising the efforts of so many local councillors.

However, there is a bizarre situation in which many of those councillors feel that the Government hold all the cards. It is the Government who decide the SSA, set the cap, decide and define the business rate and decide the amount of revenue support grant.

I was very interested in the Secretary of State?s comment about the SSA, that it was a mechanism for distributing grant. I hope that in winding up the Minister will make it clear that that is the Government?s view of the SSA—a way to distribute grant, not a yardstick, not a seal of approval, to define and defend the amount of Government money to be allocated to councils.

Given the Government?s range of powers, it is not surprising that local councils have very little power to raise their own revenue. In my own county, Nottinghamshire, in the current financial year, only 24 per cent. of revenue is raised locally. Of the remaining 76 per cent., 33 per cent. comes from the business rate and 43 per cent. through the revenue support grant. Given the element available for local discretion, it is not surprising that, if a council wants to provide good quality services or to do something extra, the cost falls on the local taxpayers. The problem is that, given the current small tax base, the smallest tax base of any local council in Europe, the gearing effect, the effect on people who have had to pay the charges, is extremely high.

I have looked with interest at what the Secretary of State has said in the past about capping. He has been keen to talk about local accountability. At one time he talked about capping as a mere reserve power, and he went on to say that it was important that we used rarely, and only ?to protect charge payers of an area against extreme cases of extravagant and irresponsible local authorities.?—[Official Report, 25 April 1988; Vol. 132, c. 51.] What has happened to the Secretary of State?s views over the past five years, because it is quite clear from the announcement that he has made that, in effect, virtually every council in England is now capped? There is not even a very limited element of local discretion.

Given this, it is not surprising that it is very difficult to find people who will become local councillors. The capping powers announced this time are the most stringent powers that have ever been taken. It is quite clear to me that, given the severity of the cap, there will be cuts in services and expenditure by the majority of councils this year.

Those cuts spring directly from the Government. They hold all the strings and they pull all the levers. The revenue support grant is extremely tough. The Secretary of State told us that it was £41.1 billion and that it would be adequate. He told us that it represented 3.1 per cent. growth. We have to compare figures properly. It is quite clear to me and to people working in local councils and local authority associations that there is no growth in this year's spending as against next year's planned spending by the Government. In fact, local authorities face a cash squeeze this year—a cash freeze.

We should contrast that with the Government's plans for themselves. Again, it is absolutely clear that, while councils are having a cash freeze—or, in the Government's eyes, mere growth of 3.1 per cent.—the Government's own expenditure is rising by 6.5 per cent. Why are local authorities being singled out for differential treatment? It is interesting that in every Government Department except Defence the rate of growth next year will be greater than that for local authorities.

I am pleased that the Government have done some work on notional figures. There is a feeling, however, that the notional figures proposed for taking money out of further education and out of highway maintenance are overstated. We are pleased that the Minister has listened to representations from Nottinghamshire and has increased its notional amount for FE spending. This is not extra money; it just raises the cap and allows us more flexibility. I draw attention, too, to highway maintenance, where £170 million is being taken out of the settlement and, according to local authority estimates, only £50 million is being spent. Clearly, if their figures are correct, £67 million has been taken away from local authorities.

There are other problems too. The withdrawal of section 11 is another burden for local authorities. The urban programme has been frozen and local authorities have been picking that up. In the last few weeks cuts have been announced on emergency planning. If local authorities, local councils, want to do that they have to pick up such things. Then there are insurance problems and, perhaps most particularly, the decision to raise superannuation funds back to 100 per cent. funding, albeit over a period of years. It is important to remember that that was cut to 75 per cent. only a few years ago to lessen the impact of the poll tax, but now local authorities are being told to make up those potential deficits, and it is at the cost of the poll tax payers.

Let me now consider the years beginning 1994–95 and thereafter. In the next financial year, new census information will be pushed into the settlement. I welcome that. All the new census material will be used in a more basic way in 1994–95. In particular—this point has been made by a number of my hon. Friends—I hope that the area cost adjustment will not just be looked at, but be acted upon. According to my figures, the area cost adjustment has increased from £418 million in 1989–90 to £1.3 billion in 1992–93. That is a rise of 214 per cent.

The work that the Association of County Councils and others have done has highlighted a problem concerning the area cost adjustment. It is clear to me that it overstates the position in London and some south-east counties, and I hope that the Government will listen carefully to representations and try to put it on a better footing next year. I estimate that Nottinghamshire county council is paying £24 million for area cost adjustment. They are keeping down the council tax in London and the south-east; they are raising revenue from their own people to keep council tax bills down elsewhere. That cannot be right, particularly if the basis for the area cost adjustment is so badly wrong. I hope, therefore, that the Minister will not only endeavour to look at this matter but will be prepared to act on it.

Standard spending assessments are to a large extent the root of the problem. I hope that when we get the new census information we will set it against the SSAs so that we can compare, for example, why the SSA per head in Wandsworth is £1,112, in Westminster is £1,200 and in Ashfield—in Hucknall, for example, a mining village which is experiencing real difficulties at present—is only £675. I defy the Minister to tell us that it is because deprivation and real need are greater in Westminster and Wandsworth than in mining communities in Nottinghamshire. Such an analysis will not stand up.

I issue a challenge. We will look closely at the census data, when they are on a small area statistics basis, and we will compare them with SSAs. I hope very much that there will be a move to give authorities in the north and the midlands a fairer chance.

But, given all the levers and all the strings that the Government push and pull, it is not surprising that sometimes things go wrong. They made a prediction some years ago of a council tax of £400 for a band D property. The prediction now is for £494. Given the settlement that has been made, I believe that the figures in Nottinghamshire will be much higher. For a band D property I do not believe that the figure will be £494. It is entirely a matter for councils themselves, but in Nottinghamshire I believe that the figure at the bottom will be about £590 and that it could go up to £660.

That is because we have a system in which the mechanics and the levers are all in the hands of the Government. It is a system that we must change, and we must change it now, because all over the country people will next year face higher bills than were predicted with lower services than were promised. They face a double whammy: paying more and getting less. Nobody will put up with that system. A similar system killed the poll tax, and, if the Government are not careful, this son of poll tax will run into similar problems.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow 8:23 pm, 3rd February 1993

I am grateful to be called at this juncture in the debate. While I enjoy the reputation of not being entirely uncritical of Government policy, may I tell my hon. Friends on the Front Bench that as regards tonight's debate I make no criticism whatever. Unfortunately, for reasons which I hope will become apparent in the course of my speech, I am unable to offer any praise, much as I would like to do so.

I am pleased to see in his place this evening my right hon. Friend the Member for Shropshire, North (Mr. Biffen), a fellow Salopian. I am sure that he will forgive me if I say that we make no special pleas from Shropshire. Shropshire is not a county noted for being narrow-minded or mean-spirited. I remind the House that Shropshire, being the cradle of the industrial revolution, is the county which gave the nation its ability to generate wealth and power previously undreamed of. Right hon. and hon. Members may care to ponder whether the House should spend a little more of its time considering matters of wealth generation, rather than, as tonight, always considering matters of spending.

I support very much the drive for restraint in public spending. As a nation we need to control what we spend publicly. All that we in Shropshire look for is a fair share of whatever is going, and we have arguments about the methodology which creates the revenue support grants that we are discussing today.

One of our two complaints is centred on the sparsity factor. Our county has a relatively small population, albeit a growing one, and it is spread over a very large area. This creates problems for us, particularly in respect of education. We have made the point consistently to Ministers for a number of years that Shropshire's sparsity factor is not adequately recognised.

The other factor to which we take exception is the area cost adjustment which equally prejudices the settlement for Shropshire. I shall not argue with other hon. Members about whose constituency is at the bottom of the league, but because of the methodology, and principally because of the sparsity factor calculation and the area cost adjustment calculation, Shropshire consistently comes very close to the bottom.

When it comes to the philosophy behind the revenue support grant calculations, I question the belief that absolute fairness can be achieved in these calculations. The realisation is beginning to dawn that in an endeavour to be absolutely fair to everybody we are ultimately fair to nobody. There are books full of equations and calculations, all designed to ensure that every county, every constituency, is treated with equity. I know—the Minister must also know from what has been said in the debate—that that view is not generally shared by hon. Members.

What we are trying to do today is to achieve a modicum of thrift in local government expenditure. I make no apology for using that old-fashioned word. It is perhaps not so well understood today as it used to be, and it is perhaps practised less than it was. We also want to see in local government expenditure not just thrift but accountability; and if we are to achieve accountability we must have intelligibility. Whatever we do must be intelligible to the people who elect councillors and, to an extent, to the same people who elect us to the House.

My hon. Friend the Member for Isle of Wight (Mr. Field), in a humorous and thoughtful speech, commented that people are a little confused, because of the structure of local government. When they put their little cross in their little box, they are not quite sure where the boundaries of responsibility begin and end. I contend that if the system—both the organisation of local government and, in particular, its financing—is not intelligible, it will not be accountable. If it is not accountable, there will be no thrift. That is the point that I hope that the Government Front Bench will register. If we are to obtain thrift in local government, we must make the system intelligible so that people can, from a position of understanding, take an honest and genuine interest in what is done in their name.

When I was a county borough councillor I felt that perhaps I was the last of a dying breed. At the time, I was a young business man and was prepared to serve my community. I suspect that people with such a background now are less prepared to give of their time to local government. Perhaps they do not have the inclination to cope with what I refer to as the gobbledegook which is included in so many publications to determine the workings of local government and local government finance.

I cannot equal the humour of my hon. Friend the Member for Isle of Wight, but I venture to suggest, at the risk of seeming somewhat facetious, that whoever wrote the equation on page 28 of HC422 could match the sense of humour of my hon. Friend. I crave the indulgence of the House to quote the equation, because I should like to see it in Hansard: "[Q-R+[0.75(S-T)] + [0.5(U-V)] + [0.75(W-Q-S-U)]] x X/Y That is wonderful. It is clear as mud.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Does the Minister want to intervene and explain the formula to me?

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

I was about to encourage my hon. Friend to read on because it becomes extremely clear. The only problem is that the debate is somwhat limited in time.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

If I read the following two or three pages, I would find what G, R and so on mean.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Is my right hon. Friend seeking to intervene?

Photo of Mr John Biffen Mr John Biffen , North Shropshire

Would my hon. Friend reflect on the disposition of the Government constantly to suspend the 10 o'clock rule? One would have thought that the Government would have suspended the 10 o'clock rule on this occasion so that the debate could continue.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

That is one of the ironies of life. I point out to my right hon. Friend that in the past few weeks I have spent a lot of time trying to ensure that the Government do not suspend the 10 o'clock rule when they have different intentions. Tonight, we are once again on opposite sides of that consideration.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

The Government were not planning to move the suspension of the 10 o'clock rule because they thought that all other hon. Members had read the formula and found it straightforward. I am sure that that is true.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

As I said in an intervention to the hon. Member for Barnsley, Central (Mr. Illsley), I am not shy, and I encouraged him not to be shy in saying that we do not understand the matter. I shall tell the House about a lesson I learned in life which perhaps took me longer to learn than it should have done. I was often at the back of the class not understanding anything that had happened. When I picked up courage and asked the simple question—I am, after all, a simple man—the rest of the class erupted because it was the question that they also wanted to ask but were too shy to do so.

Let us ask the simple questions because, at the end of the day, a lot of people are much less intelligent than my hon. Friend the Minister but would like to understand the matter. Such people are deterred by the gobbledegook in the publications. I want to speak a little more about the question of incomprehensibility because such incomprehensibility acts as a deterrent to accountability.

I remind the House of the sensible words of my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), who instanced the cases of corruption in local government. There is bound to be corruption if those who are supposed to control finances do not understand and find things incomprehensible. Incomprehensibility acts as a deterrent not just to accountability but to attracting talented councillors, and it acts as a deterrent to members of councils in controlling their officers.

My hon. Friend the Member for Brentwood and Ongar also referred to maladministration. One has great sympathy with members of councils who, in controlling the officers of the council, are absolutely dependent on the advice and professional opinion of officers before they make decisions. Hundreds of councilors—I might also add Members of Parliament—will be dependent on the interpretation that borough treasurers and district council treasurers put on the publications that we are debating today. In other words, because of the complexity of the calculations, the initiative is very much with the officers and not with the councillors.

As a Member of Parliament, I feel less informed and authorit- ative on such subjects than I should like to be. In such circumstances, it follows that I am less helpful to the cause that the Government are propounding because of that lack of understanding of the finer points in these papers.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

To answer my hon. Friend seriously, the purpose of the formula is to work out the taxable capacity in each different part of the country. The reason why the formula must include halves and three quarters as some of the variables detailed in the document is that some people get discounts and exemptions. Those discounts and exemptions are reflected in the formula. We cannot simply take all the houses and say that that is the tax base. We must adjust the formula to show whether people are chargeable. As a result, we get a fair method of measurement around the country of the taxable capacity in each place.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

I am grateful to the Minister for his contribution. I hope that Ministers will not be too defensive or over-protective of the status quo because there are other ways of doing this. I suggest that those other ways would be better understood by councillors and those who elected them. If we are to have accountability, it is important that people thoroughly understand what councils are doing. They must not depend on paid officials of the council to tell them what they think the councils are doing.

I will labour the point about incomprehensibility because at the end of the day it is a deterrent to good local government and, obliquely, it brings national government and national politicians into disrepute. I take the view that one should not criticise anything unless one has something positive to put in its place. I hope that my hon. Friend the Minister will recognise that. In the past, I have often made submissions to the Government in an honest endeavour to make a system more comprehensible, simpler, more straightforward and, above all, understood by all of us, not just in this place but in council chambers and the electorate.

I suggest to the Minister that we should pay more than lip service to the principle of subsidiarity. It would be an enormous boost to the Government's credibility, especially in the context of the Maastricht debate, if we implemented the principle of subsidiarity in the United Kingdom. It would be a boost to the morale of councillors if they felt that they had not just the responsibility for discharging the various functions with which they are charged but total authority to do those things.

My hon. Friend the Minister has been involved in the commercial sector and he knows as well as I that the cardinal rule of good management is to place authority in the same pair of hands in which responsibility is placed. If there is one theme running through all this, it is that we should apply the principle of subsidiarity and ensure that councillors are given not merely the responsibility for functions but the authority to discharge them.

I suggest that the Minister should look hard at the scope for taking district councils out of the revenue support grant equation entirely and making them raise, through the council tax, 100 pennies for every pound that they spend— [Laughter.] The hon. Member for Sherwood (Mr. Tipping) laughs, and I understand why—it is because it is the first time that he has heard that radical proposal and he has not had time to think it through. When he has— hopefully he will read what I have said in tomorrow's Hansard—he may conclude that the Member for Ludlow had a point. I hope that he will give it further consideration. We are all open-minded people in this House and we like to consider new ideas.

In proposing that to the Minister, I must also warn him that there may be some mismatch if district councils are charged with that responsibility; he must try to ensure that the functions that councils are charged with are capable of being sustained by the local tax base.

The present review of local government should put the horse in front of the cart and not vice versa. First, it should decide what it wishes the functions of local authorities to be. Only when that has been decided can the organisational pattern of local government be decided, and thus its financing.

I remind the House of the three important words: let us make finance intelligible, for if it is intelligible we can make it accountable, and if it is accountable it will be thrifty.

Photo of Gordon Prentice Gordon Prentice , Pendle 8:42 pm, 3rd February 1993

I thank you, Mr. Deputy Speaker, for giving me the opportunity to follow the speech by the hon. Member for Ludlow (Mr. Gill). I shall not take long, as I am conscious that many of my hon. Friends wish to speak in this debate.

The hon. Member for Ludlow spent a great deal of time regaling the House with his difficulties in understanding the documents before us. I hope that I shall be able to shed some light on them and to explain the motives and the politics behind the formula on page 28 that he misquoted.

The hon. Member for Ludlow spoke about fairness, as did the Secretary of State, who said in his opening speech: ?You have got to be fair to local tax payers.? That is from the right hon. and learned Member who was responsible for introducing the poll tax—the man responsible for introducing the council tax. He wanted to get rid of the rates because, as he told The Financial Times: A property tax is not fair. That was the justification for introducing the poll tax. The very same man is getting rid of the poll tax and introducing another council tax.

The hon. Member for Ludlow went on at great length about thrift, but it sticks in my throat to hear anyone from the Conservative Benches talking about thrift after the Government squandered £14 billion on the poll tax. How can they possibly talk about thrift with a straight face?

Fairness is not a characteristic of the new council tax. How can a tax be fair when single people get an automatic 25 per cent. discount on their council tax bills simply because they live alone? They could be millionaires or be living in band G houses, but they get a 25 per cent. discount, while a struggling family which is trying to get by just above income support level has to pay the full whack. That is not fair.

The politics behind the formula is that the Conservatives want to depress public spending. They are open about it. They want to cut public provision, as they do not believe in it—if it can be privatised, then privatise it.

The formula is another ideological attack on local government. Although we hear about efficiency and effectiveness all the time, it is not about efficiency. It is about transferring provision from the public to the private sector wherever possible. It is not merely happening to local government. Post offices and job centres are closing. Public provision is contracting everywhere, because that is the Government's ideological mission.

The tax is also a threat to democracy. My hon. Friend the Member for Blackburn (Mr. Straw) mentioned the erosion of democracy and the fact that councillors now lack controls because of the functions that have been transferred to what has been dubbed the ?new magistracy?—to shadowy characters who have not been elected but now have control of vast amounts of public money.

The revenue support grant settlement will mean major job losses. In my neck of the woods, it is about as welcome as a dose of anthrax. Job losses have spiralled since the right hon. Member for Huntingdon (Mr. Major) became Prime Minister in November 1990. There were 1,708 unemployed people in Pendle then, but the figure has spiralled to more than 3,000, and that was before the 574 job losses announced last week at Smith and Nephew.

On standard spending assessments, I shall not go over the ground that has been adequately covered by my hon. Friends the members for Sherwood (Mr. Tipping) and for Lancashire, West (Mr. Pickthall), who is no longer in the Chamber. The SSAs were supposed to be an objective measurement of need. Because Government grant follows them, they are important.

The present Secretary of State for the Environment told the Association of District Councils conference on 17 September 1987: ?Our plans for the new grant system?— the SSA— ?will ensure stability, accountability and a great deal more simplicity.? He said the same about the poll tax, and he got that wrong. The new stable system that he was describing a few years ago is now under review by his Department and by the Audit Commission.

My hon. Friend the Member for Lancashire, West delivered a powerful critique of the flaws of the SSA system, which does not simply reflect need—whether in Lancashire, West, Barnsley or anywhere in the north of England—but tips resources to the south and the south east. The formula makes no allowances for unemployment or structural change. In my area we have lost 20,000 jobs in the textile industry. My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) mentioned the incredible changes in the mining industry in his area, which are also not reflected in the formula, yet it is supposed to be fair.

The SSA methodology is really suspect when it comes to members of our communities who come from the new Commonwealth and Pakistan. We were told that, wherever possible, information from the 1991 census is being used, but in the case of those members of our community they are using information from 1981. The information there is 12 or 13 years out of date.

What does this mean to an area like mine in north-east Lancashire? In Pendle, in 1981, 6.9 per cent. of the population came from the new Commonwealth and Pakistan. By 1991-these figures are not incorporated in the formula-the proportion had gone up to 9.9 per cent. In other words, there was a difference of a full three percentage points, yet this is not built into the figures.

Earlier, there was a discussion about the census. The Secretary of State or one of his friends tried to argue about the accuracy of the census, but we all know from experience that there has been a haemorrhage of voters from the register because of the poll tax. I am not the only person who says so: the Office of Population Censuses and Surveys itself says the same. That office says that the 1991 census is 500,000 people light. I suspect that many of those people live in inner-city areas-areas that tend to be represented by Labour politicians.

The Secretary of State has said that the new grant system provides accountability. What a joke. I want to quote from my local paper, the excellent Lancashire Evening Telegraph. Many of my hon. Friends know the paper and no doubt agree with me about its excellence. This is what my local paper, on 13 January 1993, said about the accountability that the Secretary of State trumpets: ?This drastic surgery on our local services— police, schools and the rest—has really nothing to do with local government.The cuts are taking place by government decree—one that insists that, in order to stay below capping levels, the county council has to chop £60 million from its budget.The only real input our local representives have in this process is to consider the list of horrible options put in front of them—such as fewer police and teachers.? That says it all. All this talk about democracy—handing power back to the people—is a complete distortion of the truth.

The Secretary of State talked also about simplicity. We all know—the hon. Member for Ludlow (Mr. Gill) will appreciate this, as he believes in simplicity—that, the more simple the system, the moire likely it is to contain mistakes. We have got used to rough and ready, back-of-the-envelope stuff from the Government.

My local authority in Pendle had its SSA increased by a miserable £1,000—and that was after my councillor colleagues and I had gone to see the Minister to plead the case. My hon. Friend the Member for Lancashire, West (Mr. Pickthall) spoke at great length and with great eloquence about Lancashire county council. That council's SSA has gone down from the £866.4 million of November to £865.6 million. As I said earlier, these resources are being tipped from the north to the south of England.

I want to move rapidly to the question of gearing, which was touched on by my hon. Friend the Member for Sherwood (Mr. Tipping). A local authority is not a free agent in this respect. Indeed, 85 per cent. of local government spending is determined at the centre, arid only 15 per cent. by the local authority itself. If a council wants to spend rather more than central Government think it should spend, it has to make colossal increases in the council tax. We have heard a great deal about capping, but that is another story. The gearing is designed to hold public spending down—that is the whole object of the exercise.

Connected with this matter is the whole question of valuations. The valuations have been absolutely botched. It costs about £1.76 to value a property in Pendle. In Lancashire as a whole, the figure is about £1.90. There has been no proper valuation at all. We are going to see an avalanche—I have heard a figure of 1.5 million —of appeals in April when people get their council tax bills.

For example, a pensioner came to see me who lives in a farm cottage one third of a mile from the nearest metalled road and one third of a mile from the nearest street light. His rubbish is not collected by the local council. Before the introduction of the poll tax, he paid about £114 in rates. The couple are just above income support level, and, as their property has been tipped into band C, they will now pay £577. The man told me that he did not have that sort of money. He did not understand what was happening. He though that the new council tax would be a fair replacement for the poll tax. But it is not fair. It is not fair to him, and it is unfair to many other people.

To iron out some of the unfairness, the Government introduced a transitional relief scheme. But we know that that scheme has been massively underfunded. Ministers wanted £1 billion from the Treasury, but they managed to squeeze out about £300 million. This has had a horrendous impact in areas, such as Pendle, that are traditionally low-rated.

When, about a month ago, my colleagues and I went to see the Minister for Local Government and Inner Cities, we made it absolutely clear to him that the problem was that, even with increases capped, there were some very big percentage rises. We quoted the example of a two-person household in band A—67 per cent. of the people in my constituency live in houses in that band—with transitional relief. Even after the application of the transitional relief scheme, those people will pay 33.7 per cent. more in council tax than they did under the old system.

As I am conscious of the time, I wish to conclude with a word of warning to Conservative Members. It was the Pendle factor, among others, that sank the poll tax. Latterly, my predecessor, Mr. John Lee, was vocal in his opposition to the poll tax. In a low-rated, low-wage, poverty-stricken area, such as mine, the council tax too will have punitive effects.

There is nothing in this financial settlement—nothing in the transitional relief or in the council tax or in the SSAs—to give me, any of my council colleagues or the residents of Pendle any encouragement at all. It is a bad deal for north-east Lancashire and, more importantly, for local government generally.

9 pm

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

I am grateful to you, Mr. Deputy Speaker, for calling me as I had not intended to speak in the debate until I heard the remarks of the hon. Member for Blackburn (Mr. Straw), who is not now present. It is a pleasure to follow the hon. Member for Pendle (Mr. Prentice) who is, I believe, the gentleman who is alleged to have invented the loan swaps that have caused so much grief and difficulty for many local authorities.

Photo of Gordon Prentice Gordon Prentice , Pendle

The member of Hammersmith and Fulham council who introduced it to loan swaps was Mr. Kim Howe, a Conservative leader of the council in 1981–82. If the hon. Gentleman wants to know the history of loan swaps in Hammersmith and Fulham, he should read the independent report, commissioned by the council and written by Mr. Van Veeder QC. It completely exonerates all Labour members of any nefarious dealings.

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

I am delighted that the answer is given in such a pat manner that it must have been repeated on numerous occasions.

I wish to say a few words in praise of local government, as not enough is said here in support of the men and women who give such valiant service in the councils of England, Wales and Scotland. It is right that we should put down a marker noting what they do. Some 17,000 or 18,000 people serve in that way. It is inevitable that a few of them— whatever their party or political complexion—will prove to be rotten apples in the barrel. However, the country should express gratitude for the way in which the vast majority of them give of their time and service.

Some of those people feel that they have a constitutional role in local government that overrides the views and policies that may be dictated by and originate from the House and the national Government of the country. I say that because I recall the hon. Member for Burnley (Mr. Pike) attacking me vigorously on that issue not many months ago.

Local government is subservient to national, central Government. That has always been my view. However, again and again in the debate it has been argued that there is some divine right in local government to determine national policies that may run contrary to those of central Government. That has rarely been, and never should be, the case.

We do not live in a federal authority. There are plenty of European precedents of local government or inter-state government shaping the form of national policies, but that is not so in our country. The German länder, the Italians and even the French, to a lesser extent, have a history of small states coming together in relatively recent years to create a nation. They consider that their local government —in the sense that it is a federal organization— has rights to determine national policy. Such a belief is alien to the history and principles of this country.

Local government in this country does not have the right to demand expenditure levels contrary to the determined policy of the Government, supported by the House and the other place. The decisions must be made here. We should resist the temptation to give local government the right to seek to set expenditure levels in excess of the priorities that have been debated and determined in the Chamber. There seems to be some Opposition Members who believe that local government should embark on social engineering of some form. Such issues should be determined here in the Chamber, as they are matters of national, not local, priority.

The standards of probity that we should expect of local government, and that we so often see, have unfortunately fallen short in a number of authorities. That is true not just of individual members about whom accusations have been made or are being processed, but of some local administrations. That ought to worry Opposition Members, since almost all those local authorities are under Labour control.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

The hon. Gentleman may recall that, in a previous incarnation, I used to meet him in my capacity as a National and Local Government Officers Association official at the Association of District Councils, over which he presided. We both had to deal with the gross mismanagement of an organisation called the Local Authorities Management Services and Computer Committee, which cost district councils many thousands of pounds, which is probably still having to be paid over. I still have the files, and I remember that this happened under the stewardship of the hon. Gentleman and other members of the ADC. It is wrong of him to talk about mismanagement by Labour local authorities when there is a whole raft of evidence—he is well aware of it— of wrongdoing in LAMSAC, over which he, Lady Anson and others exercised a considerable degree of control.

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

Since he has the files, the hon. Gentleman ought to recall the facts a little better. He should remember that LAMSAC, on whose board of management I never served, included among others representatives of an organisation known as the Association of Metropolitan Authorities—those members were prominent in its organisation and they came from the Labour party, as did representatives from other local government organisations. So the body was not stamped with any political mark, contrary to what the hon. Gentleman suggests. I appreciate that he may have lost himself in those files, which he seems to have retained to produce for events like this one, but he really must try to do better next time.

Earlier, I mentioned the high standards of probity in most local government. There has, however, been an appalling lapse of administrative control—not necessarily wrongdoing by individuals—in authorities such as Lambeth, Hackney and Sheffield, not to mention Monklands in Scotland. Those of us who want local government to do well and who want to be able to support it believe it fair to criticise those lapses of administration and sort them out. It concerns me that the Labour party seems slow to put its colleagues in local government right even though they have obviously gone wrong.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) said that Sheffield had won the support of some beauty parade that appeared in the Local Government Chronicle, which showed that it was a well managed authority. I seem to recall that the article in question was based on a survey of the views of local government officers, not on external appraisal by a body such as the Audit Commission. Those local government officers were mostly in the employ of local authorities, such as Sheffield city council, controlled by the Labour party.

It follows that Labour Members should check their facts before claiming examples of good management practice. In this case, the hon. Member for Attercliffe cited an authority that had spent £10 million—lost £10 million —on the student games, and which is now spending money on providing offices for Members of this House.

There have been allegations in this debate of rigging the population formulae for assessing revenue support grant. Extraordinarily enough, Opposition Members suggested that the population of certain parts of the country was being under-estimated because their residents were trying to avoid registration for community charge purposes. It is surprising that some hon. Members think that many of their constituents sought to avoid the legitimate processes of community charge registration. Those hon. Members must answer to their electorates for that.

Opposition Members fail to understand the significance of population increases and movements in terms of the estimates and appraisals in the RSG calculations. We all know, and some hon. Members will know to their cost as the parliamentary boundaries are changed, that inner cities are being depopulated, a trend that has continued for many decades. Conversely, some urban fringe and rural areas are seeing a population explosion.

Local government in such areas has to provide a substantial infrastructure to support the increased population. New schools and roads have to be constructed, and even new social services offices have to be built. Therefore, the demands on local government in the expanding parts of the country are very much greater than in areas of declining population.

There is no gerrymandering when revenue support grant properly reflects population changes that are the inevitable product of the movement of people. Such movements have continued throughout this country's history, as jobs change their nature and people seek to follow them. It is wrong to complain about grant following population in that way.

It has been said that there will be substantial job losses. There may be some, and we all regret that, but the Opposition and their colleagues in local government are engaging in much scaremongering. We were told that Birmingham city council would lose 1,000 jobs. Only a few weeks ago, the Labour leaders of that council said that they would lose 3,000 jobs. If that trend continues, they will tell us in a few weeks that they are about to take on employees. A review in the Municipal Journal reveals that 22 per cent. of local authorities will take on extra employees. We must avoid histrionics in talking about employment in local government. The truth may be very different overall when the figures are finally known.

Opposition Members spoke about spending. Many tears have been shed over the difficulties that local government will allegedly suffer next year because of the small increase in total standard spending over this year's budgets. The issue is important, because comparisons are being made between this year's budgets and next year's total standard spending. Local government, sometimes for bad reasons and sometimes for good, has spent substantially over its total standard spending in the current year. Is it suggested that that overspend should now be built into the revenue support grant calculations so that it is ratified?

That appears to be the argument, but it is nonsense, because it would mean that every local government overspend in every year would be automatically and retrospectively approved by the Government. That is not on, and the Opposition ought to know it. No Government, whatever their political colour, could possibly ratify past expenditure levels and simply carry them forward as a base for the next year. We must have a level of stability, which must be based on the total spending of the previous year, according to the formula. From that formula, additions are constructed.

Local government needs stability. I entirely support hon. Members' suggestions that area cost adjustments should be examined next year, and I welcome the Secretary of State's announcement that he is looking at the SSA mechanism. I trust, however, that, in considering any amendments, he will remember that violent changes in grant distribution from year to year should be avoided, just as violent changes in the demands on the individual community charge payer, or council tax payer, should be avoided from year to year.

The hon. Member for Pendle suggested that his constituents would suffer as a result of the imposition of the council tax. He seems to have completely forgotten about transitional relief. The same rules should apply to changes in SSAs and the grants that follow from them year by year.

Opposition Members have talked a great deal of nonsense. The truth is that the Government's proposals are eminently fair and reasonable. They will not make life difficult for local government; I know that my council colleagues of a year or two ago would make the same point. Of course it will be a tough settlement, but every year brings a tough settlement. Every year requires local government to investigate its expenditure thoroughly, and this year will be no exception. I am glad that the majority of local authorities will look at their expenditure carefully, and will seek to achieve efficiency and effectiveness in delivering services. I hope that the few that have not done so in the past will change in the future.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North 9:16 pm, 3rd February 1993

In previous years' debates on the Local Government Finance Report, hon. Members have complained that debate has involved more of the same Tory attacks—more financial restrictions, more cuts in resources, more job cuts and more damage to local authority services.

Today's debate again involves more financial restrictions, more cuts in resources and jobs and more damage to local authority services. However, it differs from the debates of past years. Although such cuts have undoubtedly been made in the past, local authorities in the past have been able to mitigate, at least to some extent, the worst effects of Conservative cuts. They have increased local sources of finance to compensate for central Government cuts; sometimes they have dug deep into their reserves, and—as many of my hon. Friends will know—in numerous cases they have virtually emptied those reserves. They have also attempted to borrow on occasion, in an attempt to defend services and protect the local population.

Few such avenues are now open to authorities, because most borrowing schemes have been decreed to be inoperable. Authorities have lost the potential to tap reserves, and central Government—through severe capping regulations—have taken away their remaining powers to raise additional resources locally.

As the Government well know, the difference between this and previous years lies in the depth and severity of cuts—cuts in services, cuts in jobs on a scale unknown before the current round of local government financial announcements, cuts in virtually every part of the country. I warn Conservative Members to make no mistake— there will be pain in many constituencies, not only in those of my hon. Friends. There will be pain for children whose schools are not properly funded, pain for elderly people when home help services are cut, pain for young people when youth clubs are closed or they have to wait much longer to get a start on housing, and pain for most of us—indeed, all of us—who use roads which will be less well lit and less adequately maintained. There will be pain for almost all sections of the community because, whether hon. Members like it or not, virtually all members of our community are in one way or another dependent on local authority services.

The debate is about that difference in severity compared with previous years. It is about the additional pain that the cuts will inflict, but it is also about the negation of democracy, about denying local communities the right to determine their future and denying people the right to have a say in their community. It is no longer local people who decide what services are provided, what education or social services or what level of road maintenance is required. Essentially, central Government decide those matters.

The 152 Tory Acts relating to local government which have been introduced since 1979 mean that local government can no longer function democratically, and democracy cannot function without local government. It is our democracy which maintains our British way of life and which is infringed by repressive legislation. Ours is the only nation in western Europe and among the industrialised countries which has so much central Government control of local government.

Many other interesting issues have also been raised. The right hon. Member for Brent, North (Sir R. Boyson) showed himself capable of making a reasonable contribution, even though he is a Blackburn Rovers supporter—probably a very depressed Blackburn Rovers supporter—by making a plea for the house owners in his constituency who will suffer through being placed in a high band for the council tax. He said that the situation was worse because of the slump that he detected. He was able to distinguish between a slump and a recession because of his northern roots. The House and his constituents will be grateful for his observations. Certainly, his constituents will be grateful that he cares so much about their economic circumstances.

The right hon. Gentleman raised two other useful points on which we can all agree. He spoke about the inadequacy of our registration system for voters. I do not believe that we can have a proper democracy unless we know who is able to vote. There should be a debate between the parties to consider how to improve the system.

The right hon. Gentleman also said that the battle in— some ways, the relentless battle—between central and local government did neither party any good. He called for balanced, measured judgment and for local democracy. Unfortunately, he dug a little too deeply into his conscience and did not feel that he would be able to vote with the Opposition today. May I plead that, after hearing the debate, he might not need to dig so deeply as he had thought?

The hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) brought out a box of tricks which he had clearly obtained from Conservative central office. He is in danger of being known in future as the hon. Member for Pandora because even with his box he did not get it right in relation to public sector borrowing requirement problems. The blame does not lie with local authorities, which raise perhaps £10 billion a year, or even with central Government finance for local authorities, which is of the order of £32 billion a year. The real problem lies with the level of unemployment because we now spend £20 billion of virtually wasted resources buying ourselves out of unemployment.

I am glad to see that the hon. Member for Harlow (Mr. Hayes) has returned to the Chamber. He emphasised his duty to make representations on behalf of his constituents, and he certainly did that in a humorous way today. He said that he was not confident that the Minister would necessarily respond to all his representations. However, I believe that he revealed some of his real views when he paid tribute to the important work of a child abuse centre in his constituency, but was not prepared to recognise that there is a clear link between the way in which the SSA is calculated and the amount of resources available to a local authority to spend on that essential duty.

The hon. Member for Harlow also gave himself away when he criticised a community group having access to a public building at peak times. I should have thought that the whole purpose of a public building was that community groups should have access to it and, if they needed access to it at peak times, that was an appropriate use for that building.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

I am grateful to my hon. Friend for giving way to the authentic voice of Essex which I believe is vested in me. The Labour-controlled council of Harlow is having to grapple with the effects of inheriting a new town with its large infrastructure as well as the reasonable expectations of its residents, but that situation is not matched by appropriate funding from central Government. There is at least a moral commitment for the Government to fund that infrastructure. Is not the hon. Member for Harlow (Mr. Hayes) caught between a rock and a hard place? His Government are letting him down while his constituents are being failed by the same Government financially.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

I am grateful to my hon. Friend the Member for Thurrock (Mr. Mackinlay) for raising that point. The hon. Member for Harlow did not inform the electorate before the general election that there was a need to rein in public expenditure: the electorate found that out to their cost afterwards.

The hon. Member for Brentwood and Ongar (Mr. Pickles) said that he believed that the country deserved good local government, and I certainly endorse that. I was not sure about his point in respect of the redundancies in Birmingham, whether the figure for job losses is 3,000 or 1,000, but even 1,000 job losses is bad for a city such as Birmingham which has suffered some of the worst effects of the recession.

Photo of Mr Graham Riddick Mr Graham Riddick , Colne Valley

Does the hon. Gentleman approve of the way in which Sheffield council has used poll tax payers' money to subsidise the constituency offices of five Labour Members to the tune of £55,000?

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

Whatever else I thought about the hon. Member for Colne Valley (Mr. Riddick), I thought that he intervened in this place sufficiently frequently to have heard the answers to questions. Had he been in the Chamber today, he would already have heard that those facilities are made available to Members of Parliament in Sheffield.

The hon. Member for Cheltenham (Mr. Jones) agreed with my hon. Friend the Member for Blackburn (Mr. Straw) that it was surprising that the Secretary of State did not mention job losses. My hon. Friends the Members for Tyne Bridge (Mr. Clelland), for Barnsley, Central (Mr. Illsley), for Sherwood (Mr. Tipping), for Lancashire, West (Mr. Pickthall) and for Pendle (Mr. Prentice) identified the way in which the calculation of the SSA has been extremely damaging to their constituencies.

My hon. Friend the Member for Tyne Bridge compared the situation in Gateshead with that in Westminster, clearly demonstrating the inequities in the system. My hon. Friend the Member for Barnsley, Central has repeatedly emphasised the way in which the system discriminates against coal areas such as Barnsley. I pay tribute to his persistence and I hope that the Minister will say more about that than his predecessors have in years gone by.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

Is the hon. Gentleman associating those on his Front Bench with the idea that money should be taken away from inner London and given to the north? That would affect Camden, Islington, Hackney and Lambeth, as well as Westminster. Is that the Opposition's policy?

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

I think that I am running out of time— [Laughter.] Hon. Members should wait a moment. I was about to help the Minister by explaining the work that has been done by Dr. Martyn Senior at the university of Salford in examining the criteria in respect of the standard spending assessment. The hon. Gentleman has brought me to that point a little prematurely, but I will answer his question.

At present, the criteria do not allow any significant impact for long-term unemployment, which badly damages certain and specific communities and leads to increased needs in respect of education, social services and economic development. That has nothing to do with comparisons between the north and London boroughs, but everything to do with an equitable system.

My hon. Friend the Member for Blackburn highlighted the failure of the capping system. He showed that cuts in local government expenditure have a deflationary effect on our economy. He said also that, when expenditure has been buoyant, so has the private sector, because it has gained much from healthy local authorities. He pointed out contradictions in the Secretary of State's position on capping, jobs and service cuts.

There are occasions in the House when hon. Members regret something that they have said. The Secretary of State has no great reputation for regretting things that he has done, but hon. Members might wonder whether he has any regrets about what he has said about capping. If he has some regrets, he will be able to take some consolation, for his political acrobatics have no doubt impressed Treasury officials well in advance of any leap that he might want to make in future from his Kremlin at No. 2 Marsham street to the bunker at No. 11 Downing street. If he is to square what he said in his November statement about no jobs being lost with what is evidently happening in local authorities, he will need the acrobatic qualities of the gladiators we see on television on Saturday evenings.

I remind the House that the Secretary of State said that local authorities should be able to maintain the full range of services that they provide if they run them efficiently. How does he square that statement with Tory authorities' response to his announcement? How does he square it with the response of Devon, which has announced £21 million in cuts and 145 job losses? How does he square it with the point made by the hon. Member for Cambridgeshire, South-West (Sir A. Grant)? Cambridgeshire's SSA is down from £402 million to £380.6 million, and 330 jobs are at risk. How does he square it with Harrow, where 10 per cent. cuts in services will take place and 200 jobs will go? How does he square it with Enfield, which has emphasised that it has a £21 million gap and that up to £10.5 million could go in its education budget?

Some schools have said that they could lose up to 20 teachers. An education officer has said that it is possible that children will be taught part-time at Enfield. The head of a school tells parents that children might be on a four-day week or a four-and-a-half day week by the time the council has finished its budget. How does the Secretary of State square what he has said with the situation in Barnet, where the chief executive has said that the effect of the Government's policy is to take the arms and legs off the local authority? The chief education officer in Barnet talks about the education system being bankrupt.

Photo of Michael Howard Michael Howard Secretary of State for Environment

The hon. Gentleman should in future co-ordinate his speech rather more closely with that of his hon. Friend the Member for Blackburn (Mr. Straw). The thrust of his hon. Friend's speech was that the system was a giant con trick designed to favour Conservative-controlled local authorities at the expense of Labour-controlled local authorities. Now we have from the hon. Gentleman a litany of woe specifically related to Conservative-controlled local authorities. The Opposition cannot have it both ways.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

The Secretary of State must acknowledge that the Opposition are not trying to have it both ways. My hon. Friend the Member for Blackburn emphasised the advantage that he believes that shire counties have had, but he also emphasised that the SSA system was so inequitable that not only Labour authorities but many Conservative authorities were complaining. What is the Secretary of State's response to those authorities?

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

No, I want to make progress.

Is the Secretary of State saying that those authorities are misrepresenting the true position? Is he saying that they are inefficiently run Tory councils? What is his advice to Barnet council? Is he saying that it should make £8.5 million cuts in education to avoid capping, or is he saying that teachers should be made redundant and class sizes increased? Is he suggesting that there should be part-time education in Barnet and that support staff should be sacked? Is he recommending that there should be cuts in equipment? Is he saying that all those cuts should take place? What is the Secretary of State saying to those Tory authorities?

What is the Secretary of State saying to parents in Barnet, who, in Conservative Britain, in state schools in 1993, are now being told that under local management their schools cannot afford to buy services from the local authority such as music, sport, and other facilities? What is his advice to the Tories on Barnet council? After hearing today's debate, is he still prepared to say that his settlement is an eminently reasonable one, as he stated in his opening remarks?

Clearly, great damage has been caused to our local authority services by the Government cuts and the destruction of local democracy. There is also a sense of grievance throughout the country, which is made worse by the feeling that the calculation of the standard spending assessment is distorted and biased. If we are to have a system of local government which is considered fair and which is honoured at local level by people of all political colours, as many Conservative Members have said today, we need a major review of the SSA system. It is not good enough to say that such a review will take place internally. I believe that there should be an independent review of local government finance. That is the view of Tory and Labour local authorities, the academic world and the Audit Commission. We all look forward to the evidence from the Audit Commission in future.

Contrary to their November statement that cuts would be unnecessary, the Government are asking the House to vote for deep cuts in local authority services. Contrary to that commitment, they are asking the House to vote for thousands of job cuts in local government at a time when 3 million people are unemployed. Contrary to the Secretary of State's commitment that capping should he used only as a reserve power, they are asking the House to vote for an unprecedented regime of Soviet-style central control of local government finance which will totally destroy democracy. Contrary to their claims about subsidiarity at the time of the Maastricht summit, they are asking for the right to deny British people the right to decide their own level of local authority provision, a right which any reasonable interpretation of subsidiarity would grant them.

We believe not only that the financial regime which the Government are set to impose on the British people is flawed and incomprehensible, but that its structure shows bias in the setting of SSAs and notional budgets and in the allocation of grant. Cuts will cause severe pain to those in local communities who depend most on local authority services, and job losses will have a further deflationary effect on the economy with a consequential increase in the cost of unemployment benefit. We believe that British people can be trusted at local level to decide the contribution that they make to their own services. We believe that democracy does matter nationally and locally, and we ask the House to reject the Government's proposal today.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government) 9:38 pm, 3rd February 1993

The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) certainly gave us a more powerful rant than the hon. Member for Blackburn (Mr. Straw), but his speech was equally wide of the mark. The charge of the Labour party that the grant system is biased and rigged is simply wrong. It is a disgraceful charge to make, and I intend to disprove it.

We have had a good debate, and I would like to add my praise to all those councillors and people who work in local government who were mentioned by my hon. Friend the Member for Bromsgrove (Mr. Thomason) and several other hon. Members on both sides of the House. Local government does extremely important work. We are often well served by our local councillors, and I add my tribute to them.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

No, I must press on, because I wish to answer many points from the debate.

The hon. Member for Pendle (Mr. Prentice) dared to attack the idea that the single person should get a discount from the council tax. This is of great importance to 6 million people and it amazes me that the Labour party wants to take that discount from all those single people. I hope that my hon. Friends will be telling their constituents just what the Labour party wants to do in this respect.

The hon. Gentleman complained that the SSAs needed changing and that they were not stable enough. To add even more extraordinary remarks to his speech, he went on to say that the Office of Population Censuses and Surveys had identified that there were people missing from its census, but did not seem to realise that it had adjusted the census and added them back in so that the SSAs would reflect the actual number of people. There are good statistical methods for correcting these things and the work has been done by independent statisticians.

The hon. Member for Cheltenham (Mr. Jones) said that the Liberal party wished to take off all the caps and he did not mind the tax consequences. He told us that he had had no letters from people wishing to keep taxes low and that this did not really matter; we should allow local government in Cheltenham and elsewhere to spend anything it liked. If that were the policy that Parliament had approved, the hon. Gentleman would soon be getting plenty of letters from those living under Liberal councils throughout the country, because they are indeed spendthrift, just like the Labour councils, which spend more and provide less service for the money they are getting. He made no mention of the fact that Cheltenham is getting a 10.9 per cent. increase in its SSA this year—one of the biggest increases in the country.

I should like to praise my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) for his excellent speech on the position of local government next year, drawing on his very wide experience of local government. I can reassure my hon. Friend that the internal management working party will look at the role of the officer and of the member in local government. I have much sympathy for his remarks that for good local government there needs to be a clear distinction between those roles; the councillors should be interested in policy and monitoring and should leave officials to get on with the job of executing and running the policies that they have agreed.

To the hon. Member for Barnsley, Central (Mr. Illsley) I can give the assurance that next year, when we review the SSAs, we will look not only at the data that are becoming available, which will be updated and changed, but also at the method. I take his remarks and those of other speakers in the debate as early representations of what they would like to see in those amendments to method. As the House will have heard during the debate today, there are many different views of how they should be changed, and of course different parts of the country want them to be changed in entirely different directions.

I enjoyed the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Clifton-Brown). His was both an amusing and a hard-hitting speech. I also enjoyed the pantomime double act with the hon. Member for Wolverhampton, North-East (Mr. Purchase), who played the straight man, or the other end of the pantomime horse, with great aplomb.

My hon. Friend the Member for Cirencester and Tewkesbury attacked the debt mountain of certain local authorities. I echo his remarks that those local authorities that can get themselves out of debt naturally get more financial freedom. They show that they can manage their affairs extremely well and they are not then spending their money on interest charges; they are spending it on real services for their people.

The hon. Member for Lancashire, West (Mr. Pickthall) attacked the whole idea of the area cost adjustment. He seemed unable to grasp the point that, despite the area cost adjustment, because there are many other factors in the formula that help his part of the country at the expense of places like the home counties and London, his part of the country really does quite well. Lancashire's SSA per head is £615, while, of the counties that he eyed enviously, Hampshire has £568 and Oxfordshire £541. I do not think that his council or constituents would like it if we swapped the one for the other. It shows that the points that he made about Lancashire's needs are clearly picked up in the formula for the SSA.

My hon. Friend the Member for Isle of Wight (Mr. Field) was rightly disappointed that members of the Liberal party were not present to hear his contribution. It is strange, as the Liberals have always claimed an interest in the Isle of Wight, but now that it is safely under the control and in the good hands of my hon. Friend perhaps the Liberals have learnt that it is not worth discussing the Isle of Wight any more.

Photo of Mr Nigel Jones Mr Nigel Jones , Cheltenham

I apologise to the Minister and to the hon. Member for Isle of Wight (Mr. Field) for missing his speech. I had an engagement with the BBC at the time.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

The hon. Gentleman obviously knows where his friends are and where his friends are not.

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

The hon. Member for Cheltenham (Mr. Jones) was desperate to get to the BBC before I did.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

I am grateful to my hon. Friend, who, I am sure, will have made better use of the invitation than did the hon. Member for Cheltenham.

I hope that my hon. Friend the Member for Isle of Wight is pleased that the Isle of Wight has, at 6.1 per cent., the biggest increase in standard spending assessment per head of any of the counties next year, and that it makes budgeting easier. It has picked up some of the points that he mentioned. I give him the assurance that we will look at the issue of the fire services SSA distribution in the working party and in the discussions ahead of next year's settlement. If he or any other hon. Member wishes to make representations on that, we will be happy to receive their letters.

The hon. Member for Sherwood (Mr. Tipping) made no reference to the Newark and Sherwood councils which have increased their budgets by almost 50 per cent., comparing the current year with 1990–91. Despite their having gone up 50 per cent. against inflation of 12 per cent., we were treated to the usual speech about deadly cuts and savage impositions by the Conservative Government. What price, then, the freedom of local government when a council in his own area can increase its budget by almost 50 per cent. if it wishes? It seems to me to show considerable local freedom and autonomy, together with the ability to put the interests of those providing the council services ahead of those of the chargepayer. The SSA is primarily a mechanism to distribute grant—the hon. Member for Sherwood seemed keen that I should say that—but, as he knows, it serves other purposes as well.

The hon. Gentleman also attacked the idea of the area cost adjustment. He seemed unaware that Nottinghamshire and an SSA of £603 per head while Surrey, deep in the area that he covets, has an SSA per head of £513. I hope that he will find that the £90 extra is not only useful but reflects the way in which needs differ between Nottinghamshire and Surrey and are picked up by the formula.

I was delighted to learn that my hon. Friend the Member for Ludlow (Mr. Gill) will give the Government his wholehearted support on this issue. I hear that there have been one or two disagreements recently between him and the Government, but 1 am delighted that he sees fit to support us on this occasion. We will look carefully at the points that he made on sparsity and area cost, but he may like to know that already his council is the second biggest beneficiary from the sparsity factor. That, among other things, will be reviewed. We will also review the weightings, although it would mean putting another fraction into the grant formula, and my hon. Friend, in his amusing speech, was a little critical of the fractions in some of the grant formulae.

I agree with my hon. Friend that we should attempt to make all that we do intelligible and easy to understand. Some of the documents are, by their nature, complicated because they attempt to provide accurate assessments around the country and they form the base for the computer programming and the detailed work of local authorities. There are more accessible ways of learning about the system. My Department has sent out leaflets in plain English on, for example, the council tax, so that people can find out how the system is built up without all the complex detail needed to run the computers aria define the SSAs precisely.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The Minister will recall that when he was asked on the BBC at lunchtime about whether jobs would be cut, comparing next year with this, he dodged the question. Will he tell the House categorically whether he believes that this time next year there will be fewer, the same or more jobs in local government than there are today?

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

I will not forecast the number of jobs in local government, because, for example, there may be a good many grant-maintained schools. I do not know how many will decide to become grant-maintained. If that happens, the same number of people will still be employed but they will be employed by the schools, thus reducing the number employed by the local authorities. If a large number of local authorities do more competitive tendering, there could be a transfer of jobs from local authorities to the private sector.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

The hon. Gentleman should let me answer and then he may have another cockshy if he wishes to. He may be disappointed that he is not getting anywhere on this point. One cannot forecast that sort of thing.

As my right hon. and learned Friend the Secretary of State said, the settlement means that there is no need for compulsory redundancies in any well run authority, given the increases in grant and permitted spending which we are offering. There may be one or two badly run Labour authorities which have budgeted badly, overspent and got into terrible difficulties in the past. Those authorities may have to take awful steps. My hon. Friend the Member for Harlow (Mr. Hayes) said that the fault lay with Labour Members, not Conservative Members, for the way in which such authorities are run.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

The Secretary of State said that there will be no compulsory redundancies. In fact, in his letter to me dated 17 December he said that there would be no need for any job cuts. The question that I put to the Minister again, which is different, is: taking account of any transfers to the grant-maintained sector and privatised commercial undertakings, can he say that this time next year the overall level of jobs in local government will be the same as or lower than this year?

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

I agree with my right hon. and learned Friend the Secretary of State that there will be no need for job losses. I refer the hon. Member for Blackburn to the survey in the Municipal Journal, which interviewed the personnel chiefs of all local authorities. Of the local authorities surveyed, 22 per cent. will be making extra jobs in key areas, especially in care in the community; only 10 per cent. are thinking of any job reduction and 68 per cent. are not thinking of making changes. That is one estimate; it is not my estimate. As I told the hon. Member for Blackburn, I will not estimate the number of jobs that there will be in local government in the next 12 to 15 months. Personnel chiefs suggest that more councils will increase staff numbers in key areas rather than make reductions.

My hon. Friend the Member for Harlow gave the House a riveting account of what can happen in a Labour-controlled council which deliberately overspends. When such councils overspend, not simply by the odd million pounds but by many millions of pounds which they do not have, they must get the money back from the taxpayers.

Photo of Doug Henderson Doug Henderson , Newcastle upon Tyne North

Is the Minister aware that Wandsworth council announced this week, as it prepared its budget, that it has overspent by £6 million? How does he compare Wandsworth in those circumstances?

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

Wandsworth council is well known for its good financial management and low taxation. I do not expect to see Wandsworth as a potential applicant for capping, whereas I fear that one or two Labour-run councils may have to be so.

As we heard from my hon. Friend the Member for Harlow, the result of council overspending and bad management is damage to taxpayers and services and the sacking of employees. it is a disgrace that local authorities should be so badly run that councils get to the point of damaging taxpayers and services and sacking employees when the overall settlement is perfectly reasonable.

The hon. Member for Tyne Bridge (Mr. Clelland) contrasted Westminster and Gateshead as an example of alleged political bias. That is one of the kernels of the debate. The matter was first taken up by the hon. Member for Blackburn. The issue is whether there is any bias in the system. Let us examine the facts. On the standard spending assessment—it is right to examine the amount of spending and the grant based on it which councils are given for each individual in a local authority—the councils which do well under the current formula are Lambeth, at £1,241 a head, Hackney, at £1,410 a head, and Tower Hamlets, at £1,435 a head.

I can see a bit of political bias in that, but I fear that the criticism will come from Conservative Members, not from Labour Members. When I compare those figures with the shire areas, I see Surrey at £513 plus £80 or £90 for each district and West Sussex at £551 plus £80 or £90 for a typical district. Those figures are under half the level that large Labour and Liberal authorities in inner London receive.

Let us consider the specific argument of the hon. Member for Blackburn, who said that we had singled out the Labour shires for bad treatment. The eight Labour shires have an average SSA per head of £594, and the average for all shires is £585, so they had £10 per head more than the average.

Consider the averages by types of authority. In the shire areas, where there are more Conservatives, taking county and district together, it is £674 per head. In the metropolitan areas, where there are more Labour councils, it is £814. In London—with the considerable weight given to inner London where many Labour councils are—it is £1,055 per head. So I completely reject the idea that there is any political rigging whatsoever. The hon. Member for Blackburn does not want to intervene now because he knows that that is right. He knows that the formula gives more money to Labour-controlled areas.

Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment)

I am grateful to the Minister; he should not make an invitation like that. He failed to deal with the fact that the increase for Labour shire counties, at 2.2 per cent., is well below the increase in SSAs for Conservative shire counties, at 3.7 per cent. The difference in the increases shows the bias of the Conservative Government.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

They were getting more before and they will be getting more next year. Their increase is smaller because their populations have been falling, or have not been increasing as much as those in Conservative areas.

In introducing the debate, the hon. Member for Blackburn made a wimp of a speech; a stumble of a speech; a speech that died of intellectual rigor mortis long before he got to the end. I began to wonder whether he was understudying the shadow Chief Secretary to the Treasury, because he certainly lost his hon. Friends and most of mine in his strange arguments about public expenditure. I began to wonder whether he had come to the wrong debate.

The hon. Gentleman went on to make claims about the state of local government based on a survey that had just been conducted—a survey that he thought was independent and rigorous. I see this statement on the inside of that survey: ?The client for the independent budget monitoring project is the Labour party.? What an independent survey. Labour organised the questions, paid for the results and decided whether to publish them. There is open government in practice.! The Opposition are obviously trying to warm up their ideas.

When we look at the first survey resulting from that expensive piece of consultancy, we find not so much a survey but more a loosely linked group of 80 casual press cuttings. Any press cutting with bad news attached is included and any cutting with good news attached is scrupulously avoided and kept out.

It is like the Opposition's policy on local government: give prominence to the announcement that Birmingham will cut 3,000 jobs and let people believe that they will be sacked and that there will be compulsory redundancies; let the families of all those people squirm; let those employees go home at night worrying whether they will have a job in the morning; and then play it down when they are told a few days later that there will be only 1,000 job losses at maximum, and that no one will be sacked or made redundant. As one of my hon. Friends said, who knows how many job losses they will be predicting in a week or two? I hope that it will be none.

Let us consider what happened in Avon. I had to go on the radio and explain why I thought that there would be 4,000 job losses. I said that I did not think that there should or would be. The ?Today? programme of the BBC was not interested in the story that followed, when Avon climbed down and said it was not 4,000, 2,000 or 1,000 job losses, but that 170 posts might disappear. I hope that it will be none.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

No, I shall not give way.

I know that for some local authorities next year will not be easy—

Photo of Roger Berry Roger Berry , Kingswood

On a point of order, Madam Speaker. Is it in order for the Minister to give inaccurate information to the House and refuse to give way when he is challenged?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

The Minister is responsible for his own comments and statements.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

It is obvious that the hon. Gentleman wanted to stop my peroration. He does not like what I am saying.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The hon. Gentleman must resume his seat.

Photo of John Redwood John Redwood Minister (Department of Environment) (Local Government)

This is a fair settlement, a good settlement, and I commend it to the House.

Question put:

The House divided: Ayes 308, Noes 251.

Division No. 140][10 pm
AYES
Adley, RobertCoombs, Simon (Swindon)
Ainsworth, Peter (East Surrey)Cope, Rt Hon Sir John
Aitken, JonathanCouchman, James
Alison, Rt Hon Michael (Selby)Cran, James
Allason, Rupert (Torbay)Currie, Mrs Edwina (S D'by'ire)
Amess, DavidCurry, David (Skipton & Ripon)
Ancram, MichaelDavies, Quentin (Stamford)
Arbuthnot, JamesDavis, David (Boothferry)
Arnold, Jacques (Gravesham)Day, Stephen
Arnold, Sir Thomas (Hazel Grv)Deva, Nirj Joseph
Ashby, DavidDevlin, Tim
Aspinwall, JackDickens, Geoffrey
Atkinson, Peter (Hexham)Dorrell, Stephen
Baker, Nicholas (Dorset North)Douglas-Hamilton, Lord James
Baldry, TonyDover, Den
Banks, Matthew (Southport)Duncan, Alan
Banks, Robert (Harrogate)Duncan-Smith, Iain
Bates, MichaelDunn, Bob
Batiste, SpencerDurant, Sir Anthony
Beggs, RoyDykes, Hugh
Bellingham, HenryEggar, Tim
Bendall, VivianElletson, Harold
Beresford, Sir PaulEmery, Rt Hon Sir Peter
Biffen, Rt Hon JohnEvans, David (Welwyn Hatfield)
Blackburn, Dr John G.Evans, Jonathan (Brecon)
Body, Sir RichardEvans, Nigel (Ribble Valley)
Bonsor, Sir NicholasEvans, Roger (Monmouth)
Booth, HartleyEvennett, David
Boswell, TimFaber, David
Bottomley, Peter (Eltham)Fabricant, Michael
Bottomley, Rt Hon VirginiaField, Barry (Isle of Wight)
Bowden, AndrewFishburn, Dudley
Bowis, JohnForman, Nigel
Boyson, Rt Hon Sir RhodesForsyth, Michael (Stirling)
Brandreth, GylesForth, Eric
Brazier, JulianFowler, Rt Hon Sir Norman
Bright, GrahamFox, Dr Liam (Woodspring)
Brooke, Rt Hon PeterFox, Sir Marcus (Shipley)
Brown, M. (Brigg & Cl'thorpes)Freeman, Roger
Browning, Mrs. AngelaFrench, Douglas
Bruce, Ian (S Dorset)Gale, Roger
Burns, SimonGallie, Phil
Burt, AlistairGardiner, Sir George
Butcher, JohnGarel-Jones, Rt Hon Tristan
Butler, PeterGarnier, Edward
Butterfill, JohnGill, Christopher
Carlisle, John (Luton North)Gillan, Cheryl
Carlisle, Kenneth (Lincoln)Goodlad, Rt Hon Alastair
Carrington, MatthewGoodson-Wickes, Dr Charles
Carttiss, MichaelGorman, Mrs Teresa
Cash, WilliamGorst, John
Channon, Rt Hon PaulGrant, Sir Anthony (Cambs SW)
Chaplin, Mrs JudithGreenway, Harry (Ealing N)
Churchill, MrGreenway, John (Ryedale)
Clappison, JamesGriffiths, Peter (Portsmouth, N)
Clark, Dr Michael (Rochford)Gummer, Rt Hon John Selwyn
Clarke, Rt Hon Kenneth (Ruclif)Hague, William
Clifton-Brown, GeoffreyHamilton, Rt Hon Archie (Epsom)
Coe, SebastianHamilton, Neil (Tatton)
Colvin, MichaelHampson, Dr Keith
Congdon, DavidHannam, Sir John
Conway, DerekHargreaves, Andrew
Coombs, Anthony (Wyre For'st)Harris, David
Haselhurst, AlanNeedham, Richard
Hawkins, NickNelson, Anthony
Hawksley, WarrenNewton, Rt Hon Tony
Hayes, JerryNicholls, Patrick
Heald, OliverNicholson, David (Taunton)
Heathcoat-Amory, DavidNicholson, Emma (Devon West)
Hendry, CharlesNorris, Steve
Heseltine, Rt Hon MichaelOnslow, Rt Hon Sir Cranley
Hicks, RobertOppenheim, Phillip
Higgins, Rt Hon Sir Terence L.Ottaway, Richard
Hill, James (Southampton Test)Page, Richard
Hogg, Rt Hon Douglas (G'tham)Paice, James
Horam, JohnPatnick, Irvine
Hordern, Rt Hon Sir PeterPatten, Rt Hon John
Howard, Rt Hon MichaelPattie, Rt Hon Sir Geoffrey
Howarth, Alan (Strat'rd-on-A)Pawsey, James
Howell, Rt Hon David (G'dford)Peacock, Mrs Elizabeth
Hughes Robert G. (Harrow W)Pickles, Eric
Hunter, AndrewPorter, Barry (Wirral S)
Hurd, Rt Hon DouglasPorter, David (Waveney)
Jack, MichaelPortillo, Rt Hon Michael
Jackson, Robert (Wantage)Powell, William (Corby)
Jenkin, BernardRedwood, John
Jessel, TobyRenton, Rt Hon Tim
Johnson Smith, Sir GeoffreyRichards, Rod
Jones, Gwilym (Cardiff N)Riddick, Graham
Jones, Robert B. (W Hertfdshr)Rifkind, Rt Hon. Malcolm
Jopling, Rt Hon MichaelRobathan, Andrew
Kellett-Bowman, Dame ElaineRoberts, Rt Hon Sir Wyn
Key, RobertRobertson, Raymond (Ab'd'n S)
Kilfedder, Sir JamesRobinson, Mark (Somerton)
King, Rt Hon TomRoe, Mrs Marion (Broxbourne)
Kirkhope, TimothyRowe, Andrew (Mid Kent)
Knapman, RogerRumbold, Rt Hon Dame Angela
Knight, Mrs Angela (Erewash)Ryder, Rt Hon Richard
Knight, Greg (Derby N)Sackville, Tom
Knight, Dame Jill (Bir'm E'st'n)Sainsbury, Rt Hon Tim
Knox, DavidScott, Rt Hon Nicholas
Kynoch, George (Kincardine)Shaw, David (Dover)
Lait, Mrs JacquiShaw, Sir Giles (Pudsey)
Lamont, Rt Hon NormanShephard, Rt Hon Gillian
Lang, Rt Hon IanShepherd, Colin (Hereford)
Lawrence, Sir IvanShersby, Michael
Legg, BarrySims, Roger
Lennox-Boyd, MarkSkeet, Sir Trevor
Lester, Jim (Broxtowe)Smith, Tim (Beaconsfield)
Lidington, DavidSmyth, Rev Martin (Belfast S)
Lightbown, DavidSoames, Nicholas
Lilley, Rt Hon PeterSpencer, Sir Derek
Lloyd, Peter (Fareham)Spicer, Sir James (W Dorset)
Lord, MichaelSpicer, Michael (S Worcs)
Luff, PeterSpink, Dr Robert
Lyell, Rt Hon Sir NicholasSpring, Richard
MacGregor, Rt Hon JohnSproat, Iain
Maclean, DavidSquire, Robin (Hornchurch)
McLoughlin, PatrickStanley, Rt Hon Sir John
McNair-Wilson, Sir PatrickSteen, Anthony
Madel, DavidStephen, Michael
Maitland, Lady OlgaStern, Michael
Major, Rt Hon JohnStewart, Allan
Malone, GeraldStreeter, Gary
Mans, KeithSumberg, David
Marland, PaulSweeney, Walter
Marlow, TonySykes, John
Marshall, John (Hendon S)Tapsell, Sir Peter
Marshall, Sir Michael (Arundel)Taylor, Ian (Esher)
Martin, David (Portsmouth S)Taylor, John M. (Solihull)
Mates, MichaelTaylor, Sir Teddy (Southend, E)
Mawhinney, Dr BrianTemple-Morris, Peter
Mayhew, Rt Hon Sir PatrickThomason, Roy
Mellor, Rt Hon DavidThompson, Sir Donald (C'er V)
Merchant, PiersThompson, Patrick (Norwich N)
Milligan, StephenThornton, Sir Malcolm
Mills, IainThurnham, Peter
Mitchell, Andrew (Gedling)Townsend, Cyril D. (Bexl'yh'th)
Moate, Sir RogerTracey, Richard
Molyneaux, Rt Hon JamesTredinnick, David
Monro, Sir HectorTrend, Michael
Montgomery, Sir FergusTrotter, Neville
Moss, MalcolmTwinn, Dr Ian
Vaughan, Sir GerardWilkinson, John
Waldegrave, Rt Hon WilliamWilletts, David
Walden, GeorgeWilshire, David
Waller, GaryWinterton, Mrs Ann (Congleton)
Wardle, Charles (Bexhill)Winterton, Nicholas (Macc'f'ld)
Waterson, NigelWolfson, Mark
Watts, JohnWood, Timothy
Wells, BowenYeo, Tim
Wheeler, Rt Hon Sir JohnYoung, Sir George (Acton)
Whitney, Ray
Whittingdale, JohnTellers for the Ayes:
Widdecombe, AnnMr. Sydney Chapman and
Wiggin, Sir JerryMr. Andrew McKay.

Question accordingly agreed to.

Resolved,

That the Local Government Finance Report (England) 1993–94 (House of Commons Paper No. 422), which was laid before this House on 28th January, be approved.

It being after Ten o'clock, MADAM SPEAKER put the Questions necessary to dispose of proceedings on the other motions relating to local government finance, pursuant to Order [29 January].

Resolved,

That the Special Grant Report (No. 5) (House of Commons Paper No. 423), which was laid before this House on 28th January, be approved.—[Mr. Howard.]

Resolved,

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1993–94 (House of Commons Paper No. 424), which was laid before this House on 28th January, be approved.—[Mr. Howard.]

Resolved,

That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) (Amendment) Report (England) 1993–94 (House of Commons Paper No. 443), which was laid before this House on 1st February, be approved. —[Mr. Howard.]