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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 7:22 pm on 1st February 1995.

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Photo of Mr Gerry Steinberg Mr Gerry Steinberg , City of Durham 7:22 pm, 1st February 1995

The only point on which I agree with the hon. Member for West Derbyshire (Mr. McLoughlin) is his concern about the area cost adjustment.

This year's revenue support grant settlement is a great disappointment to Durham county council, which provides services in my constituency. It appears to have been severely punished under the capping regime for having adopted a cautious and realistic approach to past spending.

For a long time, the county council has sought changes to the area cost adjustment, but it has been ignored. It is the county council's contention, and mine, that the area cost adjustment is fundamentally flawed. It is now three times higher than five years ago and it has grown six times faster than local authority resources generally in that period. Some local authorities may need to be compensated for labour cost variations, but it is difficult to understand the size and distribution of the compensation—or perhaps that was explained to us earlier. It could have something to do with the political control of certain councils in the south of England, but perhaps I am being cynical.

The settlement is divorced from reality. The three major employment groups are teachers, the police and firefighters, who are all on nationally agreed wage scales. Durham county council, like many other authorities outside south-east England, has been deprived of its fair share of SSA.

The capping limit has been increased since last year's settlement, but it is well below last year's level for Durham county council. I appreciate that some factors have changed in the calculation of SSAs. Nevertheless, the county will have to save £14.5 million this year to set a budget at the capping limit. If it is to save that money, it will have to make cuts, including in administration, to maintain services to the community. It is inevitable that services will suffer. Specific decisions have not yet been taken, but, without doubt, some appalling cuts will be made. That is not scaremongering. Libraries will close.

Durham county council has given schools funding of £1.5 million to take into account the increase in pupil numbers. The Government have ignored that cost and have failed to provide any extra funds to pay for the cost of the teachers' pay settlement in 1995–96. That will have dire consequences on school budgets.

Road maintenance schemes will be cut by £500,000 and public transport support will have to be cut. Economic development, to which the council has attached great priority in recent years because the Government closed the mines and the steelworks in the north, will be severely cut.

I accept that the money transferred to social services under the special transitional grant is sizeable, but it is inadequate to meet needs, particularly the growing number of private nursing home places. Consequently, those services will come under significant pressure and will face cuts. Community care in Durham is under threat.

Cuts are not being made for the first time—far from it. In 1991–92 the council had to cut £1 million; in 1992–93 it had to cut £4.2 million; in 1993–94 it had to cut £6.9 million and in 1994–95 it will have to cut £10 million. It cannot go on.