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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 8:08 pm on 1st February 1995.

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Photo of Mr Anthony Coombs Mr Anthony Coombs , Wyre Forest 8:08 pm, 1st February 1995

Like many other hon. Members, in particular those who have had some local government experience, I do not deny that it is a tough, tight settlement. Nevertheless, it is entirely defensible and entirely manageable. Indeed, it would be totally hypocritical if I argued with the Treasury that Government spending should he kept down, as I have done consistently, and then ignored £43.5 billion out of total Government expenditure of £262 billion at the first whiff of grapeshot. Indeed, I appreciate that the 1.5 per cent. increase for Hereford and Worcester overall is a tough settlement. The settlement for education is 2.3 per cent. Nevertheless, it is an increase, and 2.3 per cent. is only marginally less than the rate of inflation.

It is entirely unjustified for somebody like Russ Clayton, the chairman of the county council, to try to scaremonger among parents in the county by arguing that there will be significant reductions in services before he knows how many pupils he will have to educate, before he knows what the teachers' pay settlement will be and before he even knows the final details of the SSA education settlement.

We were talking about the distribution mechanism of SSA. I suppose that nothing is perfect, and everybody will have their own point of view on the matter. Nevertheless, it is worth saying that a recent study by Rita Hare of the Chartered Institute of Public Finance and Accountancy and Tony Travers of the London School of Economics stated that no overseas country appears to have a full grant system which goes so far in its attempt to achieve full equalisation. I was going to say—in an awful pun—that that means that what the hon. Member for Holborn and St. Pancras (Mr. Dobson) said was an absolute travesty. I believe that reforms are continuing to be made to the SSA mechanism, and it is as fair as we can get, although I have one or two things to say about matters which I believe should be reformed.

That there is room for economies in a service that nationally spends £43.5 billion is beyond doubt. For instance, my district council—I was happy to recommend that it was capped to protect local council tax payers from its profligacy—spends no less than £10.5 million; fully 25 per cent. above its SSA. If one bears in mind what neighbouring authorities of a similar type spend on their SSA, it shows the excessive expenditure of the council.

What is more, the council—despite the fact that it is spending £1 million more than its capping limit—has had to take money out of its reserves. No specific attempt has been made by the district council to cut back and make the long-term economies which would mean that services are protected and the council tax thereby reduced.

It is significant that, from 1987 to 1993, non-manual costs of local government rose by 85 per cent. It is equally significant that the Audit Commission has suggested—the House should not forget that the vast majority of costs in local government are staff costs—that few authorities have a consistent or coherent approach to crucial questions such as how many staff they need, how much they should be paid and how they can get the best from their staff.

I have four points about the mechanism this year. First, although I was in favour of having my district council capped to protect local council tax payers, I do not believe that that is desirable in the long term. It is a matter of some regret that now only 20 per cent. of local expenditure is raised locally.