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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

It may well be less. It is unfortunate because it breaks the link of accountability between the local electorate and the council. I know that a debate is going on within the Department at present, but I hope that the sins of the profligate should be visited upon the profligate. There is a case within the limits for either a relaxation of the existing capping limit or giving the Minister discretion. That should depend on the efforts of the capped authorities to order their affairs more sensibly.

In addition, I am concerned about the use of the social and economic index as it affects councils like mine, which have a significant amount of deprivation in towns with populations of less than 100,000, but which otherwise cover rural areas. The index also affects towns such as mine, which have a small ethnic minority population. The use of the social and economic index means that those towns are deprived of £1.04 million out of a £10 million budget. The Government should be looking at how those indices work.

My second concern relates to area cost adjustments. I do not regard it as acceptable that Hereford and Worcester county council should be given £104 less on primary and £139 less on secondary education than a county such as Oxfordshire. I defy anybody to believe that the costs of living in Oxfordshire are significantly greater than those of Hereford and Worcester. Those figures alone show that ACAs are in urgent need of review, and I hope that that is done as quickly as possible.

My third concern is the way in which councils use their own assets. Not enough councils have used private finance—purely for ideological reasons which they will later regret—particularly in housing, to introduce more capital into their coffers which they would then be able to spend to their tenants' advantage. The net receipt for my district council—I hope it will read the debate in Hansard—if it transferred its housing stock to housing associations would be no less than £51.2 million. At a stroke, the council would eliminate its debt, and would have about £12.8 million to spend on capital improvements for the benefit of the people of the area. That also takes into account what the council regards as the fixed part of its expenditure—some £4 million out of £10.5 million. A significant proportion of that is payments on debt charges for capital projects on which it has—possibly unwisely—embarked in the past. The Minister will see that there is significant potential for councils such as mine if they are prepared—with the acquiesence of their council tax payers—to effect large-scale transfers of their housing budgets.

My final point concerns the teachers' pay review body. Obviously it is important that teachers are properly rewarded to attract good-quality people into the profession. We all agree with that. But equally, I happen to believe that pay determination is best done locally and according to local labour markets. From talking to teachers, I know that if the implication of them not taking an extra 1 per cent. or 2 per cent. in their wage packets was that they would be able to keep on staff who would otherwise be made voluntarily or compulsorily redundant, they would—on the basis of what was needed locally—be prepared to forgo that increase.

The fact is that, since 1990, teachers' pay has increased by 36 per cent. against a national average of 23 per cent. This year the teachers' pay review body may give an increase that is entirely unrealistic. I suggest that that be used merely as a guideline, so that teachers' pay is locally determined—