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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 8:18 pm on 1st February 1995.

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Photo of Bob Ainsworth Bob Ainsworth Opposition Whip (Commons) 8:18 pm, 1st February 1995

As I have only 10 minutes, I do not intend to accept interventions. The Secretary of State, having gone on for 70 minutes in a most blatant abuse of the House, effectively prevented other Members from making points. We clashed last year, during debates on what I called the "blatant fiddle" of the revenue support grant. I have seen nothing in this consultation, or in the final proposals, that causes me to modify my view. Past devices used to rig the grant have been maintained and, in some respects, added to.

My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) detailed many of those issues and exposed the fact that, under this settlement, council lax payers throughout the country, irrespective of the political complexion of their local authorities, will pay more for less.

I wish to discuss revenue support grant as it affects my authority, Coventry, and Westminster city council. Coventry councillors are angry and frustrated, having raised this year, as they have repeatedly raised before, legitimate issues of anomalies within the settlement only to find that those have not been dealt with. Moreover, the final formula contains new anomalies that have not been the subject of consultation with local authority associations.

Coventry has asked for changes to the use of "homelessness" as an indicator, because it costs the city nearly £2 million per annum and is not a reliable indicator of need. It has asked for the type of tenure not to be used as a proxy for deprivation, as it punishes areas with higher-than-average home ownership. It continues to be appalled by the massive over-allowance being delivered to some authorities via the area cost adjustment. As usual, Coventry was listened to politely, but it discovered that, in the final settlement, changes were made without consulting the local authority sub-group. Those changes benefit some inner-London authorities and punish Coventry and other metropolitan boroughs. That has happened despite the fact that the Minister agreed with the findings of last year's Environment Select Committee report that transparency in decision making should be improved. One must conclude that that commitment paid no more than lip service to the report.

Over the next three years, cuts of £21 million will have to be made in Coventry, while this year tax levels will rise by 10.5 per cent.—3.2 per cent. as a result of the Budget in the autumn, and 7.3 per cent. as a result of Coventry losing grant to other authorities. We are left with the feeling that our lobbying on revenue support grant has been a failure, so we have looked at how other authorities lobby and, in that regard, at the workings of Westminster city council.

Westminster city council has lobbied and gained significant increases in its grant share over the years. It is well satisfied with this year's settlement, having received a 9.7 per cent. increase in standard spending assessment and the grants that flow from that. As a result of its success, and Coventry's lack of success, in lobbying for higher grant, massive anomalies have arisen. Spending per head of population in Westminster is 30 per cent. higher than in Coventry, but a 90 per cent. difference in grants turns that completely around at taxpayer level. The SSA for Westminster was 60 per cent. higher per head than for Coventry, which translates into grant pound for pound.

In education, the SSA per pupil in Westminster is 52 per cent. higher than in Coventry. Much of that difference is due to area cost adjustments, which assume that it will cost 32 per cent. more to employ a teacher in inner London than it will in Coventry. That is absurd, as the London weighting premium on teachers' pay is less than 10 per cent.

I do not have time to discuss the massive anomalies that have arisen in social services. In SSA for the elderly, Westminster receives 2.49 times that of Coventry. That, too, is absurd. The proportion of elderly people on income support in Coventry is higher than in Westminster, but Westminster gains because elderly people on income support are not taken into account when calculating the SSA, while elderly people in rented accommodation are. That has little statistical justification and leads to the absurd anomaly whereby an elderly Member of Parliament living in rented accommodation in Westminster counts as having special needs, but a single pensioner living alone on income support in a small owner-occupied terrace house in Coventry is not classed as such.

Westminster's SSA for highway maintenance is 1.52 per cent. higher than Coventry's, which is ridiculous given the borough's special ability to generate car parking income. Coventry's highways budget of £9.1 million is offset by car parking income of £1.6 million. This year, Westminster is expected to collect a staggering £34 million for on-street parking and is struggling to spend that sum. It is now repairing Westminster bridge outside this place to try to get rid of the money that is sloshing around in its account. Effectively, it is doing so at the expense of taxpayers in Coventry, St. Helens and elsewhere. A Touche Ross report on Westminster city council shows that it has massive balances in its account which it simply does not know how to spend.

Westminster's SSA for "other district services" is 3.94 times that of Coventry and the highest per head of any council in England. That arises because Westminster's SSA population is almost doubled by commuters, overnight visitors and day visitors. Its SSA for tourists is about 60 per cent. of Coventry's SSA for the entire resident population. Most absurd is the fact that commuters and tourists in Westminster are assumed to have exactly the same social characteristics as the resident population. For example, 12 per cent. of tourists and commuters coming into Westminster are assumed to live in overcrowded accommodation; 24 per cent. are assumed to be from an ethnic minority; and 36 per cent. are assumed to live in purpose-built—mainly council—flats. The idea that people who have a job in Westminster and can afford to stay in a hotel, or who visit Westminster on a day trip, should be classed as deprived is utterly ridiculous.

How does Westminster council achieve those marvellous levels of grant support? Has it used the same lobbying methods as Coventry and other councils? No, it does not have to do that, and it never did. A note to Lady Porter on Westminster city council's lobbying methods and results has come into my possession through the digging activities of the district auditor. It details how individual members of the Government should be approached and targeted, and how blatant political considerations are used to get more money. With regard to the Secretary of State, the note says: John Gummer is the most alert of ministers to political nuances He will be particularly conscious that with safety nets a number of high spending Labour London boroughs will appear to get 'off the hook' with Community charges lower than Westminster. The note then details the work done on behalf of the borough in bringing pressure to bear to get its grant increased at the expense of other local authorities.

That is how it is done. One does not lobby the Department of the Environment using solid analysis of the grant system; one lobbies the Tory party, stressing its electoral interests. That is the real reasoning behind many of the changes that have undermined the credibility of the grant system.

I am firmly of the opinion that we are dealing not just with a renegade local authority at Westminster, which has been buying electoral advantage by such mechanisms as "homes for votes" and free repairs for leaseholders at the expense of council tenants, but with a Government who are up to their eyeballs in this issue. We need an urgent decision on an extraordinary audit into Westminster city council. We need an end to the abuse of grant distribution which is punishing good, well-run authorities like Coventry. We need to restore credibility to the grant system because the people of Coventry and elsewhere are tired of paying other people's taxes, as they have constantly been forced to do through this disreputable system of grant distribution.