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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 8:38 pm on 1st February 1995.

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Photo of Paddy Tipping Paddy Tipping , Sherwood 8:38 pm, 1st February 1995

In the hothouse atmosphere earlier this afternoon, it was difficult to follow what the Secretary of State was saying. Let me try to paraphrase it. This has been a tough and tight financial settlement. Public expenditure has to be kept control of, and local authorities must share the pain—and by the way, they have to be more efficient. That was the gist of what he said.

A number of hon. Members have today attacked local authorities in a fairly vicious way. I would therefore like to record the fact that, in recent years, local authorities have worked hard to make efficiency savings. They have implemented information technology; they have slimmed down management. Resources have moved from county halls to schools. The hon. Member for Scarborough (Mr. Sykes) talked about land sales. Nottinghamshire county council aims to sell £8 million-worth of land each year to support its budget.

Local councils, I believe, are becoming ever more efficient. That is also the view of the Audit Commission. Its reports of seven years ago said that savings of £541 million could be made. Today they are being made by local authorities. They are taking stock, and they are making the necessary changes. Ultimately, efficiency savings run out; one day, the pips will really squeak. Such savings are not endless.

We should also take a look at central Government, whose overall public spending has risen by 3.3 per cent. Next year, the Department for Education will have an increase of 4.1 per cent.; MAFF will have an increase of 13.5 per cent. So the pain is not being shared evenly.

What can be done to remedy the problem? We could look first at the hideous local government review. Fifty million pounds has been top-sliced off this settlement for that review. We do not know what its final costs will be. We are told that the transitional costs in Cleveland may be between £13 million and £18 million—that is what the Local Government Commission estimates. The bids coming in from councils in the area amount to about £30 million.

What will happen in the next financial year, 1996–97? How much will be top-sliced then: £150 million, or £200 million? No one knows, because the Department of the Environment has not taken the time to study what the costs of the review may turn out to be. It is a leap in the dark, and I predict that, by the end of the process, very few savings will emerge.

Secondly, we might look at capping. When it was introduced 10 years ago, it was designed to get the dirty dozen—the handful of difficult councils—but now it is universal; 85 per cent. of councils' grant now comes from central Government. The element of local discretion no longer exists.

I am astonished to find that Nottinghamshire county council has been given a capping increase of 0.5 per cent. The new police authorities are getting a capping increase of 4.9 per cent.; the inner London boroughs one of 3.2 per cent. If it is good enough for people in Brixton, Lambeth and Westminster, the increase should be good enough for my people in Blidworth, Lowdham and Walesby. Why cannot the Government stand by one set of caps for the whole country?

As I said, the London boroughs are being given an increase of 3.2 per cent. Applied generally, that would release £600 million for local authorities, and some of the real problems that local councils face would disappear forthwith. There would be no cuts in social services and few in education.

We also need to focus on the area cost adjustment system, which other hon. Members have already highlighted. When I met the Minister of State earlier this year, I was pleased to hear him say that research into this matter would be carried out. I should like him to consult widely in the course of that research. I am not sure whether looking at travel-to-work areas will help. The research must focus on real costs, not notional costs. If councils do not pay more, they should not receive extra grant. The system should be fair and transparent.

Bills in Nottinghamshire are set to rise by £30, or 6 per cent. People there will pay more for less after I April. There will be real cuts in education. The county council intends to spend £373 million next year, against an SSA of £347 million—a spending above SSA of £26 million, or 7.5 per cent. But there are going to be cuts. As many as 300 teachers will lose their jobs.

Abbey Gates primary school in Nottinghamshire, an excellent school, is a case in point. The chairman of the governors wrote to me to say: We find ourselves unable to set a budget which is both legal and responsible, financially and educationally sound". He is going to lose three teachers. The children will suffer, and class sizes will increase. That is what Ministers call a tight and tough settlement. In fact, it is a double whammy: people pay more for less.

This is an unjust settlement, and we must throw it out.