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Orders of the Day — Local Government Finance

Part of the debate – in the House of Commons at 9:20 pm on 1st February 1995.

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Photo of Tony Lloyd Tony Lloyd Shadow Spokesperson (Environment, Food and Rural Affairs) 9:20 pm, 1st February 1995

The House was entertained by the comments of the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) about his orchard, but I am not sure whether it was the most central speech today. It is a great shame that the House spends less than one day debating what is the most important thing that affects local government. Even the Secretary of State for the Environment made the point that local government is responsible for something like a quarter of the funding that central Government provide. On that basis, I hope that we will have a much more lengthy debate in the future so that, if for no other reason, hon. Members on both sides of the House can have a little more time to make their points.

Confusion seems to exist between the two Government spokesmen. Just after the local authority statement was made in December, the Secretary of State wrote to hon. Members and said: Local authorities, like central Government, must play its part in restraining the growth of public spending ‖ we are not asking authorities to do more than Government is itself having to do to control its costs. As has been said by hon. Members on both sides of the House, that is simply not true. The record can be put clearly and simply. A number of hon. Members have made that point.

If we consider the settlement for local government, it is the Minister who is right. I do not think that he was speaking in a personal capacity when he said that he had been stuffed by the Treasury. He was expressing that view on behalf of local government, about which, I would be the first to say, he knows something. His view is rather different from that of the Secretary of State. Everyone knows that the settlement is bad for local government, which will have to make cuts of about £1.5 billion and increase the council tax across the board by 6 per cent. on average to stay within the settlement.

Local government has been given a cash increase of only about 0.4 per cent. in real terms, yet the budgets of other Departments of central Government are increasing—that of the Department of Health by 3.8 per cent., that of the Department of Social Security by 3.7 per cent., and that of the Department for Education by 4.1 per cent. That is happening at a time when the Secretary of State says that the schools budget can go up only by 1.1 per cent. That shows that central Government treat themselves differently from the way in which they treat local government.

The most significant budget increase involves the Secretary of State's former Department, the Ministry of Agriculture, Fisheries and Food. Its budget has increased by some 13 per cent. now that he has gone, but he has been able to achieve a paltry increase for the local government family. That is an indictment of Ministers.

If the Minister and his right hon. Friend really do believe that the SSA methodology is one upon which decisions are even handed, rational and based upon the most information available for all authorities he is out of touch not only with my hon. Friends, but with his hon. Friends.

We had a number of interesting speeches by my hon. Friends the Members for St. Helens, North (Mr. Evans), for Coventry, North-East (Mr. Ainsworth), and for City of Durham (Mr. Steinberg), as well as by the hon. Members for Derbyshire, West (Mr. McLoughlin), for Great Yarmouth (Mr. Carttiss), for Somerton and Frome (Mr. Robinson), for Wyre Forest (Mr. Coombs) and for Windsor and Maidenhead (Mr. Trend). They all complained about the methodology used for the SSAs. The Minister must accept that the methodology needs to he challenged.

My hon. Friend the Member for Holborn and St Pancras (Mr. Dobson) gave examples of the social index scores. I can give the House another example. Liverpool is one of the most deprived cities, not just in Britain but in the whole of western Europe, yet it is in 81st position with a score that suggests that it is less than averagely deprived. The City of London, that well-known centre of deprivation and urban squalor, is 19th in the list of deprived local authorities. If that is the index that the Minister is using, it really is time to look at this issue differently.

Local authorities up and down the land are being deprived because the index does not take proper account of the real statistics. For example, Surrey local education authority gains £8 million every year for the young people who live in the area, many of whom go to private schools outside Surrey. Surrey is a wealthy local authority and that £8 million is being provided at the expense of other authorities. The Minister must look again at the way in which the SSAs are calculated.

The jewel in the Government's crown, the authority around which the structure of local government finance is written, is the London borough of Westminster. We have heard from my hon. Friends the Members for Holborn arid St Pancras, for Coventry North-East and for St Helens, North about how Westminster is treated so much more favourably than the rest of local government as to be nothing short of a scandal. The Minister should explain to the House not why Westminster is an efficient authority--we know that it is not—but what he intends to do about that running sore which will discredit him, the Department of the Environment, and the Government unless they are prepared to act.

The real losers in this year's settlement are not Members of Parliament but those whom we serve and who use the services in our local authorities. Let us look at the settlement for education. Many hon. Members have mentioned that. The hon. Member for Derbyshire, West said that it is ridiculous that local authorities have to set their budgets before the pay settlements are known. That is made even more ridiculous by the fact that this year the Government have given, even in their own terms, a cash increase of 1.1 per cent. in the education SSAs, while the practical reality is that teachers' pay increases are outside the hands of local government. The local authorities are expecting to face bills in excess of that 1.1 per cent. and will have to find that money at the expense of education.

We know that another 110,000 pupils arc coming into our schools this year. Although we know that the pupil rolls will increase still further, it is only Education Ministers who believe that that will not be at the expense of the education of our young people. The number of pupils per teacher and per class in our primary and secondary schools is about 25. In Japan it is 17 and in France it is as low as 13.6. If it is good enough for children in Japan and France to have classes of that size, why is not it good enough for children in this country?