Local Government Finance

– in the House of Commons at 3:30 pm on 27 November 1996.

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Photo of John Gummer John Gummer Secretary of State for Environment 3:30, 27 November 1996

With permission, Madam Speaker, I should like to make a statement about the local authority finance settlement for England for 1997–98.

In forming my proposals, I have considered the pressures that local authorities will face in the coming year and I have listened carefully to the views of the local authority associations. I have taken account of the important functions for which local government is responsible and weighed carefully the interests of local citizens in the services that they have a right to expect and the taxes that they have to bear.

The Government remain committed to rigorous control of public expenditure, as my right hon. and Learned Friend the Chancellor of the Exchequer made clear yesterday. I am pleased that this year my statement comes the day after the Budget statement, because what I have to say is a continuation of yesterday's message of good government. The Government have inflation firmly under control, with underlying inflation remaining very low. Even if this settlement did no more than confirm the figures in last year's Budget, it would be worth significantly more for local government spending than was envisaged because of the good housekeeping of this Government and because of the underlying low inflation rate.

Local government accounts for almost a quarter of general Government expenditure. It would be absurd to imagine that within this large total there was no room for greater efficiency—[Interruption.] It would be absurd to imagine it and I note which hon. Members are therefore imagining it. I make no apology for the fact that we have pursued such efficiencies vigorously, but I also assure hon. Members that we approach our assessment of what is needed to maintain key services with equal vigour.

This is the background to the aggregate figures that I published yesterday. The Government's view is that the appropriate level of total standard spending—TSS—for local authorities in England in 1997–98 will be £45.66 billion.

My right hon. Friend the Secretary of State for Health will be making a separate announcement on resources for community care. My right hon. and Learned Friend the Home Secretary will be making a separate announcement on resources for the police. Both are included in the figure that I have just quoted. The TSS figure is adjusted to take account of the move to vouchers for under-fives education provision. The figures also take account of other changes in local government functions. Provision of £150 million has been made for the transitional costs of local government reorganisation.

My proposal, including provision for community care, reorganisation costs and the police, provides for a 2.5 per cent. increase in local authority spending year on year. In distributing this provision, we have, as usual, adjusted provision for capital financing to bring it in line with authorities' need to spend.

In allocating TSS between services, we have decided to give priority to education, the police, and the fire service. My proposal is that, after adjusting for vouchers and changes in function, education standard spending should increase by £633 million, or 3.6 per cent. In addition, under the new voucher scheme, education authorities will attract voucher income if their schools are favoured by parents.

I will ensure, as last year, that authorities can actually spend the increase in their education provision. Each local education authority must set its own budget and reach its own decision on how much money goes to schools. However, if an LEA decides not to spend the money that we have allowed, it will have to explain that decision to an electorate who have made it increasingly clear that education is a priority.

The settlement also provides year-on-year increases, after adjusting for changes in function, of 4.2 per cent. for fire services. The provision of £150 million for transitional costs of reorganisation will cover the new tranche of reorganised authorities as well as remaining costs in those areas reorganised already.

I want to forestall some of the nonsense that often comes from Opposition Members. They compare TSS for this year not with TSS for last year, but with budgets. That is analogous to comparing a person's weekly basic wage for this year with his weekly wage plus his overtime plus any bonuses for last year. It is not surprising that the two are different. We have to compare like with like. [Interruption.] The very fact that the Opposition will not listen reminds us that they were intending to do what they have tried to do in the past. We need to compare this year's TSS with last year's TSS, in the knowledge that local authorities have other resources from balances, fees and charges and interest receipts, and now the extra money that successful schools will get from nursery vouchers. Therefore, they will budget at a different level. That always happens. The budget of a local council is greater than the TSS simply because local authorities have other sources of income. Therefore, we always compare budget with budget and TSS with TSS—a basic financial problem that most hon. Members understand.

To put the difference in context, last year English authorities budgeted for revenue expenditure some £2.5 billion above TSS. I should like to score a first this year by ensuring that all sides of the House compare like with like.

Now I want to turn to how much assistance local authorities will get from the non-domestic ratepayer and the national taxpayer—[Interruption.] When I was a Whip, Whips did not spend their time talking.

Together their contribution will total £35.77 billion. Within that figure the distributable amount of non-domestic rates in 1997–98 should be £12.03 billion, and I am today publishing the detailed basis for the distribution. I propose that the revenue support grant should be £18.69 billion. In addition, some £5.05 billion of specific and special grants will be available. The total revenue support grant for England on which I am consulting may need to be altered slightly if the balance of the police funding formula between Welsh and English police authorities changes as a result of consultation.

I turn now to the means of distributing revenue support grant. At its heart is the standard spending assessment for each authority. The House will know that the SSAs are made up of a whole series of elements, each of which has been crawled over by the local authority associations and the Government. The individual factors reflect the concerns of different authorities. Rural areas are most interested in the sparsity factor. Closely packed urban areas are interested in the density factor. According to independent experts, the system may be the most sophisticated anywhere in the world. [Laughter.] The reason why the system is the most sophisticated is that it seeks to help people in need and ensure that no place gets less than it ought in order to provide the services that we want to be carried out. The Labour party evidently wants an unsophisticated system—one that does not help people according to their need.

The corollary of the system being the most sophisticated in the world is that, every year, new population and other changing factors are taken into account, and there is usually pressure to review particular factors. Last year, I announced that we would be reviewing the area cost adjustment; we would commission research on the effects of sparsity and density of population on the cost of local authority services and the Department of Health would receive the conclusions of research relating to the social services SSA.

All that work was completed by the summer and has been discussed in detail with the local authority associations. We also had the benefit of research commissioned by local government on some of those subjects. The Department of Health has thus received a very full examination. Nevertheless, there remain strong differences of views within local government about the merits of what has emerged from the work.

In assessing the findings and responses, I wanted to be confident that any changes would represent an improvement in the standard spending assessments. I have to say that it has been difficult to reach that view. I believe that all the work has been valuable in improving the understanding of the issues in central and local government and has made plain how difficult some of them are, but it is clear that further work will be needed on some of the issues if we are to reach conclusions with sufficient confidence. I shall deal with each of the main studies in turn.

The review of the area cost adjustment must be the most comprehensive examination of the subject that has been undertaken. I am grateful for the considerable contribution of the local authority associations and groupings and their researchers. Two of the local authority associations found the review's general approach convincing, but seek further refinements of particular aspects. The other two associations were unconvinced.

Many individual authorities have made strong representations both for and against. The associations, however, were unanimous that they did not wish the recommendations of the review to be introduced for 1997–98. We have therefore accepted that view. [Laughter.] The Labour party might note that all the associations are Labour-controlled. It is therefore curious that it should laugh at their unanimous decision, but there we are. The Labour party appears to cover all embarrassment with laughter.

We shall wish to discuss with the associations what further work, based on the research on the area cost adjustment, will be necessary to resolve areas where there are clear concerns about the report's analysis. I am not sweeping the report of the review off the table. It has been very valuable, but it needs to be developed, and further analysis is required before we can come to a clear view on the way forward and there is a reasonable consensus of support among local authority organisations.

We had the benefit of three research reports on the effects of sparsity of population on the cost of providing local authority services. Members who represent rural constituencies will know how important that is to their assessments. The research commissioned by the Department was supplemented by research conducted for the sparsely populated authorities and the metropolitan authorities. We have also received a great many representations on the subject. The conclusion of the research commissioned by the Department was that the present allowances for sparsity of population in the SSAs for education and for what are known as "other services" were about right. We therefore propose to leave the sparsity allowances unchanged for 1997–98.

The Department of Health commissioned two research studies in connection with the SSAs for personal social services. The research relating to social services for children proposed radical change. We needed to be particularly sure that the changes were justified, given the substantial effects on SSAs that they implied for some authorities. We had sympathy with those who felt that the general approach might help us to improve this element of the SSAs, but the analysis on which the recommendations were based is very novel in the SSA context, and has yet to command wide support in the local authority world. More time will be needed, I believe, for local government and its advisers to examine the new techniques, satisfy themselves as to their appropriateness and pursue the points of concern that have been raised. The Department of Health intends to take this forward in 1997.

The Department of Health also commissioned research on residential social services for the elderly. I believe that research has taken us some way towards an improved formula. Again, there remain areas of doubt where the arguments for and against might be easier to resolve if more work was undertaken. If those areas of doubt can be tackled successfully, we shall consider the research proposals again in the next round.

We nevertheless believe that we should continue to refine the SSAs where we can be sufficiently confident that we are making improvements. We are therefore proposing a number of changes of this kind, but their effect on the SSAs is noticeably less than the changes we introduced a year ago. I would mention, in particular, the formula for the police standard spending assessment where a number of improvements have been possible, following the collection of new data by the police service.

Lastly, there are changes to the SSA for the education of children under five, to take account of the introduction of nursery vouchers nationally from next April. We propose that the SSAs for all authorities should be adjusted in a similar way to those of the four authorities that conducted phase 1 of the nursery voucher scheme this year. That method of adjustment ensures that authorities can replace the reductions in SSAs by a similar amount of income from vouchers, if they continue to attract as many four-year-olds as in recent years.

I propose to continue damping the effect on the council tax of past changes in the way SSAs are calculated. Although fresh SSA changes will be small, I propose that they too should be damped. The threshold for damping will be 2 per cent., as last year. Once again, there will be separate schemes for police and non-police authorities.

I also propose to repeat this year's scheme to damp council tax increases directly attributable to reorganisation, above a threshold that I shall set. The scheme would damp such council tax increases that exceed a threshold of £104, or £2 a week, at band D for authorities subject to reorganisation from April 1997. It would also provide for a second year of damping for authorities reorganised this year, by damping such council tax increases where they exceed a threshold of £130, or £2.50 a week, at band D.

The council tax is well established as an equitable means whereby local residents contribute to the cost of local services. Council taxes vary widely, depending on the spending decisions of each local authority and its performance in collecting the tax, which is very important. Variations also occur in the circumstances of each household, and on individual entitlement to exemptions or benefits. There is therefore no real significance to be attached to the concept of average taxes within or between authorities.

However, I am required to identify notional taxes for each valuation band, for a standard level of spending—the so-called council tax for standard spending or CTSS. My proposals incorporate a CTSS for band D of £591. I would emphasise to the House that that is merely an element in the grant distribution formula. It is neither a prediction of individual council tax bills nor a national average.

We remain determined that local authorities should make a full contribution to the control of public expenditure and set budgets that their local taxpayers and the country can afford. I am today announcing my provisional capping principles for 1997–98. I am also issuing proposals for the calculation of notional amounts for those authorities whose boundaries or functions will change from 1 April 1997.

Those include constituent authorities of national parks; local education authorities, to take account of the introduction of the nursery voucher scheme; and the reorganised authorities of Bedfordshire, Luton, Buckinghamshire, Milton Keynes, Derbyshire, Derby City, Dorset, Bournemouth, Poole, Durham, Darlington, East Sussex, Brighton and Hove, Hampshire, Portsmouth, Southampton, Leicestershire, Leicester City, Rutland, Staffordshire, Stoke-on-Trent, Wiltshire and Thamesdown. The notional amount is the base from which I will measure the increase in budget in determining whether that increase is excessive.

My provisional capping principles themselves make allowance for expenditure on community care which is being met this year by the special transitional grant; the introduction of a new metropolitan railways passenger services grant payable next year to passenger transport authorities; the removal of discretionary non-domestic rate relief from the capping regime; the capital limits for residential accommodation charges grant payable this year; and the transfer of voluntary schools into the state sector to be maintained by local education authorities. These adjustments are necessary to make a fair year-on-year comparison of budgets. Subject to these and other technical adjustments affecting individual authorities—[Interruption.] The adjustments are of considerable importance to hon. Members—including Opposition Front-Bench Members.

As in previous years, when authorities set budgets that are 12.5 per cent. or more above their standard spending assessment, the proposed principles will not permit them any increase over their 1996–97 base budget. For shire districts, I propose that the principles should be the same as last year. For all other authorities budgeting up to 12.5 per cent. above their SSA, I propose a continuation of passporting.

This means that an authority will get an increase which is the greater of the increases compared to 1996–7 in the authority's SSAs for education, police, personal social services, fire and revenue support for private finance initiative projects, and a flat rate year-on-year increase compared with its 1996–7 base budget. [Interruption.] Labour Members demanded that councils be able to spend the money that we allowed them to have, and they also demanded passporting. We have now given them passporting, which they either do not like or do not understand. I rather think that it is a mixture of the two.

I propose that the flat rate increases should be as follows: for county councils, outer London boroughs and the City of London, I propose that the year-on-year increase should be limited to 2 per cent; for inner London boroughs, metropolitan districts, unitary authorities and the Isles of Scilly, I propose that the increase should be limited to 1 per cent; for police authorities outside London, I propose that the increase should be limited to 3.2 per cent.; for the London and metropolitan fire and civil defence authorities, I propose that the increase should be limited to 3 per cent. These principles are necessarily provisional and I cannot take my decisions on capping until authorities have set their budgets. When I come to take those decisions, I shall, of course, take into account all relevant considerations.

My Department is today writing with the details of the settlement to every local authority in England. That package includes a consultation paper that sets out how we propose to distribute central Government support between authorities, including my proposals on SSAs and damping. It sets out my provisional capping criteria, and includes my proposals for notional amounts. Copies of this package have been placed in the Vote Office and the Library.

The principles that I have outlined today represent a balanced and reasonable response to the conflict between the pressures to provide more resources for local government and the need to control public spending. They provide for a 2.5 per cent. increase in local authority spending, including community care and the transitional costs of reorganisation. They incorporate improvements in the way the available resources are allocated, without major turbulence. They allow council taxes next year to be set at reasonable levels. They represent a package which the country as a whole can afford.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Madam Speaker, would you consider suspending the sitting for half an hour to allow hon. Members to study the figures?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

I noticed that there was some unrest in the House, because hon. Members were obviously, and quite understandably, puzzled by the figures that were used without documentation. I have great sympathy for them.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

The somewhat lengthy and complicated statement that we have just heard, combined with the Budget statement yesterday, forms a prime example of this Tory Government giving with one hand and taking away with the other.

Will the Secretary of State confirm that the figures issued by his Department show that the Government plan to force council tax payers to cough up an extra £4 billion in the next three years, a figure equal to 2p on the standard rate of income tax or £200 extra council tax per family? Will he confirm that the official Government documents make it clear that the council tax will go up next year by an average of 6 per cent. or more in England, equal to £40 extra council tax per household? Will he confirm that, despite these council tax increases, the Government's target for council spending next year is nearly £2 billion short of what the councils are actually spending this year?

Will the Secretary of State confirm that his figures make no allowance for inflation, the cost of pay increases or the cost of providing extra services for the growing number of old people and of children at school? Will he confirm that the Government have not provided £633 million extra for education but have simply told councils that they can spend more? They have not given them the money, despite the need to educate 54,000 extra school children in the coming year.

Will the Secretary of State confirm that education authorities are already spending £750 million more than the Government think they should? Is it not true that, if education authorities were to limit their spending next year to the level set by the Government, schools would have to reduce their spending by £41 per pupil? Will he confirm that the capping levels that he has announced today will bear most heavily on education authorities, especially metropolitan districts and unitary authorities, including Bury, Birmingham, Coventry, Wolverhampton, Calderdale, Bristol, Stockton-on-Tees, North Lincolnshire and North East Lincolnshire, and that they will also bear heavily on counties? How does he expect that to improve educational standards?

Yesterday, the Government announced massive cuts in the housing investment programme, having denied them on Monday. How much will that decision add to councils' costs, as more and more families have to be housed in expensive, unsatisfactory, temporary bed-and-breakfast accommodation instead of being housed more cheaply in permanent, purpose-built, decent homes?

Will the Secretary of State confirm that, when he talks about "other sources of income" he means that he intends to force councils to force parents to pay more for school meals, to force disabled people to pay more for home helps and pensioners to pay more for meals on wheels, so that local people will once again have to pay more and get less?

Will the Secretary of State confirm that that is all part of the Government's long-term strategy, as stated by the head of local government finance in his Department, who said that council tax payers would have to take more of the strain of paying for local services and added: the downside is that your taxes go up sharply"? Will the Secretary of State now abandon the Government's rigging of the grants system to give extra help to Tory Westminster council, which is being allowed to spend an extra 16 per cent. this year, compared with a national average in comparable districts of about 2 per cent., at a time when council tax payers in Westminster already meet only 4 per cent. of the cost of their council services, compared with the 25 per cent. met by council tax payers in the rest of the country? Does he genuinely expect Conservative Members to continue to vote for that gross inequity in the run-up to the general election?

Photo of John Gummer John Gummer Secretary of State for Environment

That was such a farrago of misconceptions, misrepresentations and plain failure to listen to what I said, that it is difficult to respond. I know that there are complexities, Madam Speaker, and I remind you that this was a simplified version of exactly the sort of statement that we have had before, because I acknowledge that it is a complicated matter and I want to make it as easy as possible. You are perfectly right, Madam Speaker, to point to the complexity of the system.

The hon. Member for Holborn and St. Pancras (Mr. Dobson) said that there would necessarily be increases in council taxes that would be equivalent to 2p on income tax and cost the average family about £5 a week. That is not what Sir Jeremy Beecham said; he said that there would be a 6 per cent. increase, amounting to 75p a week. The previous time that Sir Jeremy Beecham made a prediction, his figures were almost double the actual rise.

The Labour party has it in its hands to decide what the rise or non-rise will be, because it runs most of the local authorities, which decide the level of council tax. The Labour party is busy trying to predict rises of enormous size, because it wants to hide the council tax rises that it hopes to be able to get away with. The fact that people in the Labour party cannot decide between them whether they mean £5 a week or 75p a week shows just how impossible even they find it to predict what their authorities will do.

That is why I have no intention of forecasting what Labour councils will do about council tax. I forecast that if places had Conservative councils, they would do better. When we get the budgets, I will make it absolutely clear how much they have risen, why they have risen and which councils have managed to push council tax up the most. That is the most sensible forecast.

The hon. Gentleman asked about other sources of income. Last year, local authorities budgeted for £2.5 billion more than the TSS because they had additional sources of income. If he had listened, he would have heard me give a series of examples of such sources. This year, authorities will have a new source if they attract voucher money for pre-primary schools. Many will expect to be able to do that. [Interruption.]

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. I made a serious statement late last week about discussions with civil servants in the Box. The hon. Gentleman should resume his seat. Perhaps he will look at my statement.

Photo of John Gummer John Gummer Secretary of State for Environment

The fact is that the money is there. Resources include fees and charges for car parking and such like. There are all sorts of other resources. Many local authorities get considerable money from the interest payments on their capital receipts, which gives them the opportunity to keep council taxes down. When the Labour party says that authorities should spend as much of that money as they like, I hope that it realises that the public will want to know why their council taxes would thereby go up.

The hon. Gentleman said that we set levels. We do not; local authorities decide at what level they should spend. I am merely giving them additional elbow room to spend up to 3.6 per cent. more on education. That is because we make education a priority.

On housing spending, we are considerably extending the opportunities for large-scale voluntary transfers and introducing a system that will enable authorities that do not like traditional LSVTs to use housing companies. I hope that we shall find significant sums by tapping those resources.

The hon. Gentleman mentioned capping levels. Of course there are capping levels; if there were not, many Labour local authorities would push up the council tax again and again and again. Labour is committed to abolishing capping.

Labour also used the old canard of Westminster. I repeat this simple fact: when Labour was in power, Westminster did proportionately better than other authorities.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Environment, Food and Rural Affairs, Shadow Minister (Culture, Media and Sport)

On a point of order, Madam Speaker. The Secretary of State is in severe danger of misleading the House. He has made that point in the past and we have tabled parliamentary questions. The Library has made inquiries to the Department of the Environment, which has denied what he has just said.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

I have no evidence of that but I have to take what the hon. Gentleman says. I remind the House that we have important business before us. Practically every hon. Member in the Chamber is rising. We will get nowhere with this statement with such long responses. I hope that the Secretary of State will make brisk responses because many hon. Members want to question him.

Photo of John Gummer John Gummer Secretary of State for Environment

I am replying to only a quarter of the questions asked by the hon. Member for Holborn and St. Pancras (Mr. Dobson). If I may finish with this question, I shall refuse to answer the other three quarters.

Under Labour, Westminster did proportionately better, compared with other authorities, than it does under the Conservatives. If that is to rig, it is the rigging that Labour did under its system to help Westminster.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Is my right hon. Friend aware that I am most anxious to thank and congratulate him but, unfortunately, the sparsity of the information with which we are supplied and the density of the formula on which the various figures are based make it impossible to ask sensible questions? Could he just tell me what it means for Staffordshire's educational expenditure?

Photo of John Gummer John Gummer Secretary of State for Environment

Last year, in order to help, I started a system of providing the figures at the beginning rather than at the end of the statement. There is no other way of doing it. Staffordshire's permitted increase in budget is 2.5 per cent. That will enable Staffordshire to meet not only its present needs but the additional needs which will result from the increase in the school population.

Photo of Mr David Rendel Mr David Rendel , Newbury

Can the Secretary of State confirm, because I do not believe that he did so in reply to the hon. Member for Holborn and St. Pancras (Mr. Dobson), that a straight comparison between the amount of spending on education which the Government expect for next year and the actual spending on education by local authorities this year will show that next year's expected spending is lower than this year's actual spending?

Can the right hon. Gentleman also confirm that he has decided to halve the spending on transitional costs for the new unitary authorities, despite the greatly increased number of such authorities?

Finally, as he wants to compare like with like, can he confirm that on the Government's own figures, according to the Red Book produced yesterday by the Chancellor, table 4A.6, council tax bills are expected to total £9.8 billion this year and £10.6 billion next year, an increase of 8 per cent?

Photo of John Gummer John Gummer Secretary of State for Environment

First, we could not possibly make the comparison for which the hon. Gentleman asks because we do not have an expected level of spending. Local authorities decide what they will spend on education. We have said that we will increase the amount of money available to them in one way or another by 3.6 per cent.

This is the same trick that the Liberal Democrats tried to play last year when, all round the country, they sent out notes, as they have done again this year, saying, for example, that in my county there would be a cut of 5 per cent. instead of an increase of 4.2 per cent. in the amount of money available for education. I am prepared to bet that no Liberal Democrat will send a letter apologising for frightening people beforehand. Liberal Democrats never say sorry for the mistakes that they make on purpose every year.

I am meeting those transitional costs that I expect to arise. People will have to run the transition as cheaply as they can because we do not want to waste money on transition. That is necessary.

The council tax figure that we are talking about includes all sorts of things, such as the change in the number of houses, and so on. We cannot prognosticate what the amount will be because we will not know until Labour and Liberal Democrats have sorted out their arguments and decided what they will charge.

Photo of Eric Pickles Eric Pickles Vice-Chair, Conservative Party

Does my right hon. Friend recall previous debates on the cause of the level of council tax, and the fact that, while my authority of Essex was calling for cuts in education, it was luxuriating in a balance of £120 million? Does my right hon. Friend agree that only Labour-controlled authorities will be putting up the council tax?

Photo of John Gummer John Gummer Secretary of State for Environment

One of the problems is that some people in local authorities do not believe that there are any savings to be made. They do not note that it is extremely difficult to get large numbers of Labour-controlled authorities to go out to competitive tendering in order to obtain better value for money and so prevent the need to put up the council tax. They do not seem to note some authorities' large balances. Nor do they note that many county councils are still paying much more per head of their elderly population by putting their old people into county council-run homes instead of providing better homes in the private sector. Those are three simple ways in which to raise more money to spend without raising council tax.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

Does the Minister accept that his statement merely maintains the practice pursued during the last decade and a half of ensuring that burdens are placed more on the shoulders of ratepayers and council taxpayers than on the general public body? Does he further accept that, during the last few years, many local authorities such as my own, which have never defied the Government or acted irresponsibly but have always sought to co-operate with the Government, have eaten into their balances, and so face a difficult situation, especially as the Secretary of State's words scarcely match the optimistic pronouncements offered by the Chancellor yesterday about greater educational expenditure? What does he have to say to those local authorities which have acted prudently, despite economic ravage in their areas, as mine has done, and now face a greater increase than they or the community would like?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman puts his case reasonably, but it is not true that every year there is a greater burden on local people.

Photo of John Gummer John Gummer Secretary of State for Environment

Since 1979 the general burden on the local taxation base is much lower. That is a fact.

Photo of John Gummer John Gummer Secretary of State for Environment

I am sorry. The hon. Gentleman should look at the figures and he will see that that is so. He must accept that budgets that draw down balances also often arrange for the replacement of balances. Balances are not just for once and then drawn down. Local authorities prudently and sensibly build up their budget at some times and draw down at other times. Over the years the hon. Gentleman's local authority has done that.

The particularities of the situation in Rotherham are clear and are taken into account in the SSAs. That is why the SSAs are so sophisticated a mechanism. They ensure that Rotherham gets a proper amount to carry out the necessary services. I hope that Rotherham will examine a range of possibilities, not least the concept of putting out to tender far more of its services.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

Will the Secretary of State confirm that his announcement today is very good news for the Cumbria police? On top of last year's above average increase of 5.6 per cent. in spending power, he is announcing today an increase of 2.8 per cent. in spending power, which is again above average. Is he aware that, up to June this year, that increase led to a reduction in crime in Cumbria of almost 1.5 per cent., and that in the current year there are 42 extra constables on the beat?

Photo of John Gummer John Gummer Secretary of State for Environment

I confirm what my right hon. Friend says. It is extremely important that law and order should continue to be one of our major priorities. He is right to say that in Cumbria we will contribute to the increase in police constables, which in the end will add up to 5,000.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Denton and Reddish

Will the Secretary of State remind the House of the new duties which the Government and Parliament have placed on local authorities, and how much money is in the settlement for those new duties?

Photo of John Gummer John Gummer Secretary of State for Environment

Under the new burdens procedure I have looked carefully to the new duties. I do not wish to weary the House with too many detailed answers, but I will point out that, for example, I have allocated many millions of pounds in additional money to deal with the new duties relating to the air pollution aspect of air quality.

Photo of Mr James Spicer Mr James Spicer , West Dorset

My right hon. Friend will know that the departure of Bournemouth and Poole from the county of Dorset reduces the population and the income by about 50 per cent. He will also be aware that last year the Liberal leader of our county council, who was begging that we should establish a rural county council, gave a 100 per cent. assurance to the Minister of State that he would institute the most rigorous check on the cost of running that new county council. How can we be sure that that is being done? Is there any audit procedure that we can undertake to ensure that the county council is living up to its word?

Photo of John Gummer John Gummer Secretary of State for Environment

I shall study very carefully at what is done, especially in an authority where a Liberal leader has made such promises. My hon. Friend will be pleased to know that the permitted increase in budget in Dorset will be 2.5 per cent. We will closely examine how the divisions are made. In many cases they are agreed amicably between the two sides, but if my hon. Friend knows of any problems, I shall be happy to look into them.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Does the Secretary of State accept that over the past 17 years the Government have taken away about £50 billion in grants that hitherto went to local authorities, irrespective of whether they were Tory or Labour authorities in the early days, apart from Westminster? That is confirmed by facts, not by guessing. My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) is right when he says that the Government are at it again. They are shifting the burden of payment from central Government taxation to the local taxpayer.

As the Secretary of State is eager to compare like with like, why does he attack local authorities for using a formula to compare their spending this year and next year? The Chancellor of the Exchequer came to the Dispatch Box yesterday and said, "I have not got a PSBR of £14 billion, which I first envisaged. I have not even got one of £23 billion, which I secondly envisaged. But I have to tell you that I have one of £26.6 billion, which is now the truth and sadly, that is the figure that I am going to use." If it is right for the Chancellor of the Exchequer, it is right for local authorities.

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman will be pleased to know that his county council will have significantly more money to use. I also point out that this Government changed the weight of local taxation considerably when we moved to council tax. We made the biggest ever move from local taxes to central taxes.

Photo of John Gummer John Gummer Secretary of State for Environment

I am answering the hon. Gentleman's question, although it was incorrect and factually wrong. At least the hon. Gentleman is consistent because, as far as I can recall, he has never asked a question that was factually correct.

Photo of Mr Anthony Grant Mr Anthony Grant , Cambridge South West

While welcoming the expenditure increases for education and fire services on Cambridgeshire county council, I regret the decreases for the more efficient South Cambridgeshire and Huntingdonshire district councils. Is my right hon. Friend aware that there will be deep disappointment that the reform of the ludicrous area cost adjustment system is to be delayed once again? Despite the courtesy and patience of his Minister of State, Cambridgeshire is no closer to obtaining justice. It is losing millions of pounds compared with its next-door neighbour, Bedfordshire, and that is a disgrace.

Photo of John Gummer John Gummer Secretary of State for Environment

I wish that I were able to satisfy my hon. Friend on this occasion because I have considerable sympathy with his views. He knows that that is true, not least because my county makes exactly the same complaint about the structure. However, if there is a research project of this kind and all four local authority associations—including that association most in favour of the area cost adjustment changes—say that it is not possible to make the changes this year, it would be foolish for the Government to insist upon them.

That does not mean that I disagree with or put aside that research. I have said that specific concerns must be met in order for it to be robust, and it must be robust because it cannot be changed again without causing a great deal of turbulence. I want to do the work and I assure my hon. Friend that it has not been put off long into the distant future. We intend to arrive at an answer and I hope that it will satisfy him.

Photo of Bill Olner Bill Olner , Nuneaton

Does the Secretary of State recognise that my constituents in Nuneaton and Warwickshire will be extremely upset that their representations to his Department and to the Department of Education and Employment about the SSA and how it has dealt badly with them in the past have not been heeded? Warwickshire has been offered a 2 per cent. increase, which is nowhere near the 16 per cent. increase that has been offered to Westminster. If Warwickshire had the same settlement as Westminster, it would be able to employ another 2,119 teachers. The Secretary of State has done nothing to sort out the differences between Westminster and the other local authorities in this country.

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman knows perfectly well that that is not true. Westminster does less well than any comparable London borough and recently we have reduced its settlement almost every year. I do not know why the hon. Gentleman bothers with Westminster; why does he not take Islington? If Warwickshire had the same settlement as Islington, the revenue support grant would be worth about £897.61 per head. If everyone got what Islington gets, the council tax band D would be reduced by more than £1,500—it would be negative in Warwickshire—and we would have £25 billion on central taxation, which is 14p on income tax.

When Labour Members say, "Let's all do it like Westminster", we will reply, "Why not do it like Islington, which is even more favoured?" Why not do it like Islington and increase national income tax by 14p? The hon. Gentleman may want that, but I am not sure that the public would.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I congratulate my right hon. Friend on the increase in education expenditure, on which few hon. Members have commented. That increase should be recognised and praised; in Devon, it means an increase on last year's expenditure. Will my right hon. Friend try to ensure that the increases go to the sharp end of education—the schools—and are not kept by county councils? Devon county council keeps 28 per cent. of its SSA, which is quite foolish. We should ensure that the money reaches the teachers and governors so that they can get on with education properly.

Photo of John Gummer John Gummer Secretary of State for Environment

My right hon. Friend again shows that he has a good command of what happens when the money gets as far as the county. I have done everything in my power—by passporting and the like—to ensure that it is spent on education. Perhaps my right hon. Friend will have a word with the hon. Member for Newbury (Mr. Rendel), who might explain to him why so many Liberal councils manage to spend a lot of money away from the sharp end of education and at the same time complain about the amount that they have to spend on each schoolchild. I hope that my right hon. Friend will be able to remind every school in Devon that this is the amount that is available, and if they are not getting it they should find out what the Liberal county council is doing with it.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

Is it not a fact that, once again, the Minister is misleading the House with regard to what he says about education? Do not most local education authorities and local authorities already spend at above SSA for education? How many education authorities, if they were to spend at SSA, would reduce the amount spent on education?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman represents a constituency in Lancashire, which is one of the counties that spend a great deal of time demanding more and more local decision-making, and that is why it is a decision that Lancashire county council will make. All I am saying is that it will be able to increase its spending by 3.6 per cent., which to me seems to be a very sensible and satisfactory situation all around the country. To be specific, Lancashire's permitted increase in budget is 2.2 per cent., but there are considerable savings that Lancashire could make, because it is a badly run council, which for a long time has wasted significant sums, and if it started to spend more by enabling elderly people to go into private homes, for example, it would save a great deal, all of which it could spend on education if it got off its backside.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I congratulate my right hon. Friend on the priorities that have been established—namely, education, personal social services, fire and police—and as far as education is concerned, my county of Cheshire has been given another £12.5 million, for which we are grateful. But I am sure that my right hon. Friend will expect me to express grave concern for my most efficient borough council of Macclesfield—one of the few with overall Conservative control in the country—which, yet again, has had its standard spending assessment reduced, this year by about £250,000. That really does not reflect well on a very efficient council, which will find it very difficult to provide services without dramatically increasing its council tax. What will he do?

Photo of John Gummer John Gummer Secretary of State for Environment

I share my hon. Friend's unbounded enthusiasm for Macclesfield district council. I realise that, by having an increase in spending of 0.5 per cent., his local authority has particular difficulties. I remind him that the concomitant of saying that we are spending more and placing the emphasis on education means that it is more difficult for those that are not education authorities. That is what has happened. We have applied the same system over the country as a whole, and Macclesfield has that difficulty.

I will look with considerable care at anything that I can do to help Macclesfield, which is one of the authorities where considerable effort is made to save money rather than spend it. One difficulty from which Macclesfield suffers is that it is in a class with many other local authorities—many of which are run by the Labour party—where the same saving is not to be found. That is difficult, because we have to have a system that covers all.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

How can the borough of Westminster, which includes Belgravia, Mayfair, the area around Trafalgar square, Buckingham palace, the Houses of Parliament and the most expensive property in the United Kingdom, be treated more favourably than Cumbria, which has to wrestle with problems of unemployment and deprivation in large pockets? How can it possibly be fair?

Photo of John Gummer John Gummer Secretary of State for Environment

Obviously the hon. Gentleman moves only in Belgravia and never goes to a Peabody estate. He never notices that Westminster is the most closely packed of London boroughs, that it has special local problems of regeneration that are necessary to tackle and that it meets all the objective criteria. The hon. Gentleman seems not to notice that Westminster did much better when there was a Labour Government than it does under a Conservative Government.

Photo of Mr Peter Fry Mr Peter Fry , Wellingborough

Does my right hon. Friend accept my deep disappointment about the failure to do anything about the area cost adjustment? Continued delay means that unfairnesses will continue. I understand the problems that my right hon. Friend is having with the Labour-controlled local authority organisations, but I have to explain to my constituents why it is that a Conservative Government have to give way to Labour-controlled local authorities. I hope that my right hon. Friend will give me an answer that I can take back to Wellingborough.

Photo of John Gummer John Gummer Secretary of State for Environment

I hope that my hon. Friend will accept that I have worked with some considerable vigour to understand the representations that he has made and to examine ways in which we could help. My hon. Friend has been extremely assiduous in pressing the real case that he has. I accept that there are particular problems in the county which he represents in part.

It must be explained to anyone who asks about these matters that we try as far as possible to march together with the local authority associations in the assessment of those things that must be taken into account. I think that my hon. Friend's constituents would understand that when even those local authority associations that want changes tell us that they think that it would not be possible to introduce them in the coming year, we must, as a prudent Government, take that seriously. It is not a matter in that instance of the political complexion of the particular association. It is an association that says, "Yes, we want these changes but we genuinely know that not everything could be done in this coming year."

In those circumstances I think that it would be possible for my hon. Friend to explain to his constituents that I by no means turn my back on the changes that are wanted. Indeed, I have made some clear statements about the matter. I have listened carefully to my hon. Friend's representations and I understand that there are pressures. I say to them, however, that it would be wrong to take into account something that all the local authority bodies, for technical reasons, say cannot be introduced this year.

Photo of Joan Walley Joan Walley , Stoke-on-Trent North

After all-party delegations to the Secretaries of State for Education and the Environment, may I say how disappointed I am that there will be no real increase in local government spending in Staffordshire, including Stoke-on-Trent? Will the Secretary of State confirm that Stoke-on-Trent's capping limit is £182.834 million, and that the SSA is £180.201 million? Will he tell me how it can be fair when we have a system that is flawed from the beginning, which means that Staffordshire pupils are each allocated as much as £288 less than pupils in the top education authority in Hertfordshire? How can that be fair and how can such a policy can be carried over and continued?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Lady is right in that the permitted increase in budget for Stoke-on-Trent is 1.3 per cent., and that for Staffordshire as a whole it is 2.5 per cent. I also agree with her that it is true throughout the country that different local education authorities spend more or less than others. The reasons for that are partly historical and partly because of particular issues that arise.

The hon. Lady is keen for local authorities to make their own decisions about these matters. The SSA system seeks to assess the needs for each local authority in the most effective way. We work these things out with the local authority associations. On these issues there is a general agreement that what we are doing is about right. That must be so because in no case has the Labour party said that it would to change a system in its extension when it comes to education. There is no proposal from local authorities or the Labour party to have a new system of dealing with education SSAs.

Photo of Mr David Congdon Mr David Congdon , Croydon North East

I welcome the extra 3.6 per cent. for education, but presumably that means that the SSA for all other services will be less than the 2.5 per cent. average that my right hon. Friend mentioned. Will he confirm that, to keep overall spending within those broad levels, local authorities will have to get their act together on compulsory competitive tendering and stop trying to bend the rules to favour their direct services organisations? Social services departments should be much more willing to use the private sector and to divest themselves of their homes, which are much more expensive to run.

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend has put his finger on precisely the point. Other services, such as the fire service and the police, will be able to spend more—the figure for the fire service is 4 per cent. Local authorities must play their part in ensuring that we spend less of the public's money in the Government. The figures that we are discussing represent a quarter of Government spending. Unless we keep spending down to just below 40 per cent. of GNP, we will not he able to compete with the rest of the world.

My hon. Friend is right that local authorities should not immediately reach for more money from the state or from the council tax payer, but should seek ways of saving money and improving services. Through my discussions with Labour local authorities, I have discovered that they hate the concept of contracting out. The Labour party wants to abolish compulsory competitive tendering, because it wants more expensive services at a lower level provided by people who never have to compete. We want competition, and we want the people who offer the best service to win.

Photo of Mr John Evans Mr John Evans , St Helens North

Will lie Secretary of State confirm that next year, as a result of the increase announced today, the tax demands of most council tax payers will increase by two or even three times the rate of inflation, and the rents of council house tenants will be substantially increased? Will he also confirm that, as a result of the reduction in support for housing associations, they will next year build fewer than 40,000 houses to rent?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman should ask his own local authority about its plans to meet the needs of his area. He should ask whether it will push up the council tax, or whether it will find better ways of saving money. He should ask how it will use the extra money provided by the Government, and whether it will go beyond compulsory competitive tendering to voluntary competitive tendering. It could investigate the possibility of large-scale voluntary transfers to improve the conditions of its council house tenants. It could go through the gamut of things that can be done to improve services and reduce costs. If it does that, it will not have to put up the council tax.

Photo of Mr Irvine Patnick Mr Irvine Patnick , Sheffield, Hallam

I welcome the overall settlement for local authorities. What action does my right hon. Friend propose to take against Sheffield, which holds back the SSA for education? It provides no extra money, then blames everyone save itself. Action is required, because it holds back that percentage and then blames the Government.

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend should not be surprised about that. Sheffield council has taken that attitude for a long time. There are two former leaders of Sheffield council in the House, both of whom were responsible for one of the worst run local authorities in the country. They increased the council's debts, and the people of Sheffield are still paying for their bad management.

Photo of Bob Ainsworth Bob Ainsworth Opposition Whip (Commons)

Does the Secretary of State accept that his bluster and deliberate over-complication of the matter is designed to hide the fact that the figures that he has just announced will lead directly to a £43 increase of the band D council tax—the 23rd Tory tax increase? He is trying to confuse the issue.

Does he also accept that the problem will be worse for Coventry, given the 1.5 per cent. increase in the standard spending assessment? As he insists on defending Westminster council, will he tell us whether, if Coventry had to raise only 4 per cent. of its expenditure through the council tax, it would show the same level of incompetence and offer the same overly expensive services as Westminster?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman clearly prepared his question before listening to the extremely clear statement that I made—if, that is, he had a chance to listen, given the noise that Opposition Front Benchers were making. I do not know where he gets his 4 per cent. figure. In fact, Westminster raises 14 per cent., more than Tower Hamlets, Wandsworth or Lambeth, and it happens to have some of the worst areas of deprivation in the country.

As the hon. Gentleman knows, if he wants to get a better figure he should do what I would do, and use the Islington figures. That would enable him to produce a wonderful answer for his own council—but, of course, it would not be in accordance with the fair way of sharing out the money. He might look at what Westminster received under a Labour Government: he might get some more money that way. All of it, however, would add up to 14p on income tax. The hon. Gentleman should remember that as well.

My statement was as clear as any statement made from the Dispatch Box on this subject, but more detailed, because the local authority associations—all of them run by Labour—have asked for considerable changes in order to ensure that the system is fairer.

Photo of David Lidington David Lidington , Aylesbury

Does my right hon. Friend understand my concern about the possible impact of the disaggregation of SSAs on Buckinghamshire county council, following the establishment of a unitary authority in Milton Keynes? Has he considered introducing a damping arrangement? I understand that that was done for Scottish authorities that were in a similar position. Will my right hon. Friend remain open to representations from Buckinghamshire county council in the weeks to come?

Photo of John Gummer John Gummer Secretary of State for Environment

Certainly. I have discussed the matter with most of those who are concerned with these issues, and my Ministers and I have been keen to ensure that there is a fair and objective division between the various authorities. I believe that an agreed position may well be secured between Buckinghamshire and Milton Keynes. I am aware of the problems, and I have already announced a damping system, which will help.

Photo of Mr Bill O'Brien Mr Bill O'Brien , Normanton

Has the Secretary of State received from his hon. Friend the Under- Secretary of State for the Environment a report about the deputation that he received from the Webber Craigh group, which includes Wakefield, my own authority? The group explained to the Minister, without any doubt, about the unfairness involved in the financing of education. Other issues could have been raised, including social services and community care, but the group concentrated on education.

According to the report, the increase in Wakefield's budget for this year, in comparison with last year's budget, is less than 2 per cent.—1.9 per cent. Is the Minister taking seriously the point that has been made about the reduction in education resources in the Wakefield area, and will he give us some definite ideas about how he intends to assist local authorities in the Webber Craigh group?

Photo of John Gummer John Gummer Secretary of State for Environment

The record of the Webber Craigh group is particularly good, although its dominance is not one that I share. The hon. Gentleman has noticed on several occasions that its propositions have been carried through into the SSAs. On this occasion, we looked carefully at my hon. Friend the Under-Secretary of State's very full report of the discussions in which he engaged. We were not able to reflect some of the points that were raised, even after extensive investigations, but I shall be happy to look at the report again. There is no doubt that the group put its case seriously and properly.

Photo of Mr David Shaw Mr David Shaw , Dover

Why, after 25 years of Labour control in Islington, does that borough have the lowest educational standard in the country? Conservative Members are fed up with the fact that this local government expenditure, while it is relatively generous to many areas, is overly generous to Labour areas such as Islington. We are not seeing payment by results. Can we have a "payment by results" system for local government expenditure in future?

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend raises an issue that must be a real concern to many people. It is quite clear that the leader of the Labour party decided that they were not getting payment by results in Islington, which is why his child did not go to school in Islington.

Photo of John Gummer John Gummer Secretary of State for Environment

It is quite clear that his child was moved from a school in Islington, and that is the point. He went to school in Islington, and they decided that it was not good enough—[Interruption.] No secondary school was good enough. In defending his leader, the hon. Member for Nottingham, North (Mr. Allen) fails to remind the House that his leader passed over several boroughs before finding a school that he considered satisfactory. Some of those are Labour-controlled boroughs, and one of them is the borough in which he lives. Islington receives a great deal of money for education, but it does not provide value for that money.

Photo of Mr Jack Thompson Mr Jack Thompson , Wansbeck

May I suggest to the Secretary of State that he or one of his civil servants—whoever drafted his statement—might take a short course in plain English? Hon. Members on both sides of the House have had a great deal of difficulty understanding what he was saying. Obviously we will have to get the documents and study them very carefully to identify what he really means.

It is fine making a presentation on issues of local government funding to right hon. and hon. Members, but, some time in the near future, will he find the time to visit a shire county such as mine, for example? I do not ask him to visit the politicians there, but to sit down with the local authority's officers in that county—not here, in London—to discuss financing that authority.

He can look at the books—for as far back as he wishes to go—to discover how those officers have dealt with funding, and he will find that money allocated for the road system, for example, has been diverted to support the education system. If he were to visit in late January or early February and examine the system in my county of Northumberland, which is a very rural county—there are 4,500 miles of roads, with a sparsity factor of 0.6 person per acre—he might find that he had to stay a lot longer than he had planned, because he would probably be snowed in.

Photo of John Gummer John Gummer Secretary of State for Environment

I must tell the hon. Gentleman that Northumberland is among the top-ranking counties in SSAs, because it has particular problems. He should examine very carefully the administration and running of Wansdyke, which is certainly not an authority to which I would look as an example.

Photo of Mr Jack Thompson Mr Jack Thompson , Wansbeck

On a point of order, Madam Speaker. Wansdyke—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. I have to take points of order after the statement. Does the Minister wish to come back on that point?

Photo of John Gummer John Gummer Secretary of State for Environment

Inadvertently, I did not say "Wansbeck", which is the authority I was referring to.

Photo of Mr Roy Thomason Mr Roy Thomason , Bromsgrove

Will my right hon. Friend confirm that, year on year, local authority revenue balances are consistently replenished by underspending by local authorities? Does he agree, therefore, that the Labour party's claims that revenue balances are continuously being denuded make a hollow sound—when, in fact, that replenishment is taking place? Does he agree that one of the prime reasons for the replenishment of revenue balances is that Labour-controlled local authorities consistently overestimate the inflation level achieved by the Government?

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend is perfectly right. He did not mention, however, that many local authorities could have more money to spend if they more efficiently collected their council tax. Most councils that inefficiently collect council tax are run by the Labour party. When my hon. Friend was explaining the system, he might also have said that the Labour party is not prepared to recognise that one gets better services and does not have to push up the council tax if one saves money by obtaining better value for money. It is true that many of those authorities have very considerable balances, which have arisen from past underspending.

Photo of Jeremy Corbyn Jeremy Corbyn , Islington North

May I ask the Minister to get off his high horse on housing policies and start encouraging and allowing local authorities to build and buy housing at affordable rents? That is not only a method of solving the housing crisis and taking many people out of bed and breakfast and other accommodation, but a way in which we can save a great deal of public money, which is currently lining the pockets of private sector—often millionaire—landlords through spending on the housing benefit system. That money should be spent on local authority housing, so that we can have low rents and decent housing for people to live in.

Photo of John Gummer John Gummer Secretary of State for Environment

Obviously, the hon. Gentleman has not looked at all our programmes, such as those that are improving bad estates, especially through LSVTs.

Photo of John Gummer John Gummer Secretary of State for Environment

I want to improve the bad ones as well, because many of them are hard to let, even in difficult areas, because they are so bad. Through LSVTs we shall be able to improve the condition of buildings. We have been putting a great deal of money into housing associations so that they may build more.

I remind the hon. Gentleman that the Labour party has not committed itself to spend any more on that. It has simply said that it will allow local authorities with receipts to spend those receipts. It does not mention that Birmingham, Blackpool, Bolton, Dudley, Gateshead, Hackney, Lancashire, Leicestershire, Milton Keynes, Newcastle, Oadby and Wigston, Southwark, Sunderland, Wear Valley and Wolverhampton, among many others, have no receipts to spend.

The Labour party would allow local authorities that have no real need to spend, to spend their receipts, and it would not allow those that do have a need to spend. We put the money where the need is.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

Will my right hon. Friend, with his well-known reputation for moderate language, help me to formulate a reply to Liberal councillors on the Isle of Wight who say that the settlement is not adequate, given the thousands of pounds that they spent on a Mori poll, trying to convince my constituents that they should leave the UK? Including the capping limit, nearly £100 million for 100,000 electors does not appear to be a deal that anyone except Don Quixote—who I presume must have been a founder member of the Liberal party—will want to leave the UK for.

Photo of John Gummer John Gummer Secretary of State for Environment

There are good reasons why people might want to leave a local Liberal-run authority. Only the fundamental attractions of the Isle of Wight keep people there. As usual, the local Liberals are chasing after unnecessary expenditure to pat themselves on the back and inflate their egos. If the local Liberal party really wanted to help the people of the Isle of Wight, it would save money, ensure that the council tax was lower, and hold no more referendums on whether to leave the United Kingdom.

Photo of Stephen Timms Stephen Timms , Newham North East

The Secretary of State is aware of the difficulties in which several local authorities—including mine—find themselves, arising from the fact that the capital financing element of the SSA reflects notional, not actual, borrowing. Disappointingly, that anomaly has not been addressed; that part of the SSA for Newham has fallen this year. Can the Secretary of State hold out any hope that his calculations will reflect actual borrowing, especially where, as in the case of Newham, the borrowing was incurred long before the current financing system was introduced?

Photo of John Gummer John Gummer Secretary of State for Environment

There is a genuine problem. Let me take as an example, not Newham, but another council. If one reflects exactly the borrowing of Sheffield, it means that Sheffield would—

Photo of John Gummer John Gummer Secretary of State for Environment

Or even Newham, but I was trying to be polite to put it into context, so let us take as an example one that we all know was a thoroughly bad authority. Sheffield has borrowed very large sums of money. Why should the rest of the country meet those requirements when Sheffield has borrowed the money?

I am afraid that the same is true of Newham. I agree that Newham's borrowing record is much improved; I would not for a moment say that there is quite the same degree of profligacy. I believe that the hon. Member for Newham, North-East (Mr. Timms) started that change when he was involved in local government there. Nevertheless, I do not see why prudent authorities, or those who have their homes in prudent authorities, should be denied a proper return because we are bailing out local authorities that over-borrowed in the past.

Therefore, we must have some notional system. If the hon. Gentleman feels that the notional system that we have does not properly reflect the position, I am always willing to look at it. I am not prepared to allow the mass of the population to pay for the profligacies of Labour's past.

Photo of Mr Harry Greenway Mr Harry Greenway , Ealing North

Can my right hon. Friend confirm that the 3.6 per cent. increase in educational spending will, in Ealing, make proper provision for continued current levels of expenditure on schools and allow for the increase in rolls at high school level, and that it will in no way excuse the Labour council's present reduction to £30,000 a year of expenditure on adult education, thereby taking away adult education from hundreds, if not thousands, of people for whom it is a lifeline?

Will he also confirm that the settlement for Ealing and for other authorities contains proper cover for the implementation of the Noise Act 1996, the provisions of which are so much needed in many parts of the country, from 1 April next year?

Photo of John Gummer John Gummer Secretary of State for Environment

My hon. Friend will agree that Ealing council could save money in many areas, not least its constant changes to the traffic pattern and the installation of vast quantities of special traffic arrangements and flower beds. Much could be done.

Every year, when we talk about education, Labour Members say that our measures will result in a reduction in the number of teachers by 7,000 or 9,000—they always choose one of those two figures. In fact, the number of teachers in England and Wales increased in 1995, and increased again in 1996. I have no doubt that Opposition Members will say yet again that teacher numbers will fall, but we have provided enough money to enable a prudent authority to meet all its requirements and do something better. I hope that Ealing will start to be a prudent authority.

Photo of Paddy Tipping Paddy Tipping , Sherwood

May I draw the Secretary of State's attention to one of the documents that he has published today—the Local Government Finance Report (England) 1997/98? Will he explain the meaning of the formula on page 31, in Annex C, paragraph 3(a)? It says: [(R-(S+T+U+V+W)) + (0.75xV) + (0.5xW) x X/Y". If the Secretary of State cannot explain that now, will he confirm that, as he controls the capping limit of every local authority in the country and provides 80 per cent. of the finance, when council tax bills go up, the finger must point at him?

Photo of John Gummer John Gummer Secretary of State for Environment

When council tax bills go up, it is because the local authority puts them up. It has the control over them. I shall be happy to take the hon. Gentleman through the formula point by point immediately afterwards if he would like me to.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

What response has the Department of the Environment made to my representations on the SSAs for North and North East Lincolnshire? Does my right hon. Friend recall that the rates for the new North Lincolnshire unitary authority, which came into existence in 1 April this year, went up by 31 per cent. notwithstanding capping? That surely cannot happen next year. Will we continue to receive damping for North Lincolnshire council?

Photo of John Gummer John Gummer Secretary of State for Environment

The damping will continue. I assure my hon. Friend that I have taken his concerns seriously. He had a particular and, in a perfectly proper sense, unique circumstance. I have made sure that damping continues.

Photo of Brian Jenkins Brian Jenkins , Staffordshire South East

I know that the Secretary of State may not have the figures with him, but I should like some explanation about the Staffordshire settlement. I was part of the cross-party team that lobbied him on Staffordshire's SSA for education. I know that the county has a 2.5 per cent. increase.

Is the increase in education funding greater than 3.6 per cent., which would bring us up from the foot of the table? If so, how far up the table will it take us? Will he also explain why, of the eight district councils in the new, reconstructed Staffordshire, seven will have a permitted increase of 0.5 per cent. or less, but the other one will get a permitted increase of 41.5 per cent.? Is it because it is the only Conservative-controlled council left in Staffordshire?

Photo of John Gummer John Gummer Secretary of State for Environment

The hon. Gentleman is right to say that the amount that can be spent on education in Staffordshire has increased by more than 3.6 per cent. I understand that the increase is 3.8 per cent. The funding for the district councils is calculated according to a formula. In the old days, it used to be possible to change one rather than another, but the system works by a formula, which I shall be happy to go through with him.

Photo of Michael Fabricant Michael Fabricant , Staffordshire Mid

Will my right hon. Friend confirm that, in addition to the 3.8 per cent. for education, there will be 3.9 per cent. extra for the police force, which will enable us to have 40 extra officers in Staffordshire? Is not the synthetic rage from the Labour Front Bench a little rich, given that the leader of the Labour party told a meeting of local government members that there would be no extra money under a Labour Government?

Photo of John Gummer John Gummer Secretary of State for Environment

I can confirm what my hon. Friend said. The Labour party constantly demands more money, but constantly repeats that, were it in power, it would provide no more money. That double standard and the constitutional impossibility of the Opposition spokesman ever coming to terms with the facts of the system, or the system that his party used to run, make intelligent discussion difficult.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

I am pleased that the Minister has conceded that North Lincolnshire has experienced particular problems since it was set up. He referred to the damping grants. The papers relating to the transitional reduction mention that North Lincolnshire will receive a grant of approximately £1.3 million. However, it was receiving £2.2 million. Does that mean that there will be a reduction of £1 million in that grant?

Does the Minister understand why the people of North Lincolnshire feel so resentful about the way in which the four new unitaries of Humberside were set up? North-East Lincolnshire is a comparable local authority, with a population of only 8,000 more than that of North Lincolnshire, but it receives £13 million more in standard spending assessment. Although I know that the SSA is not calculated strictly on population, that comparison shows that North Lincolnshire is being treated unfairly.

Photo of John Gummer John Gummer Secretary of State for Environment

The amount provided for the damping grant is less than before, because the local authority said that it would be able to make considerable savings in the second year. I remind the hon. Gentleman that many of the problems arose because of the scandalous behaviour of Humberside county council, which did not leave behind the residue that it should have done.

I repeat that the arrangements to compare one local authority with another—the measurements—are exactly the same. If the hon. Gentleman would like to identify particular aspects of the SSA that he feels do a disservice to his local authority or that of my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), I should be happy to look into the matter. However, the same system and the same series of indices have been generally acceptable. I repeat that I shall certainly look into the matter.

Photo of Gordon Prentice Gordon Prentice , Pendle

I should like to do just that, and invite the Secretary of State to look again at the methodology of the fire service SSA. It has had the most perverse effect on Lancashire county fire brigade, that has been extremely successful in tackling hoax calls but has suffered an enormous decrease in the part of its SSA that covers that element.

Although people welcome the 4 per cent. increase in the fire authority SSA, in Lancashire the brigade is spending 10 per cent. above what the Government consider to be correct, and Lancashire county council is making up the difference. The Minister constantly criticises Lancashire county council for spending over the odds, but it is subsidising a vital public service, which is not getting proper Government support.

Photo of John Gummer John Gummer Secretary of State for Environment

I am happy to look at the particular problems that the hon. Gentleman has identified. If it helps him, I can certainly say that Lancashire county council is a better local authority than Hammersmith and Fulham was under his leadership.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

On a point of order, Madam Speaker. I can well understand why you felt unable to accept my earlier suggestion that we suspend the sitting for half and hour to look at the figures, but it is clearly unsatisfactory to discuss an immensely complex statement, but not to have the figures available until after the Minister has sat down. Those of us who wish to ask questions cannot leave the Chamber or, quite rightly, you will not call us to put our questions.

I make no criticism of my right hon. Friend, who is the most courteous of Ministers and always tries to be extremely helpful, but it would be immensely helpful to Back Benchers on both sides of the House if we had some opportunity or facility to look at the figures before we asked our questions.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

The Secretary of State has been extremely helpful to hon. Members. I have kept him at the Dispatch Box for an hour and half to answer questions in detail. However, the hon. Gentleman has a point, and I shall certainly consider it.