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Local Government Finance

– in the House of Commons at 4:13 pm on 3rd February 2000.

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Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

With this, it will be convenient to discuss the following motions: That the Local Government Finance (England) Special Grant Report (No. 52) (HC 161), which was laid before this House on 27th January, be approved.That the Local Government Finance Report (England) 1998–99: Amending Report 2000 (HC 162), which was laid before this House on 27th January, be approved.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I shall set the financial settlement in the context of the Government's radical reform for local government. Modernising and improving public services is central to the Government's approach, to enable people throughout the country to have a higher quality of life. High-quality, accessible and affordable local public services are an essential part of community life.

Promoting the economic and social regeneration of our villages, towns and cities, tackling crime, ensuring that our schools deliver excellence, maintaining decent health and social care, enhancing the local environment, and protecting our most vulnerable citizens—all these are responsibilities which local government at its best fulfils best in partnership with others.

Our ambitious and long-term reform agenda for local government requires a long-term approach to the funding of public services. As my right hon. Friend the Prime Minister has made clear, dealing with the Tory inheritance has taken and will take time. We are determined not to make the mistake of boom and bust, and instead have sought to create a stable economic climate within which our public services can develop and improve over time.

Photo of Alan Beith Alan Beith Liberal Democrat, Berwick-upon-Tweed

I am grateful to the right hon. Lady for giving way. I must point out to her that the only thing stable about education funding in Northumberland is the fact that we are still working on the plans of the previous Government, and that even this year the education standard spending assessment for Northumberland is one of the lowest of any shire county. When can we hope for some improvement in the situation in which children in Northumberland have so much less spent on them per head than in so many other parts of the country?

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

As the right hon. Gentleman knows, there has always been a system of redistribution, taking account of need. We have paid greater attention to the sparsity factor, which has benefited Northumberland. I know the problems of Northumberland because, as the right hon. Gentleman knows, my constituency is separated from it only by the river.

The problems are being tackled. There has been a 4.4 per cent. increase in education funding this year. Everything possible is being done to ensure that all children in Northumberland get the opportunity that they deserve.

A distribution formula inevitably means that not every place gets exactly the same amount of money per child, but we are conducting a review and looking at how we can ensure that people throughout the country know that they are getting a better deal. They know that this year because, however low education spending in Northumberland is, it is a lot more than it was in the last three years of the previous regime.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I am sure that the hon. Gentleman, who is my neighbour, will speak later in the debate. I must make progress.

We were acutely aware that local government inherited a short-term challenge, exacerbated by a 4.3 per cent. cut in real terms in the three years preceding 1997. There has been no such cut since this Government were elected. I am pleased to confirm today that this year's settlement will mean that over the first three years of this Government, grant to local councils will have increased by £6 billion. That is a real-terms increase of 7.8 per cent., compared with a 4.3 per cent. cut in the three years preceding the election of a Labour Government.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I am grateful to the right hon. Lady for giving way. May I move the debate from Northumberland down to Leicestershire? The right hon. Lady may not know that Leicestershire has the lowest standard spending assessment for education of any shire county. The Government's recommended spending on education in Leicestershire would involve a 3.3 per cent. cut per pupil. However, that is not going to happen, because Leicestershire county council is to spend more than the recommended amount.

Will the Minister speak to her right hon. Friend the Secretary of State for Education and Employment and explain, first, that Leicestershire is concerned about the small amount of money that it is getting from the Government through the education SSA and, secondly, that the leader of the council is not the chief executive? Although the Secretary of State has been told that on more than one occasion, he keeps writing to the chief executive, Mr. Sinnott, as the leader.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

The average increase in education standard spending assessments is higher in shire counties than in metropolitan counties. That means that Leicestershire received a higher increase than many other authorities. Not everybody can be average or at the top in a system that uses a distribution formula.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

The Labour leader of Northumberland county council has written to the Secretary of State for Education and Employment to plead for extra help. Northumberland county council has had to cut its education budget and, consequently, it cannot take up £2.8 million of standards fund money because it does not have the match funding. Schools in Northumberland currently face that problem.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

Despite the substantial increases, some authorities and schools have historically received low funding. The hon. Gentleman knows that, under the previous Government, his local authority suffered substantial cuts. The Government have ensured increased funding. We have not been able to put everything right, because righting all the previous Government's wrongs will take time. We are considering the third settlement. I remind the hon. Gentleman of the real-terms increase of 7.8 per cent. for local councils since the general election, in contrast with what was happening before the election.

The Government are mindful of the long-term challenges that local councillors face, and appreciate that they are eager to modernise the fabric of the community through capital investment, of which the Tories starved them. We have therefore made available more than £6 billion of additional capital to invest in schools, homes and other much-needed community facilities.

Additional resources must be invested wisely. That is why we are committed to modernising the local government finance system, which at present makes up in complexity for what it lacks in transparency. If local councils are to plan ahead and work effectively in partnerships, they need assurances about the stability of future funding. That is why we announced totals for SSAs and grant for three years, during which we do not expect to change the SSA formulae. The Local Government Association welcomes that move.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

Will the right hon. Lady explain the enormous variations between last year and this year, and the rumours that they are caused by a glitch in a computer, which affected the previous year's data?

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I do not deal in rumours. Changes have been made this year because of the additional investment that we are providing, and because of changes in data. As the hon. Gentleman knows, we have consistently said that we would change not the formulae, but the data. Of course changes have occurred, but the good treasurers were able to predict what would happen.

We continue to work with the LGA to review the revenue grant and capital control systems to ascertain whether, together, we can achieve a simpler, fairer system that puts the grant where it will do most good. That is why we are implementing radical proposals for a more efficient, transparent and accountable local democracy.

We have abolished crude and universal capping and we no longer set authorities' spending limits in advance. Those changes make councils more accountable to local people for their tax decisions. In general, councils responded well to that approach in 1999–2000. Unlike Conservative Members, the Government are not in the business of forecasting council tax increases. Indeed, it is becoming a tired old ritual for Opposition Members to forecast high council tax increases and make alarmist predictions that rarely materialise.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The Minister cannot divorce herself entirely from the impact of the settlement on council tax, because real people pay that tax through real councils. Many of those people face hardship in paying increased council tax.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

That was an interesting intervention. Given the hon. Gentleman's predictions, I wonder about his intentions. Today, he predicted increases of more than 10 per cent. Is he trying to encourage authorities to do that? Last year, Labour councils increased council tax by 6.1 per cent., whereas Tory councils raised it by 7.6 per cent. Perhaps the hon. Gentleman is trying to encourage profligate spending by Tory authorities. Thank goodness there are not many of them.

It is important that councils consult local people and consider fully the scope for increased cost-effectiveness before setting their budgets. I am delighted to say that, since I announced the provisional figures in November, efficient management of the transitional costs of local government reorganisation has produced a saving of £35 million. As part of the Government's continual drive to ensure that investment is focused on front-line services, I decided to return the £35 million through an increase in grant support to local authorities to help them fund service improvements and keep council tax increases down.

In addition, my right hon. Friend the Secretary of State for Education and Employment recently confirmed that an extra £50 million for schools will be paid through a special grant to all education authorities.

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs)

But to qualify for that £50 million, local education authorities must maintain last year's education budget as well as finding extra cash to match the Government's increase on the education SSA this year.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

My right hon. Friend has written to local authorities to say that he is interested in the way in which they will pass the education money to schools. He will examine that before he makes a decision. I am happy to support my right hon. Friend.

Overall Government grant to local authorities will be £41.9 billion in 2000–01. That is nearly £2.3 billion or 5.8 per cent. more than in 1999–2000.

Photo of Dave Watts Dave Watts Labour, St Helens North

Depopulation in many poor areas causes severe problems in maintaining standards and services, and for the council tax. Will my right hon. Friend specifically consider the poorest areas, such as St. Helens and Barnsley, which are suffering while we wait for the review of the SSA system? We all want that to happen as soon as possible.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I shall tackle that later in my speech.

As I said, the overall effect of our policy is an increase this year. Total standard spending will be £53.6 billion, which is £2.9 billion or 5.8 per cent. more than in 1999–2000. Individual authorities' SSAs will have moved slightly since the provisional figures were announced in November to reflect updating or corrections to data. I do not propose a change in the method of calculating SSAs, except when that is needed to take account of the changes that are connected with establishing the Greater London Authority. However, in a formula-based system such as the standard spending assessment, changed circumstances change the amount of grant that individual councils receive. Specifically, when the data that feed into the formula change, the SSAs for individual authorities change. Those changes led to representations on three issues in particular.

Lower interest rates affected the distribution of the element of the SSA that relates to capital financing. The authorities that lost by that change—principally metropolitan authorities with debt, but low interest receipts—suggested to me an alternative means of calculation. I understand their argument that using an interest rate at a particular point in time may not be representative of a whole year. However, we have said that we intend to stick to the existing method of calculating SSAs and we have to be consistent in that. I must also make the obvious point that reducing interest rates results in a reduced cost to authorities of servicing debt. That is reflected in the particular SSA.

A number of representations suggested that more grant be given to those authorities with the lowest grant increases and that the threshold of 1.5 per cent. that we had proposed for central support protection grant be increased. The Government, though, have to strike a balance between protecting authorities with low increases and allowing the new data to work through the grant formula to give larger increases to others. I consider that we have that balance right.

Authorities such as those to which my hon. Friend the Member for St. Helens, North (Mr. Watts) referred—which lost grant because of data changes and, in particular, declining population—suggested that we should introduce a mechanism to phase in those losses. I am not persuaded that that would be sensible. It must be true that, other things being equal, a decline in local population will feed through to lower spending. However, that is one of the issues that we shall continue to examine as we consider the review.

I have considered those and other points carefully. However, I remind the House that our July 1998 White Paper, "Modern Local Government—In Touch with the People", set out our plans for the period of the review of revenue grant distribution. We stated that although we did not expect to change the method of distribution, we would update the SSAs of individual authorities to reflect changes in the demands for their services, as reflected in the data used to calculate SSAs. We see no reason to change that view. Therefore, I do not intend to make any changes to the basis of grant distribution that I proposed on 25 November.

The Local Government Association sought information about the arrangements for phasing in the effect of grant changes. I accept its argument, which chimes with the Government's emphasis on providing a stable financial environment in which authorities can plan and deliver better services. I therefore announce today that we intend, for 2001–02, to use the same arrangements for phasing in grant changes as for 2000–01. That means that no authority will lose grant, and local authorities with education and social service responsibilities will receive a grant increase of at least 1.5 per cent.

I also intend to maintain stability in another area that relates to council tax benefit subsidy. We received and considered representations on our proposals for subsidy limitation. Some were opposed to the scheme itself and some sought modifications. However, none convinced me that the basic principle behind subsidy limitation is wrong. Local authorities will therefore continue to contribute to the benefit costs of council tax rises, if those are above a guideline. The guideline will operate cumulatively, as we said last year. In other respects, the scheme remains as last year.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I understand that the guideline is about 4.8 per cent. Why is that so much above the rate of inflation? Does it not demonstrate that the Minister knows that the consequence of the grant settlement is that council tax rises will be significantly above the rate of inflation next year, as they have been in the last two years under this Government?

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

The hon. Gentleman has a short memory. He knows that when he was in charge of these things—or at least when he was one of the Ministers in the Department—he supported changes that drastically changed the amounts raised through central Government grant and locally. The balance was redressed slightly by changing the basis of that, but his Government changed those amounts. That has been maintained, but we are considering it in the review. It is not true that the guideline is 4.8 per cent. and it is not true that councils have to spend up to it. Councils have already planned to spend well below the guideline, which is not a suggested council tax increase but the guideline at which council tax benefit subsidy limitation kicks in. That is a very different matter.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire

An aspect of the council tax benefit subsidy limitation scheme presents a problem. Parish council precepts are included in the amounts to be considered, but parish councils are in control of their own expenditure. Some authorities have a great number of parish councils in their area, so should not that matter be removed from these considerations?

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I have considered that. It would be difficult to administer my hon. Friend's proposal and the cost of administration might far outweigh the amount that would be taken. Following discussions with the National Association of Local Councils, we decided not to go down that road. However, I understand his point.

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs)

I am grateful to the Minister for giving way a second time. Combined fire authorities, which have no control over the local authorities that set their budgets, are affected by the council tax benefit subsidy limitation scheme. Will she consider making reforms, as the scheme is very unfair to them?

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I do not accept that argument. Combined fire authorities comprise representatives from member authorities, and it is their responsibility to ensure that decisions taken by the combined fire authorities do not inflict exacting tolls on the council tax payer. It would not be fair to put that liability on to the other authority, which does not set the tax.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I am sure that the Minister did not mean to refer to me.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

Absolutely not—I apologise, Mr. Deputy Speaker. The liability rests with the authority that sets the budget. If the fire authority sets the budget, council tax benefit subsidy limitation impacts on that budget. The authority must take responsibility for the decisions that it takes.

This is the third local government settlement under the Government and the second within the comprehensive spending review. We are providing unprecedented financial stability for local government, together with proper funding. I acknowledge that some authorities face difficulties. That is why we are continuing to seek long-term reform of the local government finance system. Our proposals for 2000–01 have been widely welcomed by local government. They represent the best deal for local government since the introduction of the council tax. They lay the foundation for reform and modernisation, and enable councils to plan effectively for the provision of decent public services that underpin strong communities. I commend them to the House.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 4:40 pm, 3rd February 2000

Here we are again, Mr. Deputy Speaker.

This is a Government who like to pretend that they are the friends of local government. They talk a great deal about enhancing local democracy and use that famous word in the new Labour dictionary, "modernisation". When this Government start talking about modernisation, it is time to start counting the spoons. The last thing that they want is vigorous, independent, representative local councils standing up for local people and opposing harmful policies imposed by central Government. As we see from their attitude to the London mayoral race, there are clear limits to devolution under this Government. They are not prepared to tolerate a mayoral candidate who will not wear a pager and take his lead from Millbank or No. 10.

In the rest of the country, the Government wish to impose their own blueprint for local government structures. The Secretary of State is now leaving the Chamber; I am sorry about that. The Government also refuse point blank to allow the so-called fourth option—to let councils and local people choose the status quo if it suits their needs. Yet so unsuccessful have the Government been in attracting genuine support, rather than sullen acquiescence, from councillors for their plans that not one solitary councillor in Labour-controlled Camden could bring himself or herself to support their plans for reorganisation.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I understand that the council voted 40-something to zero, with three abstentions, against the Government's plans for reorganisation and that one of those who abstained was the Labour leader of the council. If the Minister thinks that I am wrong, however, I shall be happy to give way to her.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

Council members properly abided by the group whip, which demonstrates, to an extent, that the current committee system does not provide full, free and open access to discussions relating to decisions.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

This is unreal. The Minister is saying that the Labour group debated her proposals for local government modernisation and decided against them, and that there was then a Labour whip against those proposals. She really should take stock. Is it the case that everyone else is wrong, and she is right?

The Minister may not agree with me about Camden, although I believe that that is a matter of record. She may know, however, that there is a campaign in the Labour party for open local government, which claims to have more than 1,000 Labour councillors as members. [Interruption.] I am sorry if hearing this is painful for Labour Members, but it is what happens when the Government's policies part company with the aspirations of grass-roots Labour party members. Sometimes, that also brings about ministerial resignations.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The last thing that Conservative Members want is for the Minister to resign, but I was referring to the hon. Member for Liverpool, Walton (Mr. Kilfoyle).

Nowhere is the Government's control freakery more apparent than in local government finance. Their approach reeks of it. Yet again, we have heard much from the Minister about stability; but, as I said at the time of the original statement, it is no consolation for a council that is treated unfairly in year 1 to be told that it can make plans on the basis that it will be treated just as unfairly in years 2 and 3.

Let me take this opportunity to ask the Minister in more detail how she and her colleagues are progressing with the review of the working of standard spending assessments. I am sure that that is of interest to hon. Members on both sides of the House. According to what I last heard, 19 countries' systems were to be considered. I believe that that has now been narrowed down to four: four countries are to benefit from a ministerial visit, or junket. It would be interesting to know what time scale Ministers have in mind for the reaching of conclusions.

The Government are trying to downplay the significance of the settlement. That is hardly surprising; I do not blame them. Let us look at the facts. The settlement confirms that, over the past three years, the Government have channelled £425 million out of county councils, and £180 million out of London boroughs, in order to subsidise largely Labour-controlled metropolitan councils. In this year alone, shire counties' standard spending assessments will be £160 million below the level that they would have reached without the Government's changes to the funding formula.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

Does my hon. Friend agree that the migration of funds from the shires to spendthrift northern metropolitan boroughs under Labour control is all the more absurd when the population figures are rising in the south-east—and, because of that, the Deputy Prime Minister wants to impose 1.1 million new houses on us—while the population figures in northern boroughs are falling? Is not the per head settlement weakening all the time in the south-east?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am grateful to my hon. Friend for making a point that neatly links this debate with the debate that we had only yesterday.

This year's settlement was particularly hard on shire district councils. Funding for environmental protection and cultural services was cut in real terms, and that makes up a substantial proportion of district council spending. District councils are set to lose 6.1 per cent. of their cash revenue support grant; if we take inflation into account, that means a cash shortfall of more than 8 per cent.

The Government say that they are increasing the grant to every authority. That, however, has been achieved because of a large surplus on the business rate pool from last year, which the Government are obliged to transfer to local authorities. I think it fair to say that, without that money, many councils would face steep cuts—actual cuts—in their overall grant.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

May I return my hon. Friend to the subject of shire counties? The Government do not necessarily discriminate: Labour-controlled Northumberland county council has suffered badly in terms of cuts. I have been sent the records of a meeting between staff and council officers who are worried about the situation. They are quite revealing. The staff said: The commitment to spending at SSA in relation to education will mean a cut in school budgets—perhaps a commitment should be made to school budgets rather than SSA. The answer was: The council is going through a process of closing old people's homes and cannot spend above SSA for education because of the implications for other services. Further on in the minutes, a 6.5 per cent. increase in council tax is predicted.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

That paints a bleak picture of how Northumberland will fare as a result of the settlement. I intend to return to the Northumberland example when I deal specifically with education.

The Minister adopted an extraordinarily detached attitude to council tax levels, as if they were an act of God and wholly unrelated to the settlement that we are debating. However, last year's increase of 6.8 per cent.— a sharp rise under this Government—came on top of a record increase of 8.6 per cent. the previous year. The average band D household is already paying £100 more in council tax this year than when Labour took power.

That would be bad enough were it not for the fact that, if council spending increases at the same rate as last year, council taxes could go up by more than 10 per cent., with an average band D household facing a further rise of £85. By the end of the process, many homes throughout the country could pay getting on for £200 more in council tax than at the general election. We are not necessarily talking about wealthy people. Ordinary families on tight budgets and elderly people who have trouble meeting such bills may face those costs. Those are serious matters.

If one goes into the figures in even more detail, it will produce some interesting results. If one looks at the real-terms changes in SSA and TES—total external support—one will reach the following conclusions. Last year's settlement was notably biased against councils in the south of England, a point that was made by my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton). Councils in the south of England and the west midlands will have a smaller percentage of their SSA real-terms increase matched by a TES real-terms increase. The Minister is right to say that council taxes are fixed by councils, but within constraints. That produces the potential for higher-than-average council tax increases in those very councils.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

I am somewhat puzzled. Is the hon. Gentleman saying that, somehow by magic, the formula on which the settlement is based has surreptitiously been changed without anyone noticing, or that the method by which the SSA is formulated is the same as it was under his Government? Therefore, provided the rules have been kept to, the Government are simply carrying out the formula. While he is at it, is he not saying that, if it were not for the fact that there is more money from the business rate, there would be less money? That seems a strange method of opposing a settlement.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Yes, I am saying that in the first year of the three-year process, the goalposts were moved. The point about the business rate is that, were it not for the surplus from last year, the Government would be looking at real cuts in grants for certain councils.

Let us do a political analysis of the real-terms increases in both SSA and TES for councils and look at the party political control of the councils. The TES increase as a percentage of the SSA increase—a crucial part of the formula—for Conservative-controlled councils is 55.3 per cent., compared with 62.6 per cent for Labour-controlled councils. If it is any assistance to the Government's friends on the Liberal Democrat Benches, the equivalent figure for Liberal Democrat-controlled councils is 53.5 per cent., so they might have something to say about the way in which the councils that they temporarily control are treated by the Government in one or two of those Cabinet Committees.

Therefore, a smaller percentage of the SSA real-terms increase of Conservative and, incidentally, Liberal Democrat-controlled councils will be matched by a TES real-terms increase. As I have said, that lays the groundwork for higher-than-average council tax increases in those councils, even though the Minister went out of her way to suggest that it was nothing to do with her.

As we have heard, the methodology was not altered this year. We are part of a three-year cycle. There are 21 authorities whose total SSA in 2000–01 will be lower in real terms than in 1999–2000, assuming inflation of 2.5 per cent. One of the them, Tewkesbury, will suffer a fall in SSA. The reason why most—in fact all, except the London borough of Merton—of the councils on that list are shire district councils is because the increase in funding to local government was directed primarily at education and social services. That is a major reason why those councils have been treated unfairly.

The other point, which I think is accepted by the Minister, if I understood her properly, is that the year-on-year changes are data driven. They are based on size, composition of population and so on. They have nothing to do with decisions by Ministers. That is one of the pitfalls of having a three-year period in which no changes are made to SSAs, and in which Ministers have said that they are unwilling to receive representations other than in writing from local councils.

Additionally—this point was made earlier in the debate—some police and fire authorities are receiving a below-inflation increase: Merseyside and West Yorkshire are two examples. That also will have a serious knock-on effect in the areas affected.

A moment ago, I touched on the question of representations. The other day, in answer to a question of mine, the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Stretford and Urmston (Ms Hughes), listed eight authorities that had made requests in writing for meetings to discuss the financial settlement for the coming year. She makes it clear—because this is the basis on which they entered the process—that No Minister from this Department met those authorities to discuss their representation",—[Official Report, 1 February 2000; Vol. 343, c. 518W.] although Ministers did receive representations in writing and from the Local Government Association and other bodies.

Again, however—I have made the point before, but I happily make it again—it really cannot be right to have a system that allows Ministers to avoid the necessity of meeting delegations from local authority areas to discuss whether they have been fairly treated. When the previous Government were in power, Ministers regularly met such delegations—I led delegations myself, from Eastbourne—and they listened patiently and courteously to those representations. That is, in part, what Ministers are for.

It is really quite a difficult concept in a parliamentary democracy to have Ministers who refuse to have that type of consultation.

Photo of Dave Watts Dave Watts Labour, St Helens North

I took part in delegations to see the previous Administration about various problems, but we were shoved through one door and out the next. Very rarely did anything come from those meetings; they were pointless. Often, the Ministers did not understand the issues that we were raising and showed very little interest in the problems facing local authorities.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Perhaps it had something to do with the leadership of the delegation. My experience is that Ministers were unfailingly courteous, and—in the shape of my hon. Friend the Member for Mole Valley (Sir P. Beresford), who is in the Chamber—extremely knowledgeable indeed, having been leader of an extremely well-run local authority.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

There is a contrasting view, as Ministers sometimes had to recognise that those who were in a delegation did not understand the points that they were trying to make. Occasionally, graphs we were given were filled in upside down. When it was pointed out to them that the axes had slightly changed, their whole argument would collapse. However, that said, there was much positive gain from receiving those deputations. In the final year of the previous Government, my fellow Ministers and I saw about 92 delegations, which was beneficial.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Perhaps I can draw a line under this particular part of the debate by admitting that there were occasions when I was present when I had the eerie feeling that no one in the room understood the point that was being discussed—but perhaps that is the nature of SSAs. We are hoping that the Minister will come up with a whizz-o, easy-to-understand new system; we shall see.

There are other ways in which the Government, through the local government finance system, are trying to impose their own agenda on local government. One of them is the growing use of specific grants. Conservative Members are friends of the block grant. We think that, in the past, our Government, too, were guilty of having too many specific grants, in which the Government think that a particular priority is important and impose that sense of priorities on local government.

The figures on specific grant are quite significant. [Interruption.] For education—[interruption.]

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I am sorry to interrupt the hon. Gentleman. Could I persuade the right hon. Lady the Minister that a running commentary is not helpful?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I have learned not to listen, Mr. Deputy Speaker.

The figure for education specific grant, in 1997–98, was £302 million. In 2000–01, the outturn is £1,475 million. For personal social services, it goes from £193 million to £611 million. Those are very significant changes.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

The issue is not just specific grants the purpose of which is controlled by central Government. Grants are being phased out and the majority of the additional money available to local authorities is through loans. That gives the Government even greater central control over the use of the money, regardless of local needs and the democratic wishes of the people who elected the councillors.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend gives another good example of how local decision making is being constrained.

If the Minister does not want to accept what I am saying, she should listen to the Labour-dominated Local Government Association, which has said that non-police specific grants have doubled as a proportion of aggregate external finance since 1997–98. Combined with more indirect forms of hypothecation such as passporting and ministerial exhortation, that has led to a significant erosion of local financial accountability. Given the usually restrained language of the LGA, that is a serious allegation.

Then we come to teachers' pay. The LGA has expressed concern that the 3.3 per cent. pay settlement announced only a couple of days ago could mean fewer staff and larger classes if the Government fail to give local education authorities extra resources, because most LEAs have put aside 3 per cent. or less for pay rises. There is a shortfall across the board of £110 million. I do not necessarily expect the Minister to accept that from me, but she must listen to Councillor Graham Lane, the Labour chairman of the LGA's education executive, who has said: This pay rise is £110 million more than LEAs put aside in their budgets. Unless the Government meets the shortfall there will be less money to employ teachers and class sizes will rise while standards drop. That is the voice of Labour local government. My hon. Friend the Member for Hexham (Mr. Atkinson) told us in stark detail of the repercussions of the settlement for Northumberland, in particular the fact that the county is going to have to cut its education budget.

Another disturbing development has just come to light.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

How does the hon. Gentleman reconcile what he has just said about the restraints on local government caused by specific grants and the fact that authorities are not able to choose how they spend some of their money with the statement that he accepted from his hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) that northern authorities are spendthrift? How can they be spendthrift if they are being constrained in spending the money that they have?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend said that northern authorities were doing better than non-Labour-controlled authorities further south under the three years of the settlement. I agreed with him.

I should like to mention a specific and technical education issue that the hon. Member for Torbay (Mr. Sanders) has already referred to—I think that this is the same point that he raised. The Government's decision to ease pressure on education budgets following the removal of £150 million from the education SSA has attracted support from the LGA and elsewhere. The Government consulted on how the extra £50 million would be distributed. It has recently emerged that the Secretary of State for Education and Employment has decided—not suggested, as the Minister said—to allocate all the additional £50 million through specific grant, with the additional caveat that, before deciding whether to release an LEA's share of the money, he will need confirmation that the whole of the increase in the education SSA has been passported through to education. That is unprecedented and is causing great concern in the LGA and elsewhere. It runs counter to the traditional notion of a block grant, under which authorities were allowed to distribute money between services as they saw fit. For the first time, there will be a financial penalty for failing to comply with the Government's view of how the money should be spent. One of the documents sent to me describes that as "a very disturbing precedent".

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Will my hon. Friend confirm that it is particularly disturbing for local authorities that are spending above the level of their education SSA, as they will be penalised by this extraordinary action by the Government?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend is absolutely right to say that there will be an extra penalty for those education authorities. That entirely sums up the Government's approach—they do not trust local government to make decisions.

Another issue is the cost of Government initiatives. We are always hearing about the Government rolling out new initiatives on this, that or the other, but they all have to be paid for locally. That means that councils are often running up a lot of expenditure—on officers' time and so on—on the initiatives. Some councils have begun to strip out from their figures the cost of these initiatives, which shows that the costs are mounting at the moment.

I ask the Minister again not to claim that she has abolished capping, because that is just not true.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The Minister says more from a sedentary position than she ever says at the Dispatch Box during these debates. She has replaced cruel and universal capping with two versions of capping. First, there are the so-called reserve powers. I have described these before—councils worry about a knock on the door in the middle of the night after the event, when they are told that they have spent too much. They never know from one year to another whether they will be invited in for a ministerial ticking-off.

Secondly, there is so-called refined capping—the council tax benefit subsidy limitation scheme. The scheme is a precise and targeted way, as the LGA has said, of making the nearly poor pay for the really poor. The nub of what the Minister said was that she had had representations from local government and that she was not going to take a blind bit of notice of any of them. The scheme will continue, and on a cumulative basis. Our policy in the next Parliament is not to have capping at all. [Laughter.] I thought that that would go down well.

The best value regime is in danger of turning into an expensive farce, with some councils having to cope with no fewer than 179 performance indicators. A good idea—which, in many respects, grew from the success of compulsory competitive tendering under the Conservative Government—has been strangled by this Government's over-prescriptive and nannying approach to local government. The LGA says that the costs of implementing best value are causing problems for smaller authorities in particular. We should not forget the draconian powers that the Government took in the Local Government Act 1999 to intervene in the running of councils which they did not think were up to scratch.

Last year, some social services SSAs declined in Labour heartlands such as Hackney, Lambeth and Newham. It is no wonder that hon. Members such as the hon. Member for Walton are beginning to lose faith in the Government's attitude to old Labour heartlands around the country. We all know the pressures on local social services departments, and there will be hardship as a result of this settlement—let us be in no doubt about that. In addition, many local businesses will be picking up the bill in business rates for the Government's unfair treatment of some parts of the country.

On a brighter note, we welcome the Government's announcement yesterday about the appeals system for business rates. A new programme has been set out, so that ratepayers will have an idea when their appeals are to be considered by the valuation officer or the valuation tribunal. The Government say that they are encouraging the early submission of appeals. We can all envisage that there will be many appeals under the new revaluation, and it is to be welcomed that the system will be streamlined to some extent.

The problem of asylum seekers and refugees is causing much concern to some councils. The LGA has spoken of the uncertainty of funding having a damaging effect on the voluntary dispersal scheme for adults and families with children". It continued: Local authorities are concerned about the perceived lack of an overall strategy for funding the particular additional service needs of asylum seekers and refugees. I hope that the Minister will let us know when she winds up the debate whether more flexibility can be introduced into the system to deal with that specific issue.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

My hon. Friend will know that Gatwick airport is in the neighbouring county to mine. Because of the number of asylum seekers, especially children, coming through the airport, social services in West Sussex have faced a 50 per cent. increase in the number of children requiring care in the past year alone. The social services SSA for the past five years has decreased by 16 per cent. Does he agree with the Minister when she described as "profligate" attempts by counties such as mine to keep up social services spending, which will involve an extra £4 million on the budget, despite the decline in the SSA and the additional factors such as asylum seekers?

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

My hon. Friend makes a good and serious point. The Home Secretary was unable to tell me the other day how many asylum seekers and refugees are living in my constituency. We do know that more than 200 were assigned to local GPs in Eastbourne in November and December last year. It is only when people present themselves to some branch of health or social services that one knows they are there. [Interruption.] I now have a running commentary from two lady Members on the Labour Benches. I am very grateful, but they are drowning each other out.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

The hon. Gentleman may not realise it, but one must register with the local social services department in order to qualify as a refugee or asylum seeker.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

Does the Minister really believe that 100 per cent. of them ever do register? As we all know, many places such as Eastbourne have large numbers of asylum seekers and refugees sent there by London boroughs that will not perform the simple courtesy of informing the local council that they are coming. Local communities deserve more support from central Government to meet the costs entailed, and the asylum seekers themselves need support more than most, in language, health and social services.

Photo of Edward Davey Edward Davey Opposition Whip (Commons), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Whip

The hon. Gentleman's point about asylum seekers and refugees is pertinent to my local council, the royal borough of Kingston. We have several demand-led pressures, including asylum seekers and homelessness, of which the SSA does not take account. The council faces £4 million of cuts because of the allocation it has received from the Government. However, under the Tories, Kingston council's grant was cut year on year. The problems we now face are exacerbated because of the council's inheritance from the Tory years of misrule.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

One can never accuse the Liberal Democrats of not being even-handed in their abuse. When it comes to local government, Labour is all talk and no delivery. Despite all the rhetoric about this year's settlement for local government, the reality is that the council tax has already risen sharply under Labour and could go up next year by more than 10 per cent. All together, band D households could be nearly £200 worse off under Tony Blair's Government. It is another example of the great Labour lie.

Labour's figures are biased against the south of England. County councils, London boroughs and shire district councils are all losing out. Education authorities, as we have heard, will be short of a total of £110 million to meet the teachers' pay settlement. Even Labour leaders in local government admit that that will mean fewer teachers or larger class sizes—or both. The Government are threatening education standards as well as law enforcement.

The Government's attitude to finance for local government is symptomatic of their control freak tendency. They have a centralising agenda and are taking more and more control over what local councils spend. They are undermining local government and local choices. The Labour Government are ripping off local government.

Photo of Dr Jim Marshall Dr Jim Marshall Labour, Leicester South 5:15 pm, 3rd February 2000

The hypocrisy and bare-faced cheek of Opposition spokesmen and women, on not only this subject but every aspect of Government policy, are incredible, but their attitude is especially inappropriate when we are discussing local government finance.

The hon. Member for Eastbourne (Mr. Waterson) criticised the Government for not doing enough to encourage what he called the vigour and independence of local government. I happen to believe that that accusation is unjust: I think that the Government's attitude to local government is in tune with their devolution policy generally, devolving power away from the centre and enabling more and more individuals, at national, regional or local level, to take the decisions that affect themselves.

Let us compare the hon. Gentleman's accusation with the practice of the previous Tory Government from 1979 to 1997, when year by year they took power and responsibility away from local government and put constrictions and constraints and a straitjacket on local authorities such as had never been seen before. It is bare-faced cheek for him to accuse my right hon. Friend the Minister of seeking to undermine the independence and power of local authorities.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley

Does the hon. Gentleman agree that the movement of funds into specific grants, with the ties and straitjackets involved, is a form of centralisation? If not, he disagrees with the Secretary of State for Education and Employment.

Photo of Dr Jim Marshall Dr Jim Marshall Labour, Leicester South

There is clearly some justification for that point. I have some fears about the direction that the Government are taking on that matter, but I think that central Government have a right, when trying to improve standards and to experiment at local level, to ensure that the necessary funds are spent on the services to which improvements are sought rather than on the generality of services.

The hon. Member for Eastbourne also accused my right hon. Friend the Minister of fiddling the formulae to benefit Labour authorities. If the Government are doing that, they are signally failing in my local authority in Leicester. The accusation is totally inappropriate from the spokesman of a party that, in government, fiddled the figures to such an extent that Westminster, one of the country's wealthiest local authorities, with some of the wealthiest people, received an exorbitant amount of help compared with that provided for Leicester. We should not have to listen to such humbug.

The threat to do away with capping after the next general election is an empty one, because the probability of the Tories winning that election is so remote as not to place it on the political agenda.

Photo of Mr Peter Brooke Mr Peter Brooke Chair, Northern Ireland Affairs Committee

The hon. Gentleman referred to Westminster. Will he take it from me that the number of households living below the poverty criteria in my constituency makes it the poorest Conservative constituency in the country, and that the situation would be even worse in the constituency of the hon. Member for Regent's Park and Kensington, North (Ms Buck)?

Photo of Dr Jim Marshall Dr Jim Marshall Labour, Leicester South

I concede that there are poor people living in Westminster. I am one of the right hon. Gentleman's constituents, so I am as aware as he is of the population distribution in Westminster. That does not deny the reality that, in terms of global wealth, it must be one of the wealthiest, if not the wealthiest, constituency in the United Kingdom.

Photo of Dave Watts Dave Watts Labour, St Helens North

Is my hon. Friend aware that Westminster is about the same size as St. Helens? If St. Helens received the same grant as Westminster, it would not need to charge any council tax whatever and could, at the same time, afford to send all its constituents on holiday to Spain. That shows how the previous Government fiddled the council tax system.

Photo of Dr Jim Marshall Dr Jim Marshall Labour, Leicester South

My hon. Friend's comments speak for themselves.

I should like to make a final comment on the speech of the hon. Member for Eastbourne. He made a cheap political jibe about the Government neglecting their heartlands. I think that he referred to Newham and, in the same context, to my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle). However, the hon. Gentleman chose the wrong example, because he referred to the reduction in social service expenditure last year. I know about that, because my city suffered severely. It was as a consequence of the decision no longer to recognise ethnicity as producing an extra burden on social services. I remind the hon. Gentleman that the ethnic population in Walton is virtually zero, whereas in Newham it is fairly high. If he makes a cheap political point, he should at least ensure that the facts that he uses support rather than undermine it.

I should like to make a few points about the settlement's impact on the city of Leicester. My view is that the overall settlement nationally is good and to be welcomed. Perversely, Leicester has done badly, which is what I wish to highlight.

The Minister said last year that she did not wish this year to see deputations or delegations from specific local authorities about their position, but she kindly met me and my hon. Friend the Member for Leicester, West (Ms Hewitt) yesterday evening to discuss the longer-term financial plight and situation in Leicester, not the specific difficulties that we face at present, of which she is aware. I thank my right hon. Friend for that meeting, and just hope that, when the Department brings forward the longer-term solutions concerning the future funding formula, she will take account of the particular difficulties that Leicester faces, and has faced for at least four or five years.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

It is typically courteous of the hon. Gentleman to give way. He chose his words carefully, and I hope that he was not suggesting that he had had a meeting with the Minister to discuss this finance settlement for Leicester. Ministers have made it clear that they are not meeting any local authorities; I would not wish to think that they were meeting Labour authorities and not non-Labour authorities.

Photo of Dr Jim Marshall Dr Jim Marshall Labour, Leicester South

I thought that I chose my words carefully and had made the position clear. I said that my hon. Friend the Member for Leicester, West and I had a discussion yesterday with my right hon. Friend about the long-term financial position in Leicester. It became clear during the course of the meeting that my right hon. Friend was fully aware not only of the long-term implications, but of the short-term implications of both last year's and this year's settlement. My point is that, as my right hon. Friend is fully aware of those factors, they will be taken into account when the formula for future distribution eventually emerges from the Department.

Leicester has experienced well-documented deprivation and social exclusion. It is both unfair and unfortunate that year-on-year disappointments in financial settlements should have two effects. First, standards in some services are reduced. Secondly, the range of services that the local authority is able to provide is also reduced. For example, several neighbourhood centres in Leicester, which play a real part in the vitality of local communities, will close over the next financial year because of the cuts that the local authority must make as a consequence of this year's settlement. I regret to say that one of those centres—Lansdowne neighbourhood centre—is in my constituency, but I assure its users that I shall use all my influence and do everything in my power to try to save it.

The Minister is well aware that Leicester has faced a difficult financial situation for at least a decade. Successive settlements since local government reorganisation have put the council in an invidious position. Only extra financial resources will resolve the problems. I shall briefly put the problems into an historical context. In 1997–98—the first year of unitary status for Leicester—the capping regime resulted in cuts amounting to £17 million. The following year saw further cuts in services, and the overall grant settlement led to a council tax increase of 26 per cent. In 1999–2000, we had the lowest SSA increase of any local education authority outside London and a further round of cuts.

I can reinforce the point made by the hon. Member for Eastbourne by making it slightly differently. In part, this year's round of cuts was brought about by a change in formula for social services expenditure, which ceased to recognise ethnicity as a factor that gave rise to additional costs. That was particularly damaging in Leicester, where 30 per cent. of the population is of ethnic minority background.

We have not done as badly in this financial year as in previous years. However, we have still done worse than most. Leicester has received an SSA increase of only 3.9 per cent., which is below the national average. The general situation has been compounded by the loss of central Government protection grant of £1.3 million. To make matters even worse, the increase in education SSA—3.3 per cent.—is again among the lowest in the country. Overall, Leicester believes that, since unitary status began, it has received the lowest cumulative increase in SSA of all similar authorities. It has also had the lowest increase in education SSA of all local education authorities.

I admit, of course, that the Government are making additional resources available nationally to raise standards. However, Leicester is not receiving its fair share of the additional resources, and that is being felt at the sharp end by school pupils across the city. Clearly, parents do not thank the Government or the council for that. The Minister could help in numerous ways, but I shall not delay the House by enumerating them.

I ask the Minister to ensure that there will be an end to the uncertainty over future settlements, and to acknowledge the fact that the settlements for Leicestershire in recent years have made it extremely difficult for the council to meet the needs of our citizens—let alone their aspirations. I know that the Minister is listening—I hope that the whole Government are listening and that they will take action so that, for the next three years, I do not have to make the same speech that I have made for the past three years.

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs) 5:30 pm, 3rd February 2000

The Minister proposes yet another settlement that will prevent many local authorities from meeting local community needs. Increases in grant will be wiped out by inflation, pay settlements and increased responsibilities—just as they were under the Conservatives. As in the past, local government will gain duties but lose power.

Since Labour came to power, the trend has been to increase the cost burden for local government while dictating where money should be spent. Taxation has been shifted from the centre to the council tax payer; and the statistical anomalies, which disadvantage many councils and inhibit their ability to respond to local needs, have been ignored.

I have some points to make about the cost burden imposed on local authorities. In the Government's first Budget, they put a tax on pensions. In year 1, that cost local authorities £300 million. However, that cost also applies in years 2 and 3 and will recur thereafter. Local authorities have never been compensated for that loss.

In year 1, there were eight changes to the SSA; each one tended to take money away from shire councils. In 1998 and 1999, the inflation assumptions were inaccurate; that resulted in a loss of money to local authorities. There was also the council tax benefit subsidy, which resulted in the poor having to subsidise the nearly poor—mainly in poorer local authorities. In the first two years of the Labour Government, rural areas lost about £250 million and London lost £140 million.

The Government examined council tax bands, but failed to reform them. There is a disproportionate council tax burden on people in the A band; those who live in mobile or park homes, which are worth half the amount at the top of that band, have to pay the same rate of tax as people whose property is worth twice as much.

The Government dictate how the money that they give local authorities should be spent. It is one thing for the Secretary of State for Education and Employment to apply pressure on councils to spend up to the amount of the SSA, but to make grants dependent on confirmation that the money will be passed on to schools is quite different.

The Secretary of State wrote to education directors and chairs of education committees in relation to the £50 million special grant. The letter stated: The grant will not be paid automatically to authorities. I shall look for prior confirmation that the whole of the increase in your authority's education SSA has been passed on to education before deciding whether to release your share of the grant. The problem with that—as it is for those authorities which already spend up to or above SSA—is that, if authorities pass on the maximum amount to schools, any increase in the education budget from the Government goes straight to the school. If the other services that have to be met from that budget have not been given an increase, they will suffer a cut. That is why many education authorities have great difficulty in maintaining school transport, special needs provision, school music services, educational psychology, discretionary grants and central support services.

That is all based on the presumption that the SSA is accurate, which brings me to the inaccurate statistics on which the settlement is based. For example, local education authorities must pay for the pupils who attend school today, so they have to pass the money down to the schools for each pupil. However, the figures upon which the grant that they receive from central Government is based are up to 18 months out of date. Therefore, a local authority with rising pupil numbers has to find funds from other parts of its budget, outside of education, to meet the Secretary of State's requirement that it spends up to SSA and that all the money is passported to schools. That means that other services suffer.

The same is true of the budgets for people in residential care and social services. The number of people going into care in one area may be rising, but the figures on them may be behind the SSA figures and the money for them will not arrive until a later year. Therefore, an authority may have to suffer a cut to other services even though it knows that it may make the sums up later. That is a reverse of the depopulation argument advanced by the hon. Member for St. Helens, North (Mr. Watts).

The number of people on the electoral register has a major impact on the SSA figure and on the amount received by a local authority. That is a particular problem for areas that have a high turnover of residents. That point may be of interest to the hon. Member for Eastbourne (Mr. Waterson), because it relates to seaside resorts, where people often live in short-term let accommodation. They may live in the area for many years, but may change their address twice a year and never get on to the electoral register.

My local authority is probably an extreme example, but its officers estimate that nearly 5,000 people receive services from the local authority for whom they do not receive a penny from central Government. That equated into grant would make the difference between a council tax rise of the rate of inflation and the 16.9 per cent. rise that the council had to levy. The impact is greater the smaller the authority happens to be.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

The hon. Gentleman is making points that apply to my constituency, which is also a seaside resort. Does he agree that councils would like to have the option of putting such arguments to Ministers annually when they feel that they are being treated unfairly by the formula and do not want to be locked into a three-year cycle?

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs)

That is very true. Councils should be able to talk directly to Ministers because they cannot rely on the large Local Government Association, which is dominated by the metropolitan councils. The councils representing seaside resorts do not constitute a majority on the association, so perhaps there is an argument for a "seaside resort councils association". If the Government want to encourage one body to represent all local government, it is difficult for authorities that are not like the norm to make their voices heard. Ministers should have an open-door policy to meet the members of such authorities.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire

I presume that the hon. Gentleman will welcome the introduction of the Representation of the People Bill. It will mean that people can be registered as they move. Although the problem that he mentioned will remain for a while, I hope that it will eventually disappear.

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs)

The hon. Gentleman is right. The problem will reduce, but it will not be done away with completely. Because of it, we have suffered under the SSA regime for years, but I do not suppose that we will be compensated once the Bill is on the statute book.

The fact that most authorities spend more than the SSA on social services and education could suggest that the SSA is flawed. A mathematically constant formula that is designed to give average outcomes will always be unfair to those local authorities whose demographic, economic and/or geographical factors are furthest from the average. Seaside resorts, rural areas and peripheral areas, in particular, lose out every year. Sticking to the formula compounds the problem year after year.

We want a transparent system with clear accountability. The Minister said in her opening statement said that she believed the system to be clear and accountable. Yet, if one reads the Red Books, one sees that the receipts expected from council tax have increased each year, so the Chancellor is clearly shifting the burden of taxation from the centre to the council tax payer. We want a system that takes account of an area's ability to pay and gives local people choices about how community needs can be met.

Liberal Democrats want to shift tax raising from national to local government, with more of what councils spend raised through local income tax and local business tax. A buoyant, independent revenue source would do much to rejuvenate local government and strengthen local accountability.

This Government do not trust local government any more than the previous Government did. In fact, as I have said, the Chancellor has gone even further down the road of shifting taxes from the centre to the local council tax payer or the user of local services, which have either gone up in price or been cut. While the Chancellor gets a pat on the back, local councillors get it in the neck.

Photo of Edward Davey Edward Davey Opposition Whip (Commons), Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury), Liberal Democrat Whip

My hon. Friend has undersold the policy of a local income tax. Does he agree that large council tax increases particularly hit pensioners on low incomes? The Tory-run Royal borough of Kingston upon Thames increased council tax by £90 last year, and we face a possible 7.5 per cent. increase this year. Those increases affect pensioners who would be protected under the Liberal Democrat policy of a local income tax.

Photo of Adrian Sanders Adrian Sanders Opposition Whip (Commons), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Environment, Food and Rural Affairs)

My hon. Friend is spot on. Pensioners and people on fixed incomes have problems with council tax levels and increases, as do those who live in areas where council tax rates are high because of property values.

My hon. Friend forgot to say that allowing local councils to raise some of their money from income tax would mean a corresponding reduction in central income tax. Fear of allowing local areas to have that power and freedom may be the reason why central Governments of both parties have tended to resist that measure.

The Minister claims that she has increased the grant so that councils can spend more, but increasing the grant does not mean that councils will not have to make cuts, increase charges or put up council tax. If the increase in total standard spending is greater than the increase in the Government's contribution towards it, councils face a gap. The Government claim that they have increased the amount that councils can spend, the amount that they can borrow and the amount that they receive from central Government, but many councils still find themselves worse off.

Likewise, every year the Government claim that the settlement is most generous. Last year, they claimed that it was the most generous settlement ever. Of course, this year's settlement is the most generous ever—inflation sees to that—but it still represents a cut for many local authorities.

This is a patronising settlement; it is a pocket-money settlement with no room for sweeties. It will result in cuts, increased charges and above-inflation rises in council tax for many local authorities, and we shall vote against it.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central 5:44 pm, 3rd February 2000

I am grateful for the opportunity to speak in the debate, not least because it has been curtailed to two and three quarter hours, of which the two Front-Bench speakers took an hour, the Liberal Democrat spokesman took 15 minutes and I understand that 20 minutes will be taken up by winding-up speeches. Given that the Government no longer seek representations from Members of Parliament, someone should rethink the length of the debate. We should either reinstate representations from Members of Parliament or have a full-day's debate on local government finance.

I shall speak briefly about Barnsley's position under the local government settlement and then about the South Yorkshire fire and civil defence budget, which has particularly acute problems.

As the Government know, Barnsley is one of the authorities that consistently loses out under standard spending assessment methodology. I have complained about that methodology ever since its inception in 1990. We are impatiently waiting for a review of the system.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

I am sorry, no. Time does not permit me to give way.

Despite the fact that we are using out-dated SSA methodology, Barnsley is one of the first councils to employ the new modernised council system. We have a cabinet system and commissioning. It has become a model for other authorities and Barnsley has been visited by the representatives of more than 100 other local authorities to examine the set up with a view to introducing it in their areas. It is a pity that SSA methodology is not as modern as Barnsley's cabinet system. It has been flawed since its inception in 1990, when Barnsley was one of 21 authorities to be capped, a third of which were coal-mining areas.

One of the keys to SSA methodology is that it is biased against coal-mining areas, especially in the north of England. Contrary to what the hon. Member for East Worthing and Shoreham (Mr. Loughton) said, northern authorities are not spendthrifts. If he examined the performance indicators of any northern local authority, he would be pleasantly surprised.

I make a plea on behalf of former coalfield areas. Instead of giving us coalfield regeneration task forces, which are all very well in themselves, as is the money that goes with them, why not give the money to local authorities to enable them to pull themselves up and out of the problems that now beset them?

Barnsley metropolitan borough council is again facing a round of cuts. There will be a £5 million shortfall this time. That is to be added to the year-on-year cuts that we have suffered over the past 10 years.

Barnsley and other local authorities welcome the consistency of the settlement and the real increase in total standard spend of about 5.8 per cent. Welcome also is the predictability and stability of the comprehensive spending review, provided that there is predictability and provided that that works.

Barnsley does not welcome the fact that it takes 31st place among metropolitan authorities in terms of SSA per head. Why is it—I have been asking the question for the past 10 years—that schools in Barnsley at all levels receive hundreds of pounds less in SSA than schools in similar authorities, such as St. Helens? I can think of no reason other than political bias against Barnsley and South Yorkshire on the part of Governments of both parties.

We do not welcome data losses in Barnsley, but we have to use the present formula because the Government will not change it. As a consequence, we must cope with the losses. These are affected by the flow of SSA. Local authorities throughout the country are still using the 1991 census returns for general data. I appreciate that some data are updated. During 2000–01, Barnsley's data losses will amount to £180,000. That is a substantial sum for the authority and one that we cannot afford to lose. The loss will be about £58 million for all the metropolitan authorities.

We do not welcome capital finance control totals, which mean a loss for Barnsley of £700,000 this year. Similarly, we do not agree with capping. This year, the percentage rate of annual increase, before the loss of subsidy under the council tax limitation subsidy, has been reduced to 6.2 per cent. Again, local authorities are being capped. The cap squeezes year on year; as in previous years, this year's capping regime is worse than that which prevailed last year.

I shall make one or two pleas for the future. Let us get on with changes to the SSA methodology. Progress is desperately needed in areas such as Barnsley. I make a plea for the Government to consider extra damping to counter the data losses in education and to ensure the minimum SSA.

The Government must maintain the tax base. For example, since 1991, house prices in greater London have increased by 50 per cent. and in the south-east of England by 28 per cent. SSAs in the shire counties have increased by 4.7 per cent., in outer London by 4.5 per cent.; and in the metropolitan authorities by 3.8 per cent. Our house prices have increased by only 5.6 per cent., so we have lost grant and we have a lower capacity to fund our services. I am told that the effect is equivalent to a £50 reduction in band D council tax.

South Yorkshire's fire and civil defence service will get an increase in grant this year of 2.1 per cent. Previously, the figure was 1.7 per cent.—exactly half the average for other fire authorities. Why is South Yorkshire's settlement lower than that of most other fire authorities? There is no answer other than political bias against the north of England and South Yorkshire. Each year from 1990, the previous Government imposed cut after cut on South Yorkshire, until in 1995 the Home Office accepted that the South Yorkshire fire service was operating below the minimum standards drawn up by the chief fire officer. A delegation that met Home Office Ministers was told to break the capping regulations in force at the time, whereas the Department of the Environment would not permit the capping regulations to be breached. In the event, with the support of the chief fire officer, we breached the capping regulations and the Government recognised that we needed more money. We seem to be in the same situation as in 1995, because we are operating at minimum standards and face the prospect of falling below them if we accept the financial settlement that is to be imposed on us.

Conservative Members speak of spendthrift authorities. To illustrate what South Yorkshire fire service has gone through during the past 10 years, I draw their attention to the closure of Goldthorpe, Hoyland, High Green, Oaks Lane and Kiveton Park fire stations—five stations closed, and new ones opened at Tankersley and Aston Park.

There has been a reduction in the uniformed establishment from more than 1,200 to fewer than 1,000—a 25 per cent. reduction in manpower over the past 10 years. The number of pumping appliances on the run has been reduced from 43 to 33. The service has to contend with indifferent building stock, a decreasing fleet of appliances and equipment, an unfair SSA and low morale.

However, there have also been achievements in South Yorkshire. We have improved the image and the profile of the force. We have been praised by the district audit management. The service has achieved the Investors in People award and is awaiting the charter mark award. It has received the Royal Society for the Prevention of Accidents gold health and safety award. Those are the achievements of an authority running at minimum standards and on a very low budget.

South Yorkshire fire service is proud of having brought about a culture change towards the prevention of fires. An article that appeared in the local press last year stated: The proposed new structure would free up resources and encourage a culture change from firemen fighting fires to educating the public how to prevent them. The South Yorkshire force is penalised by the fact that it attends fewer fire calls than forces in other authorities, despite the fact that the authority has been trying to educate the public to call the service out less.

South Yorkshire fire authority faces a shortfall of £1.5 million, which will force it below minimum standards. Our fire brigade is one of the most cost-effective in the country. As a South Yorkshire ratepayer, I pay 53p a week for the fire service.

The district auditor, Colin Earl, attended a meeting to present his annual management letter to the authority. He said that the authority had adopted a prudent financial approach in previous years, and that the announcement of the local government settlement was disappointing for the authority. He also stated that the settlement would present the authority, which is already in a tight financial position"— that is an understatement— with some difficult decisions to make. Why is our settlement so low? When the Minister refused to meet a delegation of Members of Parliament to discuss the matter, she wrote me a letter in which she said that our calls had decreased compared with those of other authorities. Thus all the hard work that the authority has undertaken to increase fire prevention and reduce calls penalises it. Capital financing and the drop in interest rates have also penalised the authority.

The problem of declining populations has already been mentioned. Fire risk comprises categories A, B and C; it is not entirely down to population areas or residential matters. Fire risk is assessed on the type of building. Thousands of people visit the Meadowhall shopping centre in Sheffield every day, although no one lives there. The nearby airport also constitutes a high risk, but the population has no effect on it. The M1 and M18 motorways run through South Yorkshire, and the fire authority has to service them. It is required to attend if there is an accident on those roads.

South Yorkshire Members of Parliament requested a meeting with the Minister to discuss those matters, but our request was refused. Under the previous Government, we could at least put issues to Ministers face to face. In 1995, that yielded results, contrary to the claims of one or two other hon. Members. We were able to show that we were below minimum standards and needed more money. We shall have to approach the chief fire officer again, and tell him that that applies now. It is disappointing that we have been unable to put our case.

The £1.5 million shortfall means that we shall lose five fire pumps and are likely to lose 100 firefighter posts; we shall also fall below minimum standards. I did not believe that a Labour Government would allow us to fall into the same predicament as the previous Government allowed. The Government should reconsider, because the people of South Yorkshire deserve a better funded fire service. If we do not receive the funding, how can the Government claim that there is no north-south divide? Our predicament proves that it exists.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Before I call the next speaker, I stress that many hon. Members seek to catch my eye and that, unless contributions are much briefer, many will be disappointed.

Photo of Paul Beresford Paul Beresford Conservative, Mole Valley 5:58 pm, 3rd February 2000

I was stunned to realise that I agreed with the opening remarks of the hon. Member for Barnsley, Central (Mr. Illsley)—the debate is important, but it has been shortened. I believed that the Secretary of State would follow tradition and present it. That would have been entertaining, if nothing else. However, he ducked out. That is an insult to local government. The debate is perhaps even more important than usual because this year's report, taken with last year's and Government decisions and actions, has taken real government out of local government.

The revenue support grant is a major source of revenue for local authorities. It is distributed by a standard spending assessment system, which, although it was complicated previously, was accepted by independent experts as a fair system based on need. That has changed. The proportion of local government funding that is paid directly by council taxpayers and business ratepayers has increased. That applies especially to some of the key geographical areas of the country.

Last year's RSG funding was blatantly moved out of the home counties and London to the north. The report builds on that action and two points make it particularly galling. First, most of the local authorities that received funding boosts last year—generally, they will be correspondingly better off this year—were among the most incompetent. Secondly, I find the spin that has been put to hard-hit councils particularly unpleasant.

Three authorities operate in my constituency: Surrey county council, Guildford borough council and Mole Valley district council. All have been hit, and hit hard, but I shall use Mole Valley as an example. The real-terms reduction in its grant under this and the two previous reports means that it faces the prospect of effectively all its revenue expenditure being raised locally in the near future. In other words, it faces the possibility of not only a zero increase, but zero Government RSG funding. The local council tax and business rate payers will pay for that as they will be loaded with an additional and increasing local tax burden. If there is a stealth tax, that has to be it.

The Minister said yet again that this is the best settlement since sliced bread. Although she is not present, it is worth quoting a key passage from her Department's letter to the chief executive of Mole Valley district council—which she can read in Hansard—on this year's grant. The last paragraph says: Your grant support from central government will be £0.0 million higher than this year … This is less than the national average increase of 3.7 per cent. What a brilliant deduction. It continues: And, provided that there are no significant changes in the key data for your area, you can expect to receive a further real increase in funding next year. For goodness' sake, that is ludicrous.

The Minister's actions will clearly result in dancing in the streets in Mole Valley. There are not only stealth taxes, but year-on-year rising stealth taxes for my semi-rural area. There will be higher council taxes and higher business rates; care for the elderly, education and police budgets will be squeezed; and police numbers will drop. On it goes. As it is topical, I must add that farmers in my area, many of whom are going out of business, may be helped because the Secretary of State is showing great concern: he is seriously considering flooding Surrey with 90,000 new homes on their land.

It is worth looking beyond that to what else comes or flows from the report. First, we heard again that Labour promised to remove universal capping. It did that with one hand, but put two forms of capping back with the other. One is arbitrary and decided by ministerial whim; the other is crude and universal, and nothing less than that. Secondly, we were promised in last year's report three years' stability in funding. Tonight's report shows that that expectation was nonsense. This year, there were huge variations in grant distribution, which were generated by deficiencies in last year's income support data. I understand that that is down to another Government computer fiasco. Thirdly, we have all been fed the story that the Government have been converted from high taxation, but in my area in particular the report means that the council tax—a stealth tax—may rise by three times the rate of inflation. If it does not, that will be because of cuts in expenditure by beleaguered local authorities.

Even more deceitfully, there has been a stealthy movement of grants from a fair distribution system based on an assessment of need through the general grant. More and more funding, particularly from the Department for Education and Employment, is being moved to a specific grant system. Those grants are administered by ministerial whim if need be—we have seen examples of that—and linked to ministerial desires. Frequently, absolutely no regard is paid to local decisions. Furthermore, Ministers frequently require matched funding, which can put a squeeze on local authorities as they have to remove money from other budgets that they feel are more important locally.

I understand that funding by specific grant—I think the phrase is "funding by plans"—is in prospect for local government. That is appalling: it presents the prospect of the removal of local democracy, and the introduction of Big Brother patronage. While that may be all right for the Labour party as an organisation, it is not suitable for local government as a whole.

Fourthly, we have increased costs to local authorities purely through Government-imposed statutory obligations involving more bureaucrats and more bureaucracy. Perhaps this is where the Prime Minister is finding his new jobs. For example, the Audit Commission has just announced that the cost of implementing its part of best value for the first part year—hon. Members should note that I said "part year"—for Wandsworth council will be £300,000. The cost to my little Mole Valley will be £40,000. The internal cost to those authorities is likely to be four times as much. That means that Wandsworth will incur a new cost of £1.2 million, as well as £300,000 for the auditors.

Wandsworth is an efficient council, but under so-called "best value", it will have to find £1.5 million in savings just to stand still. The Mole Valley equivalent would be about £200,000. The authority's revenue support grant is only £3.2 million, and it must still take into account inflation on its £0.0 million increase.

This gerrymandering Government should be ashamed, but I imagine that they will continue to believe their spin doctors. Meanwhile, the public will receive fewer services at greater cost.

Photo of Barry Gardiner Barry Gardiner Labour, Brent North 6:06 pm, 3rd February 2000

I think it was the Duke of Wellington who said of Field Marshal Blucher, the Prussian who arrived too late at Waterloo, "Better late than never." I now know how he felt. I have waited two hours to speak today, but in truth I have been waiting since 4 pm on 4 February last year, the occasion of the debate on the three-year funding settlement. I did not manage to speak then, so I am pleased to be doing so today.

This year's local authority financial settlement was set within the parameters laid down in the three-year framework for stability in local government outlined by my right hon. Friend the Secretary of State last year. Stability is to be welcomed when the status quo is benign; unfortunately the situation in Brent, my own borough, was malign, and that malignancy has been locked in by the three-year approach.

Last year, Brent received the worst settlement of all 150 upper-tier authorities as a result of the change in the calculation of children's personal social services SSA. The decision to abolish the ethnicity criteria wiped out at a stroke a staggering 25.66 per cent. of Brent's children's social services SSA. Brent's children lost £7.5 million. The criteria were changed following research by the university of York, an institution of learning for which I have the highest regard.

When I help my children with their homework—particularly maths—I always say to them, "Look, darling, apply the formula, work out the answer, but always check it against common sense." That is a rubric that the professors at York would have done well to observe. The common-sense check cannot have been applied to a formula intended to reflect need in social services that has resulted in a 25.7 per cent. increase for Bromley, a 49 per cent. increase for Bexley and a 164 per cent. increase for the City of London, while cutting the social services grant for Camden, Lambeth, Newham, Hackney, Haringey and Brent. Those six of the 33 London boroughs contained more than 50 per cent. of London's ethnic population, and had to bear more than 75 per cent. of the £47 million that London boroughs lost in children's personal social services SSA.

On 25 November, when the provisional settlement was announced, I reminded my right hon. Friend the Minister for Local Government and the Regions that my borough of Brent was one of the most ethnically diverse in the country. A total of 106 different mother tongue languages are spoken in our schools and 61 per cent. of our children speak English only as a second language. In one school reception class that has a total of 29 pupils, 21 different first languages are spoken as the mother tongue. For those children, the settlement has not been fair.

Last year, Brent received £4.2 million in damping grant to afford some protection from the effect of the settlement on children and other vulnerable people in the borough. This year, that £4.2 million cushion has been reduced to just £197,000. The loss of more than £4 million from the aggregate external finance means that the grant that Brent will receive in the 2000–01 financial year is just 1.5 per cent. more than in the 1999–2000 financial year. For the average London borough, the increase is 3.52 per cent. Brent has just three sevenths, or 42 per cent., of not the best, but the average increase. Brent has the 25th lowest grant out of 33 London boroughs, yet it is the 20th poorest authority not in London, but in the entire country.

I understand that these two years have seen the best settlement for local government throughout the country for more than a decade. I recognise that the stability of the three years of the comprehensive spending review has been welcomed by councils, which have been able to plan on the basis of that basic formula. Even my council has welcomed that stability of planning. In her opening speech, the Minister said that the Government had promised that they "would not change formula, but we would change data." One of the issues that I would like to raise with Ministers is their failure to change data with regard to Brent.

On 1 April, Torah Temimah school will transfer to Brent—a school is transferring from the private to the public sector, and I am sure that the Government will welcome that—but the transfer has not resulted in any increase in our overall funding for 2000–01. Brent will receive the damping grant in line with central Government policy, which ensures that all local education authorities receive at least a 1.5 per cent. increase in overall funding; we do, just. However, we would have received that amount if the school had not transferred and therefore must now fund the additional £480,000 that is needed for the school from our already diminished and depleted resources. I ask Ministers to look carefully at that situation and ensure that, as the commitment was given, data will be changed, even though the formula will not.

I shall try to observe your stricture to be brief, Mr. Deputy Speaker, because I appreciate that many Back Benchers want to speak in what is an important debate. On the council tax benefit subsidy limitation scheme, the model that the Department of the Environment, Transport and the Regions has provided suggests that, if Brent sets a budget at SSA for 2000–01, our local residents will incur £817,000 in clawback. In Brent, that is the equivalent of £9.01p at band D level council tax.

It seems unjust that councils, such as my own in Brent, that have traditionally spent below the SSA—the standard spending assessment; the level at which the Government say that councils should be spending to provide a standard level of services—should be penalised if they spend below the level that the Government recommend for the current year. With some other Labour Members, I urge Ministers to look once again at the penal way in which the clawback scheme operates.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch 6:15 pm, 3rd February 2000

It is a pleasure to follow the hon. Member for Brent, North (Mr. Gardiner). His last point was very powerful and I hope that it will persuade him to join us in the No Lobby when we vote on the motions.

Today's debate could easily be entitled, "council tax debate limitation". It is clear that the Government are really about trying to restrict hon. Members—particularly Labour Back Benchers, but also Opposition Members—in the debate.

I was struck by the fact that the Minister avoided telling the House the most important figure in the settlement—the national average council tax at standard spending. We know that that figure is £695, and that, last year—which is the current year—it was £664.88. We also know that the difference between the two figures is just over 4.5 per cent. It is not surprising that the Minister did not want to admit those facts. If she had done so, she would have been admitting that the Government themselves realise that there will have to be a 4.5 per cent. increase in council tax bills even if local authorities spend in line with their standing spending assessment.

The 4.5 per cent. increase is no less than four times the amount of the pension increase—which brings me to the petition that I had the privilege of presenting to the House, on 8 July 1999, from Daniel Charles Tissington, of Christchurch, which was supported by 8,500 other people from the borough of Christchurch.

Mr. Tissington is a pensioner, as are most of the other people who signed his petition. He pointed out that, living in his band D bungalow situated in the borough of Christchurch, since 1993, his council tax has increased from £491 to £815. That is a 66 per cent. increase, whereas the retail price index has increased by 17.5 per cent. His petition, which was signed by those thousands of people, called on the Government to reduce increases in council tax to below the level of inflation.

The Government—rather than giving a direct response to the petition, saying that there was no way in which they would support such a policy—ducked the issue. However, now that the figures have been revealed to us, we can see that the Government's policy is that, in the coming year, council taxes should increase by at least 4.5 per cent., as that is the percentage by which council tax at standard spending will increase.

I therefore urge the Government to face up to the problems that are being caused to pensioners across the country. If Mr. Tissington and other people living in band D properties in Christchurch have to pay 4.5 per cent. extra in council tax, almost all the extra pension that they receive next year will have to be used to pay it.

The Minister started her speech by saying that she believes in establishing a higher quality of life, but there is no way in which pensioners will be able to have a higher quality of life if almost all their pension increase has to be spent on higher council tax. We hear today that there will be a £15 increase in the television licence fee for pensioners under 75. That will only be salt in the wound.

My hon. Friend the Member for Mole Valley (Sir P. Beresford) spoke eloquently about the Government's imposition of extra burdens on councils at the same time as they are telling councils to act reasonably and keep council tax at a reasonable level. The Department of the Environment, Transport and the Regions sets itself a target of dealing with all call-ins within seven weeks. Why did it take 22 weeks to decide to call in the planning application made by Bournemouth international airport for a new passenger terminal? That delay had enormous consequences. It will be an expensive exercise for the borough of Christchurch and everybody involved. The application was first submitted on 28 November 1997 and was the subject of extensive and exhaustive consultation. After sitting on it for 22 weeks, the Government decided to call it in, ensuring that it would be delayed for at least another year. That is typical of their cavalier attitude to my constituents.

In the previous debate, the Minister of State, Home Office, the hon. Member for Norwich, South (Mr. Clarke) made disparaging remarks about Christchurch people, saying that they were so well heeled that they could afford the penalty of having to make the largest percentage contribution towards police expenditure from council tax of any local authority in the country. I assure the House that they are not as well off as the Minister supposes. Many of them are on fixed pensions or fixed incomes. They are in despair at the way in which the Government have let them down.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire 6:21 pm, 3rd February 2000

The problems in local government finance were created by the previous Government. The hon. Member for Christchurch (Mr. Chope) was part of that, having been a Minister at some stage. He helped to create that situation and, when he replies to his constituents, I hope that he tells them about his role in the whole sorry business.

On the surface, Derbyshire seems to have done well out of the settlement. It has the top percentage SSA increase of any shire county—up by 5.8 per cent. whereas the average increase is 5 per cent. Neighbouring Staffordshire, which is in 34th and bottom position, has only a 4.3 per cent. increase. The situation looks superficially good for Derbyshire. When the money that has come from the Department for Education and Employment for schools, often in specific grants, is added to that, Derbyshire is again in a high position in the league and is often top. The only problem with the grants is that they make it difficult for us to work out who stands where, because some money comes from one Department and some comes from another, some comes in bits and pieces and some comes in the general settlement.

However, when considering Derbyshire's apparently good settlement, we need to look at what that 5.8 per cent. comes on top of. Between 1989–90 and 1998–99, East Sussex had a 30 per cent. cumulative increase above the average in the then capping levels. Derbyshire was bottom of the shire counties league table, with a 37 per cent. fall below the average increase. That was the result of the previous Government fiddling the arrangements for standard spending assessments and of the Local Government Finance Act 1988, which also introduced the poll tax. The poll tax may have been replaced by the council tax, but the rest of that Act is still in place.

Band D council tax levels for North East Derbyshire district council show part of the problem. The figures include the district council precepts, the county council and the police. I shall contrast them with the English average and the figures for Westminster. In 1996–97, the last year of Conservative rule, the figure for North East Derbyshire was £758, and the English average was £688—a difference of £70. For Westminster, the figure was £304—£454 less than in North East Derbyshire. In 1999–2000, the figure for North East Derbyshire is £905, and for England, £747—a difference of £148. The figure for Westminster is £350—£555 less than North East Derbyshire. Although slight differences have occurred in this period between North East Derbyshire and Westminster, there is a ghastly distinction between the figures. I will try to explain some of the details later.

The House of Commons document No. 160 on the subject shows what is wrong with the methodology. Page 9 deals with the formula for primary education, and the principles are the same for secondary and post-16 education. Money is given per pupil in various areas, which is a fair formula. Money is then given for additional needs and free meals, which is perfectly reasonable. However, if an area is mixed—Derbyshire, like all shire counties, is certainly mixed—money given for particular provisions is diluted by what happens in other areas. It is almost as if money is given with one hand and taken away with another. We need to devise a formula in which the extras stick and do not dilute the other arrangements.

There has been an improvement in terms of the money given for sparsity, but there is a claim that that is necessary for village schools and other matters. One of the big problems is the area cost adjustment, which is listed in detail within the document. This must be tackled, although it need not necessarily be done away with. However, if there were less weighting, and money were available for distribution—and not pinched by the Treasury—that would be important.

In Derbyshire, the area cost adjustment goes across the board—to police, fire services and highway maintenance. The problem is thereby extended. Derbyshire's funding plight cannot be corrected by tiny creeping percentage increments, welcome though they are. There has to be a change which takes into account the cumulative problems that Derbyshire has suffered year by year. We cannot wait another two years for a change in the hideous legislation—I served on the Committee—that is the Local Government Finance Act 1988.

I turn once more to the situation in North East Derbyshire district council. I hope that, if I keep saying these things, Ministers—it used to be Conservative Ministers, but it is now Labour Ministers—will respond and take some of it on board. One problem from which we suffer is the enhanced population figures. If people move out of the area in which they are resident to work or to travel for other purposes, a quarter of their SSA money is transferred elsewhere. Some areas will benefit considerably from those arrangements because they have people coming in. I am not saying that Westminster, the seaside resorts and other places benefiting from the arrangements should not have any of the money. However, the weighting is excessive and was one of the Conservative Government's major fiddles. Let us correct it. A myth is perpetuated—for instances, by a journalist on the Sheffield Star—that the people of North East Derbyshire who work and use leisure facilities in Sheffield are freeloaders, making use of the facilities without paying from them. That is far from the truth, because we pay through the nose for provisions in the Sheffield area.

The outdated 1991 census figures are used to help to work out the allocation, and some of our money is transferred to the Bolsover and Chesterfield areas because they used to have people going there to work in the pits. The pits were closed by the previous Government, but North East Derbyshire is still getting hammered by the transfer of money. We lose £3 a head to neighbouring authorities because of the weight given to the enhanced population figures.

We also suffer from the provision designed to accommodate social mix. We suffer even more seriously from that, because we lose £14 a head. In any case, the population in the east of the constituency has an almost identical social structure to Bolsover, but that area does much better from the arrangements. The money allocated to North East Derbyshire should not be dissipated by other considerations.

I asked the Minister earlier about parish council expenditure. Some 24 parish councils cover the whole of North East Derbyshire. The council tax benefit subsidy limitation scheme—incredibly—takes into account parish precepts. If parish councils in North East Derbyshire decide to spend large sums of money to try to make up for the money that the district and county councils cannot afford to spend on social problems, the district council—which has no control over the parish councils—is hit under the subsidy limitation scheme. That is a serious problem in Derbyshire, which, last year, was capped.

I hope that the Minister has in mind some dramatic improvements that will overcome the county-district-parish financial problems in Derbyshire and similar areas beyond the welcome bits and pieces that the Government have already introduced, especially since the comprehensive spending review changed the direction of the process. Derbyshire did not benefit from the shifts and changes of the first two years of the Labour Government, when money was redirected from areas of lesser need to areas of greater need, because we have a mixed social structure. Money was given with one hand and taken away with the other. We now have a bit more money—and we are grateful—but we have so many serious problems to overcome from the previous Government's mishandling that we need a considerable improvement in our ability to provide a better standard of education, social services and the other services provided by local government.

Photo of Mr Peter Brooke Mr Peter Brooke Chair, Northern Ireland Affairs Committee 6:34 pm, 3rd February 2000

The hon. Member for North-East Derbyshire (Mr. Barnes) and I share an interest in Northern Ireland and we shall both be here at 7 o'clock. I do not propose to take him up on his remarks about Westminster, save to say that if he re-examines his speech he will see that he made a further initial mathematical error before he made the one that he spotted and corrected.

I shall be brief and unashamedly make a constituency point. The Government are well aware of the effect on Westminster of the settlement in 1998–99, which reduced its SSA by £26 million. I shall not revisit that issue but it is a backdrop to the problems I shall set out.

I want to allude to the special grant of £50 million from the Department for Education and Employment, the balance of its extra £64 million after £14 million had been bestowed on "Excellence in Cities" local education authorities. The Secretary of State for Education and Employment mentioned the distribution mechanism for that grant in his letter of 25 November to councils, which was copied to Members of Parliament. It said that officials would follow up in January to seek confirmation that the Government's additional funding had been carried through into relevant local authorities' education budgets.

In Westminster, I have seen the whole of the subsequent correspondence, culminating in the Secretary of State's letter of 31 January, summarising his conclusions, which was quoted by the hon. Member for Torbay (Mr. Sanders). To distil the correspondence, the Government are asking Westminster to spend 6 per cent. more on education because its proposed education standard spending assessment has risen by that amount.

Westminster's overall grant increase is only 1.1 per cent., which already puts it behind the game, but in addition it was already spending 11 per cent. above its education SSA last year. It has conspicuously been supporting education, which is of course a Government priority, and is suffering from the squeeze to which my hon. Friend the Member for Christchurch (Mr. Chope) referred.

I infer from the correspondence that Westminster will receive no grant from the Department for Education and Employment and its £50 million because, confronted with the massive gap between a 1.1 per cent. increase in grant and a notional 6 per cent. rise, when it is already spending 11 per cent. above its SSA, it cannot guarantee that it will raise its education budget by a further 6 per cent. this year. I am a bear of very little brain, but it seems to me that the Government's proposal within such an equation could be a recipe for cutting rather than increasing the budget, as, if one concentrates on sticks rather than carrots, one offers no incentive to an authority whose heart is patently in the right place.

At this hour, I cannot bring in the other variables alluded to by the Association of London Government, not a Conservative-controlled body, in its briefing on the cost to some inner London boroughs, plus Brent—the hon. Member for Brent, North (Mr. Gardiner) made that case—of not raising the central support protection grant threshold from 1.5 per cent. to 2 per cent. Nor will I allude to the ALG briefing on the costs of homelessness, asylum seekers and unaccompanied children in London, although those children and the families of asylum seekers—because of the diverse languages—add to the educational challenge that Westminster has to face.

I am genuinely left wondering whether the Government really have an education priority. The ALG says that what are technically known as the passporting criteria for distributing the extra £50 million do not take account of local circumstances; but perhaps to a centralising Government, local circumstances are of no account.

Photo of Neil Turner Neil Turner Labour, Wigan 6:37 pm, 3rd February 2000

Coming so late into the debate, it is difficult to say the good things that one wants to say, because one has to concentrate on some of the critical points, so I hope that Ministers will accept that I broadly welcome the settlement that we have had and especially the fact that, for the third year, my local authority is able to increase both the quality and quantum of services in Wigan.

There is a problem with the £50 million for teachers' pay. I have no difficulty with the fact that the Government want to ensure that the full amount given for education is passported through to schools—that is perfectly reasonable—but unfortunately the formula takes into account the number of failing schools. A local authority with failing schools gets more than an authority such as mine, where the schools are very good. Failing schools should be dealt with by different methods. The additional money for the teachers' pay rise should be passported through to schools in proportion to the number of teachers.

I support what my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) said about the area cost adjustment. I accept that some authorities have cost differentials, but the fact that some get twice as much as others for providing the same services cannot be right.

The council tax benefit subsidy—the clawback—cannot be right. It is inequitable and unfair. It is inequitable because two authorities, with the same increase, will not have the same amount of money taken away from them, and it is unfair because the authority that has the most money taken away from it is the one with the greatest problems. That issue has to be addressed, and I hope that the Minister will do so.

Photo of Robert Syms Robert Syms Shadow Spokesperson (Environment, Transport and the Regions) 6:40 pm, 3rd February 2000

Let me say to the hon. Member for Wigan (Mr. Turner) that some of my best speeches have been two or three minutes long as well, and I am glad that he managed to make his points before the end of the debate.

In the previous Parliament, debates on local government took on average five and a half hours, allowing Members on both sides of the House to express their real concerns about the grant settlement and what was happening in their locality. Not only do we, in this Parliament, have much shorter debates, Ministers no longer see delegations from local councils and Members of Parliament. My hon. Friend the Member for Mole Valley (Sir P. Beresford) said that when he was a Minister, he saw more than 90 delegations last time.

There are some very important issues to do with local government. Members of Parliament spend most of their weekends visiting local authority institutions and schools. They also spend a great deal of time in surgeries, seeing constituents with problems to do with local government. I think it a great pity that the Government have adopted an extremely arrogant view when it comes to seeing delegations from local authorities and Members of Parliament. Many Labour Members have said in this debate that they would have wished to go to the Department to make points on behalf of their authorities. It is a pity that they have not had the opportunity to do so.

In November, the Minister for Local Government and the Regions forecast that council tax bills would go up by 4.8 per cent if Whitehall kept to spending guidelines. The Times has already said that local government experts believe that the rise could be as high as 6 per cent., and many other people predict rises of 10 per cent. or more. Local authorities and town halls have many burdens on them—next year there will be an additional 24,000 school children, high public sector pay settlements and a rise in demand for long-term care for the elderly. Labour is proving to be no friend of local government. It promised to give councils more autonomy, but it is centralising power while cutting funding and increasing taxes for many councils.

Labour is trying to play down the significance of the settlement, as based on its three-year comprehensive spending review announced last year. But central Government funding is set to rise by less than the average spending commitments of local authorities. The result will be three years of higher council taxes, cuts in services and a continuation of the bias against shire counties.

Labour talks about spending more money on education, but it says one thing and does another. To fund the £1 billion that it costs to introduce performance-related pay for teachers, Labour is reducing the increase in education standard spending assessment by £150 million in 2000–01 and £280 million in 2001–02. Rather than giving more resources to teachers, Labour is simply recycling existing money—top slicing.

The Local Government Association has said that the 3.3 per cent. teachers' pay settlement announced on 1 February will mean fewer staff if the Government fail to give the local education authorities extra resources. There are warnings that while most LEAs have put aside up to 3 per cent. for pay rises, many will have to find the extra £110 million through council tax rises. As that well known Labour chairman of LGA's education executive, councillor Graham Lane, put it: This pay rise is £110 million more than LEAs have put aside for their budgets. The key issue is that the Government are switching resources away from local authorities, particularly those in rural areas, their political allies in Labour-controlled metropolitan areas. Barnsley seems to be the exception. We had an eloquent plea for south Yorkshire and Barnsley from the hon. Member for Barnsley, Central (Mr. Illsley), who set out the problems that he faces with his local authority and the fact that the three-year settlement has set in stone some of the difficulties in funding his area.

Rural areas have already lost more than £500 million. That is in spite of the fact that they face specific problems, particularly over lack of transport. Labour has little interest in improving living standards for those in the countryside.

Before the election, Labour promised that it would end crude and universal capping. But this is just another example of the great Labour lie. Labour has replaced it with reserve powers to cap budgets. The Government now practice arbitrary and retrospective capping—they decide, after councils have set their budgets, whether to cap them. That is blurring accountability and transparency. It does local authority planning no good. By contrast, we have made it clear that the next Conservative Government will not cap councils. We are now the friends of local government.

Labour is centralising power, shifting resources from the block grant towards specific grants. Specific grants for education and personal social services have increased by more than 50 per cent., even before we take into account the effects of performance-related changes. Councils consequently have less discretion over how to spend resources, and that is weakening local democracy. Labour is cutting councils' environmental protection and cultural budgets. This year's increase of 1.9 per cent. represents a real cut of 0.6 per cent. That will hit district councils in particular, as that area represents a significant part of their overall budgets, and it will result in higher council taxes and service cuts.

The Labour party manifesto committed the Government to a fair distribution of grant. The settlement confirms that over the past three years, they have funnelled £425 million away from county councils and £180 million away from London boroughs to subsidise the wasteful antics of mostly Labour-controlled metropolitan authorities. This year, the SSAs for shire counties will be £160 million lower than they would have been if the Government had not changed the funding formula.

The Government are presenting the settlement as a great triumph. In reality, as we have heard in speech after speech, most hon. Members have real concerns about their local authorities. The Government claim to be increasing grant to every local authority, but that has been achieved only because of a large surplus in the business rate pool from last year, which the Government are obliged to transfer to local authorities. Without that money, many councils would face cuts in overall grant.

Council tax has already risen sharply under Labour. Last year's increase was 6.8 per cent., which came on top of a record 8.6 per cent. increase in 1998–99. Band D households are paying considerably more than they did when the Government came into office.

Photo of Tim Loughton Tim Loughton Conservative, East Worthing and Shoreham

Is my hon. Friend aware of the damage being done to local authority pension funds by the abolition of advance corporation tax? In the case of my local authority, West Sussex, that has resulted in a shortfall of £3 million, or 2 per cent. on the council tax, as the money must be found somewhere to keep up the income flow.

Photo of Robert Syms Robert Syms Shadow Spokesperson (Environment, Transport and the Regions)

My hon. Friend makes a good point. That change was not compensated for by the Government. The same point was central to the speech of the hon. Member for Torbay (Mr. Sanders).

If council spending increases at the same rate as last year, council taxes could rise by more than 10 per cent., which could leave a band D household facing a tax rise of £85. As my hon. Friend the Member for Christchurch (Mr. Chope) said, pensioners receiving a 75p increase will find it hard to cover that.

Council tax increases will be compounded by the Government's unfair scheme to limit the amount of council tax benefit subsidy payable to local authorities. Local taxpayers will have to pick up the tab for others who have their council tax paid for them. Again, we will see the nearly poor paying for the really poor, as the LGA has put it. From the Government Benches, the hon. Members for North-East Derbyshire (Mr. Barnes) and for Brent, North (Mr. Gardiner) made eloquent pleas against that aspect of Government policy.

Last year, £30 million was added to council tax bills across the country by the scheme, which does nothing to increase accountability. No one in the affected areas has the faintest idea of how much extra they are paying because their council is exceeding the Government's limits. There is no justification for the scheme—it is just another stealth tax.

Specific grants are increasing. Hypothecation is in vogue. As a proportion of aggregated external finance, it has increased from 13 per cent. in 1997–98 to 17 per cent. in 2000–01. That is restricting authorities' ability to make their own decisions. Many hon. Members have expressed concerns about passporting.

The settlement is bad news for local authorities and the people who depend on their services. It is bad news for hard-pressed council tax payers. The Government are not only wrong, but they arrogantly refused to meet delegations from councils and Members of Parliament of all political persuasions. They have stopped listening to people because they cannot stand to hear the truth about their proposals.

Today's debate has been a traditional one on local government finance. We have heard as much criticism from those on the Government Benches as from those on the Opposition Benches. When people see what is happening in their localities, they realise that problems lie ahead.

Photo of Beverley Hughes Beverley Hughes Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions, Parliamentary Under-Secretary (Department for Environment, Transport and the Regions) 6:50 pm, 3rd February 2000

We have held an interesting debate about a settlement, which—despite the carping from the Opposition—represents £2.3 billion of extra investment in local services. That is a 5.8 per cent. increase on top of the 5.5 per cent. rise last year.

I understand that hon. Members always want to press points that affect their areas—so they should. However, I want to stress some facts about the overall settlements that we are making with local government.

Several hon. Members:


Ms Hughes:

I will give way in a moment; I want to make some progress.

Just as we are doing in the whole economy, we are replacing cuts and uncertainty with the funding and stability that councils need to plan ahead and deliver better services, at a reasonable cost to the council tax payer. That is in stark contrast to the record of the Opposition, who, when in government—after the disaster of the poll tax, devised by the right hon. Member for Wokingham (Mr. Redwood) and imposed by the right hon. Gentleman who is now the Member for Kensington and Chelsea (Mr. Portillo) —deliberately cut grant to local authorities by 4.3 per cent. in real terms in their last three years in office.

Photo of Beverley Hughes Beverley Hughes Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions, Parliamentary Under-Secretary (Department for Environment, Transport and the Regions)

In a moment.

By contrast, the Labour Government have worked with local government to provide a more stable and generous framework. Any hon. Members with experience of local government—although there are not many of them sitting on the Opposition Benches—will acknowledge that that framework has been welcomed by councils across the political spectrum.

That is why we received representations from only a handful of authorities. Indeed, our survey of local authorities informed us that their top priorities were stability and predictability.

Photo of Mr Christopher Gill Mr Christopher Gill Conservative, Ludlow

I am most grateful to the hon. Lady for giving way. It is no good for her to bandy figures with the House. There is much anger in my county; the real-terms increase in Shropshire is less than 1.5 per cent. We are bottom of the league in police funding, and almost at the bottom for health and local authority funding. Does she not realise that there is great anger in Shropshire about the Government's unwillingness to tackle the real problems?

Photo of Beverley Hughes Beverley Hughes Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions, Parliamentary Under-Secretary (Department for Environment, Transport and the Regions)

I realise that all parts of the country—including the hon. Gentleman's area—have done much better under the Labour Government than they ever did under the Conservative Government. He needs to realise that.

Much has been made by Opposition Members of our alleged refusal to meet local authorities to discuss their settlement and of the timing of this debate. We made it clear that, given the stability that we were introducing, we would not invite local authorities to meet Ministers. However, we held formal and extensive meetings with all the associations.

As for the timing of the debate, Opposition Members will know that that is a matter for the business managers on both sides of the House. Opposition managers agreed to the timing.

Let me put the record straight on local areas. For the second year running, rural areas have received above-average increases—as have sparsely populated areas and shire counties. Contrary to Opposition allegations, the southern regions also received above-average increases at 4.6 per cent.

The hon. Member for Mole Valley (Sir P. Beresford) lamented what he saw as a poor settlement for his district council, but he failed to say that Surrey county council, which provides most of the services, had an SSA increase of 4.9 per cent. I point out to him and to my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) that I met the district councils; they are happy that, with our previous two settlements, the Government are improving their relative position.

Photo of Beverley Hughes Beverley Hughes Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions, Parliamentary Under-Secretary (Department for Environment, Transport and the Regions)

I am sorry; I shall not give way at the moment, I need to make some progress.

Several hon. Members made general points about their areas. However, it is testimony to the overall satisfaction with the settlement that so few Members made points about the improvements that they wanted in their area.

In response to the point made by my hon. Friend the Member for Brent, North (Mr. Gardiner), I understand that the data for the school to which he referred have been included in the data changes for Brent. Even with these data, Brent would have received a grant increase of less than 1.5 per cent. without the guaranteed uplift that we have introduced.

My hon. Friend the Member for Leicester, South (Mr. Marshall) spoke with great knowledge about his authority. He knows that we recognise that it has a particular problem. The authority and my hon. Friend are to be congratulated on the way that they have responded to the situation. Certainly, the changes that we want to consider in the overall review will include some of the issues that he has raised.

As we have heard, some northern areas have complained about the impact of the current system on them. My hon. Friends the Members for Barnsley, Central (Mr. Illsley) and for North-East Derbyshire referred to the area cost adjustment. However, I remind them that those areas have also received substantial increases, although they may wish that they had been greater. Certainly, they will know that, in the review that we are undertaking, the area cost adjustment is an issue that we are particularly considering.

We heard much from the Opposition parties about control freakery. The Tories complain that we are too controlling and that they are now the champions of local choice and local decision-making. Now they do not like block grants, having cut grants in real terms year on year. Now they do not like capping, having capped with a vengeance. Now they do not like best value; it is too prescriptive, unlike compulsory competitive tendering, of course. That is a big U-turn. It is beginning to sound like the warm words of a party that knows that it will be in opposition for a very long time and not have to administer any local government settlements.

We are striking the right balance. I make no apologies for central Government's responsibility and legitimate role in having an interest in the way that public money is spent and the way that taxes are raised locally. If Conservative Members are now saying that they will abdicate that responsibility, we will not.

In that context, Conservative Members raised the issue of specific and special grants. In the forthcoming financial year, specific grants will constitute 17 per cent. of the total settlement, which leaves 83 per cent. for local discretion. Again, we make no apology for ensuring that Government priorities in education and other important services—which we back with funding, unlike the Conservatives when they had the opportunity—have to be part of the priorities for local councils. That is the difference between this Government and the previous one: we are working with local authorities to help them improve education and other services. The Conservative Government simply put the screws on across the board.

Conservative Members also claimed that the teachers pay award will be a problem. The award is 3.3 per cent. and the national increase in education funding is 8.7 per cent. within which SSAs are up by 5.6 per cent. That gives ample headroom to cover pay and prices' effects on local education authorities.

The right hon. Member for Cities of London and Westminster (Mr. Brooke) and my hon. Friend the Member for Wigan (Mr. Turner) talked about the extra £50 million that will be paid to local authorities as a special grant for the teachers pay award. I remind them that the letter of my right hon. Friend the Secretary of State for Education and Employment said that he would take into consideration whether local authorities had passported fully their education grant into schools and the education budgets. My right hon. Friend has not made it clear how he will take that into consideration, but he said that he would. That is his right. Education is a top priority for the Government and if we are giving more money for education, that is where it should be spent.

In conclusion, we are continuing to deliver the most generous local government settlement since the introduction of council tax. It means more money for local services, a better deal for council tax payers and stability so that councils can plan ahead sensibly and creatively, as many are doing. Annual above-inflation increases are a far cry from the year-on-year cuts that we had under the previous Government. Advance announcement of grant totals and distribution formulae has established a climate of stability that local authorities have wanted for a long time. We recognise that local authorities—

It being Seven o'clock, MR. DEPUTY SPEAKER put the Question, pursuant to Order [28 January].

Question put:

The House divided: Ayes 266, Noes 146.

Division No. 63][7 pm
Abbott, Ms DianeDenham, John
Adams, Mrs Irene (Paisley N)Dismore, Andrew
Ainger, NickDobbin, Jim
Ainsworth, Robert (Cov'try NE)Dowd, Jim
Alexander, DouglasDrew, David
Allen, GrahamEagle, Angela (Wallasey)
Anderson, Donald (Swansea E)Eagle, Maria (L'pool Garston)
Armstrong, Rt Hon Ms HilaryEllman, Mrs Louise
Atkins, CharlotteEtherington, Bill
Austin, JohnField, Rt Hon Frank
Banks, TonyFitzpatrick, Jim
Barnes, HarryFitzsimons, Lorna
Barron, KevinFlint, Caroline
Battle, JohnFoster, Michael J (Worcester)
Bayley, HughFyfe, Maria
Beard, NigelGapes, Mike
Beckett, Rt Hon Mrs MargaretGardiner, Barry
Bell, Stuart (Middlesbrough)George, Bruce (Walsall S)
Benn, Hilary (Leeds C)Gerrard, Neil
Benn, Rt Hon Tony (Chesterfield)Gibson, Dr Ian
Benton, JoeGodman, Dr Norman A
Bermingham, GeraldGodsiff, Roger
Best, HaroldGoggins, Paul
Blackman, LizGolding, Mrs Llin
Blears, Ms HazelGordon, Mrs Eileen
Blizzard, BobGriffiths, Jane (Reading E)
Borrow, DavidGriffiths, Nigel (Edinburgh S)
Bradley, Keith (Withington)Griffiths, Win (Bridgend)
Bradley, Peter (The Wrekin)Grocott, Bruce
Brinton, Mrs HelenGrogan, John
Brown, Rt Hon Nick (Newcastle E)Hall, Mike (Weaver Vale)
Browne, DesmondHamilton, Fabian (Leeds NE)
Burden, RichardHeal, Mrs Sylvia
Burgon, ColinHenderson, Doug (Newcastle N)
Campbell, Ronnie (Blyth V)Henderson, Ivan (Harwich)
Cann, JamieHepburn, Stephen
Caplin, IvorHeppell, John
Casale, RogerHesford, Stephen
Cawsey, IanHewitt, Ms Patricia
Chapman, Ben (Wirral S)Hill, Keith
Chaytor, DavidHinchliffe, David
Clapham, MichaelHoey, Kate
Clark, Paul (Gillingham)Hood, Jimmy
Clarke, Charles (Norwich S)Hoon, Rt Hon Geoffrey
Clarke, Rt Hon Tom (Coatbridge)Hope, Phil
Clarke, Tony (Northampton S)Hopkins, Kelvin
Clelland, DavidHowarth, George (Knowsley N)
Clwyd, AnnHowells, Dr Kim
Coaker, VernonHughes, Ms Beverley (Stretford)
Coffey, Ms AnnHughes, Kevin (Doncaster N)
Coleman, IainHurst, Alan
Colman, TonyHutton, John
Corbyn, JeremyIddon, Dr Brian
Corston, JeanIllsley, Eric
Cousins, JimJackson, Helen (Hillsborough)
Cox, TomJenkins, Brian
Cranston, RossJohnson, Alan (Hull W & Hessle)
Crausby, DavidJones, Rt Hon Barry (Alyn)
Cryer, Mrs Ann (Keighley)Jones, Mrs Fiona (Newark)
Cunningham, Jim (Cov'try S)Jones, Ms Jenny (Wolverh'ton SW)
Darvill, Keith
Davey, Valerie (Bristol W)Jones, Dr Lynne (Selly Oak)
Davidson, IanJones, Martyn (Clwyd S)
Davies, Rt Hon Denzil (Llanelli)Keeble, Ms Sally
Davies, Geraint (Croydon C)Keen, Alan (Feltham & Heston)
Davis, Rt Hon Terry (B'ham Hodge H)Kelly, Ms Ruth
Kennedy, Jane (Wavertree)
Dawson, HiltonKhabra, Piara S
Dean, Mrs JanetKidney, David
Kilfoyle, PeterReid, Rt Hon Dr John (Hamilton N)
King, Andy (Rugby & Kenilworth)Roche, Mrs Barbara
Laxton, BobRogers, Allan
Lepper, DavidRooker, Rt Hon Jeff
Leslie, ChristopherRooney, Terry
Levitt, TomRoss, Ernie (Dundee W)
Lewis, Ivan (Bury S)Rowlands, Ted
Linton, MartinRoy, Frank
Lloyd, Tony (Manchester C)Ruddock, Joan
Lock, DavidRussell, Ms Christine (Chester)
Love, AndrewRyan, Ms Joan
McAvoy, ThomasSalter, Martin
McCabe, SteveSedgemore, Brian
McCafferty, Ms ChrisShaw, Jonathan
McDonagh, SiobhainSheldon, Rt Hon Robert
Macdonald, CalumShipley, Ms Debra
McDonnell, JohnShort, Rt Hon Clare
McGuire, Mrs AnneSimpson, Alan (Nottingham S)
McIsaac, ShonaSingh, Marsha
McKenna, Mrs RosemarySkinner, Dennis
Mackinlay, AndrewSmith, Rt Hon Andrew (Oxford E)
MacShane, DenisSmith, Angela (Basildon)
Mactaggart, FionaSmith, Llew (Blaenau Gwent)
McWalter, TonySnape, Peter
Mahon, Mrs AliceSoley, Clive
Mallaber, JudySouthworth, Ms Helen
Mandelson, Fit Hon PeterSquire, Ms Rachel
Marsden, Gordon (Blackpool S)Starkey, Dr Phyllis
Marshall, Jim (Leicester S)Stoate, Dr Howard
Marshall-Andrews, RobertStrang, Rt Hon Dr Gavin
Meacher, Rt Hon MichaelStraw, Rt Hon Jack
Meale, AlanStringer, Graham
Michie, Bill (Shef'ld Heeley)Stuart, Ms Gisela
Miller, AndrewSutcliffe, Gerry
Mitchell, AustinTaylor, Rt Hon Mrs Ann (Dewsbury)
Moffatt, Laura
Moran, Ms MargaretTaylor, Ms Dari (Stockton S)
Mountford, KaliTaylor, David (NW Leics)
Mullin, ChrisTemple-Morris, Peter
Murphy, Jim (Eastwood)Thomas, Gareth R (Harrow W)
Naysmith, Dr DougTodd, Mark
Norris, DanTrickett, Jon
O'Brien, Mike (N Warks)Truswell, Paul
O'Hara, EddieTurner, Dennis (Wolverh'ton SE)
O'Neill, MartinTurner, Neil (Wigan)
Organ, Mrs DianaTwigg, Derek (Halton)
Palmer, Dr NickTwigg, Stephen (Enfield)
Pearson, IanTynan, Bill
Pendry, TomVis, Dr Rudi
Perham, Ms LindaWard, Ms Claire
Pickthall, ColinWareing, Robert N
Pike, Peter LWatts, David
Plaskitt, JamesWhite, Brian
Pollard, KerryWhitehead, Dr Alan
Pond, ChrisWicks, Malcolm
Pope, GregWilliams, Rt Hon Alan (Swansea W)
Pound, Stephen
Powell, Sir RaymondWills, Michael
Prentice, Ms Bridget (Lewisham E)Winnick, David
Prentice, Gordon (Pendle)Winterton, Ms Rosie (Doncaster C)
Prescott, Rt Hon JohnWood, Mike
Primarolo, DawnWoolas, Phil
Prosser, GwynWorthington, Tony
Purchase, KenWyatt, Derek
Quinn, Lawrie
Radice, Rt Hon GilesTellers for the Ayes:
Rapson, SydMr. Don Touhig and
Raynsford, NickMr. Clive Betts.
Amess, DavidBallard, Jackie
Ancram, Rt Hon MichaelBeggs, Roy
Arbuthnot, Rt Hon JamesBeith, Rt Hon A J
Atkinson, David (Bour'mth E)Beresford, Sir Paul
Atkinson, Peter (Hexham)Blunt, Crispin
Baldry, TonyBody, Sir Richard
Boswell, TimHogg, Rt Hon Douglas
Bottomley, Peter (Worthing W)Horam, John
Bottomley, Rt Hon Mrs VirginiaHoward, Rt Hon Michael
Brady, GrahamHowarth, Gerald (Aldershot)
Brand, Dr PeterHughes, Simon (Southwark N)
Brazier, JulianHunter, Andrew
Brooke, Rt Hon PeterJack, Rt Hon Michael
Browning, Mrs AngelaJenkin, Bernard
Burns, SimonKennedy, Rt Hon Charles (Ross Skye & Inverness W)
Burstow, Paul
Butterfill, JohnKirkbride, Miss Julie
Cash, WilliamLaing, Mrs Eleanor
Chapman, Sir Sydney (Chipping Barnet)Lait, Mrs Jacqui
Lansley, Andrew
Chope, ChristopherLeigh, Edward
Clappison, JamesLetwin, Oliver
Collins, TimLewis, Dr Julian (New Forest E)
Colvin, MichaelLidington, David
Cormack, Sir PatrickLloyd, Rt Hon Sir Peter (Fareham)
Cotter, BrianLoughton, Tim
Cran, JamesLuff, Peter
Davey, Edward (Kingston)McCartney, Robert (N Down)
Davies, Quentin (Grantham)McIntosh, Miss Anne
Davis, Rt Hon David (Haltemprice)MacKay, Rt Hon Andrew
Day, StephenMcLoughlin, Patrick
Donaldson, JeffreyMajor, Rt Hon John
Emery, Rt Hon Sir PeterMalins, Humfrey
Faber, DavidMaples, John
Fabricant, MichaelMawhinney, Rt Hon Sir Brian
Fallon, MichaelMay, Mrs Theresa
Flight, HowardMoore, Michael
Forth, Rt Hon EricMoss, Malcolm
Foster, Don (Bath)Nicholls, Patrick
Fowler, Rt Hon Sir NormanNorman, Archie
Fraser, ChristopherO'Brien, Stephen (Eddisbury)
Gale, RogerPage, Richard
Gibb, NickPaice, James
Gill, ChristopherPaisley, Rev Ian
Gorman, Mrs TeresaPaterson, Owen
Green, DamianPickles, Eric
Greenway, JohnPrior, David
Grieve, DominicRedwood, Rt Hon John
Gummer, Rt Hon JohnRendel, David
Hamilton, Rt Hon Sir ArchieRobathan, Andrew
Hammond, PhilipRobertson, Laurence
Hawkins, NickRoe, Mrs Marion (Broxboume)
Heald, OliverRowe, Andrew (Faversham)
Heath, David (Somerton & Frome)Ruffley, David
Heathcoat-Amory, Rt Hon DavidRussell, Bob (Colchester)
St Aubyn, NickTownend, John
Sanders, AdrianTredinnick, David
Shephard, Rt Hon Mrs GillianTyler, Paul
Shepherd, RichardTyrie, Andrew
Simpson, Keith (Mid-Norfolk)Viggers, Peter
Soames, NicholasWardle, Charles
Spelman, Mrs CarolineWaterson, Nigel
Spicer, Sir MichaelWells, Bowen
Spring, RichardWhitney, Sir Raymond
Stanley, Rt Hon Sir JohnWhittingdale, John
Steen, AnthonyWilkinson, John
Streeter, GaryWillis, Phil
Stunell, AndrewWilshire, David
Swayne, DesmondWinterton, Mrs Ann (Congleton)
Syms, RobertWinterton, Nicholas (Macclesfield)
Tapsell, Sir PeterYeo, Tim
Taylor, Ian (Esher &Walton)Young, Rt Hon Sir George
Taylor, John M (Solihull)
Taylor, Sir TeddyTellers for the Noes:
Thompson, WilliamMr. John Randall and
Tonge, Dr JennyMr. Geoffrey Clifton-Brown.

Question accordingly agreed to.
Resolved,That the Local Government Finance Report (England) 2000–01 (HC 160), which was laid before this House on 27th January, be approved. MADAM SPEAKER then put the remaining Questions required to be put at that hour.
Resolved,That the Local Government Finance (England) Special Grant Report (No. 52) (HC 161), which was laid before this House on 27th January, be approved. — [Mr. Sutcliffe.]Resolved,That the Local Government Finance Report (England) 1998–99: Amending Report 2000 (HC 162), which was laid before this House on 27th January, be approved. —[Mr. Sutcliffe.]