Local Government Finance (Hansard, 31 October 1990)

§ The Secretary of State for the Environment (Mr. Chris Patten)
With permission, Mr. Speaker, I should like to make a statement about the local authority financial settlement for England for 1991–92. I apologise for its necessary length.
I announced the Government's broad proposals in July, including an increase of nearly 13 per cent. in the amount of grant and business rates to be paid to local authorities in 1991–92. I have today sent the local authority associations a consultation paper setting out the proposed distribution between authorities. Copies have been sent to authorities, and are also in the Vote Office and Library.
I confirm that we propose to give English local authorities £26.050 billion of aggregate external finance—that is the total of certain specific and special grants, payments from the business rate pool, and revenue support grant.
We have already announced that next year the safety net will be abolished. It will be replaced by an area protection grant which will be paid for by the Exchequer. Four hundred and eighty-five million pounds will be used for this purpose.
Another component of aggregate external finance is the money paid to local authorities from the business rate pool. We propose that the business rate next year should be 38.6 p in the pound, which is an increase in line with the annual increase in the retail prices index to September of 10.9 per cent. The total burden on business will therefore remain broadly the same as it was in 1989–90, allowing for inflation. This is despite the substantial growth in local authority spending since then, and shows the benefit of the uniform business rate for business. Under the previous system, businesses would have paid at least £1 billion more in rates this year. It should be recalled that, between 1979–80 and 1989–90, locally set rate poundages rose by 37.4 per cent. more than inflation—an average of 3.2 per cent. a year on a compound basis.
The consultation paper sets out my forecast of the amount that will be available from the business rate pool to support local authority spending in 1991–92. In making this estimate, known as the distributable amount, I have taken account of the business rates local authorities are expected to collect in 1991–92. I have also taken into account the fact that local authorities are collecting more rates in 1990–91 than will be paid out from the pool during this year, and the distributable amount reflects this as the statute requires. This arrangement means that, taking one year with another, all the income raised from business ratepayers will be passed to local authorities to support their spending.
I propose that revenue support grant will top up the income from the business rate pool and other grants to bring the total to £26.05 billion. The amounts are £13.6 billion of grants, and £12.4 billion from the pool. In addition, the Government will be providing support through the transitional relief and community charge benefit arrangements.
As I said in July, the Government believe that it would be appropriate for local authorities to spend £39 billion next year in providing services. This figure takes account of what local authorities are spending now, the new pressures they face, the scope for economies and savings, 988 and what the country can afford. From this figure is derived a standard spending assessment, or SSA, for each authority.
In January, I invited authorities to put forward any fresh evidence about the way that SSAs should be calculated. We have received many representations suggesting changes that might be made. We have considered those representations most carefully. Many of the suggestions were familiar from last year, and there was no consensus on what changes, if any, should be made. I remain persuaded that the decisions we made last year were broadly correct. I also believe that it is helpful to maintain stability, so that charge payers can make comparisons between what they are asked to pay from one year to another. I have therefore decided that we should retain the broad principles that we adopted last year after a great deal of research. But I do propose some changes and improvements. Details may be found in the consultation paper, but I shall describe three of them.
First, I propose to reduce somewhat the weighting applied to the additional educational needs index used in the assessments for education. I have looked again at the impact of this factor on the cost of providing education. In the case of the primary, secondary and post-16 elements, the weight is fair, and I am proposing no changes. In the case of the under-fives and other education elements, however, I have decided to adjust the weight from 70 to 50 per cent.
Secondly, I propose to double the significance given to the number of tourists in calculating the SSA component for other services. This change will help in particular those areas which receive a substantial number of overnight visitors. Thirdly, I propose to make allowance for supernumerary posts in the police force designated for special protection duties. I know that these changes will be welcomed by a number of hon. Members.
On average, SSAs will increase by 19.4 per cent. over SSAs for 1990–91. There will be variations around that average reflecting the changes that I have announced, and the changes between years in factors such as the numbers on school rolls and the population in each authority.
The settlement proposals give local authorities scope to increase their spending by 7 per cent. in aggregate above this year's budgets. Taxpayers and business ratepayers together will be providing 12.8 per cent more support than this year. The community charge for standard spending will be £380. If authorities are extravagant, or if they are inefficient in collecting community charges, they may have to set charges at levels higher than that, but efficient authorities which spend within their SSAs will be able to set charges significantly lower than the community charge for standard spending. Authorities receiving help for the area protection grant should also have lower charges. Authorities that paid into the safety net this year should ensure that the community charge payers receive the full benefit of the abolition of those payments.
Many people will receive help to meet their charges through community charge benefits and from the transitional relief scheme. This year, the average amount actually paid by charge payers net of reliefs and benefits will be £286 against an average charge of £357, and, given the improvements in the transitional relief scheme and the availability of benefits, it should be little higher next year. One in four charge payers will receive benefits, and up to 11 million people will receive help from the more generous transitional relief scheme operating in 1991–92. Each 989 couple receiving transitional relief now will receive £52 more relief next year, rather than losing £26 as they would have done without the improvements that I announced in July.
It is important that authorities should make every effort to collect charges. The best authorities have already collected charges from 97 per cent. of people, and across the country nearly 90 per cent. of people have begun paying. We have given authorities the powers that they need to ensure payment. Authorities—both officers and councillors—have a duty to ensure that revenue is collected. If they fail, the majority who do pay will have to pay higher charges. Those who are tempted not to pay are merely expecting other people to pay their bills for them. That is totally unacceptable.
In the first year of the new system, some local authorities used the transition from rates to the community charge as a smokescreen to hide their increases in spending. Spending rose by 13.5 per cent. It went up by a quarter in only two years. I have made it clear that authorities must be prepared to play their part in ensuring that the nearly £3 billion extra we have made available in 1991–92 is passed on to charge payers. I have also made it clear that I am prepared to make full use of my powers to cap authorities' budgets if necessary. This year, I hope that, as I am specifying now the criteria that I have in mind for capping, councils will take the appropriate action to control their spending. Many authorities have specifically asked that I should make an early announcement.
As I told the House in July, I have power to cap in two ways. I can cap a council's excessive budget, or cap excessive increases from one year to the next. In my judgment it is reasonable to allow smaller increases for those authorities whose budgets are well above their SSAs.
My intended criteria are, therefore, that any increase of more than 9 per cent. over the previous year's budget will be considered an excessive increase if it gives rise to a budget over the authority's SSA; any increase of more than 7 per cent. will be considered excessive if it gives rise to a budget over 5 per cent. above the SSA; and any increase of more than 5 per cent. will be considered excessive if it gives rise to a budget over 10 per cent. above the SSA. In addition, I intend that any budget more than 12.5 per cent. above the SSA will be considered excessive.
This year I specified that no authority would be capped if it budgeted only a small amount above the measure of excessiveness I used, but authorities should not assume that I will again adopt a de minimis proviso, or if I do that it will be at the same level as for 1990–91. Authorities spending less than £15 million are exempt from capping. I do not propose to increase that threshold, but I intend to make special provision for the particular circumstances of the inner London boroughs which still bear the cost of inherited overspending by the Inner London education authority, and also for the City of London, where there are different considerations.
These criteria are necessarily provisional. When I come to make my decisions on capping, I will of course take into account all appropriate considerations. I might reach different conclusions. I have placed a paper in the Library and Vote Office setting out my intentions in detail and have sent a copy to local authorities.
The criteria that I have announced today are demanding. Local authorities cannot be exempt from the restraint that is needed—from public and private sectors alike—to achieve the overriding objective of getting 990 inflation down. But I am satisfied that efficient, well-managed authorities can provide effective services within the proposed criteria. Authorities should look very carefully at how they can eliminate any wasteful expenditure and streamline their administration.
My right hon. Friend the Secretary of State for Wales and I are determined to make sure that charge payers benefit in full from any budget reductions arising from charge capping. Following the recent judgments in the Lambeth case, we therefore propose to legislate as soon as possible to secure that objective.
In my statement on 19 July I also announced a number of proposals to improve some of the detailed workings of the new system, to make it simpler and to remove anomalies. We have now completed consultations with local authorities and other interested organisations on these matters. Our conclusions, which I believe will be widely welcomed, have been sent today to local authorities and are also in the Vote Office and Library. We have announced reductions from next year in the standard community charge that can be levied on the owners of unoccupied property in exceptional cases. Among those who benefit will be people who have houses with an empty granny flat; people who have an empty flat over a shop which is difficult to let; people who have homes which are empty because they have gone to care for, or be cared by, someone else; students who pay a reduced personal charge but can face a double charge if they own a home elsewhere; farm owners who have empty cottages which are subject to planning restrictions; people who are having difficulty selling their houses; and people who have suffered from a mortgage repossession.
Finally—and this represents a more generous arrangement than the one I proposed on 19 July—I have decided that all those people such as clergymen, service men and some teachers who occupy a job-related property but who also own a home elsewhere will be subject to a multiplier of only one half of the personal community charge.
We intend to introduce a simplified community charge bill to improve accountability, more generous transitional arrangements for the rating of small businesses where the owner lives over the shop, and a number of other useful administrative improvements. We shall be bringing forward regulations to bring all these changes into effect for the start of 1991–92. We have not yet completed consideration of all the responses to the consultation on the treatment of bed-and-breakfast accommodation, but I expect to be able to make an announcement on that very soon.
My proposals for next year's settlement envisage a realistic increase in local authority spending, backed by an increase in external support which is fair by any standard. We have made a number of improvements in the method of distributing grant, while mantaining stability. Standard spending assessments are increasing by 19.4 per cent. on average, so most authorities should be able to budget at or below their SSAs. And no area will contribute to the safety net. Charges therefore need not be much higher than about £380 anywhere, and should be lower where authorities are efficient or where there is help from the area protection grant. I shall use my charge-capping powers to make sure that the extra resources from national taxation and businesses go to benefit charge payers rather than fuelling excessive spending. Specifically for this year, I have given authorities advance warning of my intended criteria.
991 The Government are ensuring that local authorities have the resources which they need. This is a substantial settlement, which must necessarily have its impact on public expenditure settlements elsewhere. It is now for local authorities to respond by setting reasonable budgets and reasonable community charges. Charge payers want, and have a right to expect, good services at a price they can afford.

§ Mr. Bryan Gould (Dagenham)
The Secretary of State's statement shows that he is still unable to get off the poll-tax treadmill, and that in attempting to do so he simply succeeded in making matters worse. He has revealed himself as the most centralising Secretary of State and the most damaging to local government of modern times.
Does the right hon. Gentleman accept that his total spending assessment was unrealistic when he announced it in July and that it is even more unrealistic now? Why has he not reflected the changes that have occurred since July, all of which have been adverse to the financing of local government? Why, for example, has he not taken account of the fact that inflation is running at 10.9 per cent. and not 7 per cent., on which he based himself? If he is ready to tax businesses to the full extent of the current inflation rate, why will he not recognise that local authorities, too, face that same inflation rate? Why not take account of the increased commitments, many of them of recent origin, such as those imposed only this week by the Environmental Protection Bill? Why not take account of the increased commitments on care in the community and teachers' pay which have materialised since July? Why not recognise that collection rates are much lower than expected in many cases, not because of the fault of local authorities, but, as the Audit Commission will say tomorrow, because of the structure of this inefficient tax?
On the business rate, which has already caused such distress to small businesses in particular, not least in the Secretary of State's constituency, will he confirm that by imposing the full inflation rate of 10.9 per cent. the take for the business rate will increase by no less than 18.4 per cent., compared with an increase in central Government grant of only 1.4 per cent? The business rate will increase from £10.4 billion to £12.4 billion. In other words, business will contribute £2 billion of the extra money that the Secretary of State boasted he had claimed from the Treasury in July. The truth is that on that occasion, as on others, the Secretary of State was turned over by the Treasury, and business will pick up the bill. Will he confirm that, for the forthcoming year, businesses will pay £400 million more than is paid to local government, and that that amount will go straight into Treasury coffers?
Does the Secretary of State accept that, by retaining the broad principles of calculating SSAs, he is acknowledging that his soft words at the beginning of the year to the effect that the calculation was based on an unsatisfactory premise was no more than a piece of flannel designed, as is so much else to do with the poll tax, to avert short-term criticism? Will he also accept that the formula that he has adopted for taking account of the number of tourists is no more than an Eastbourne and Westminster benefit measure—a protection racket which will reduce poll tax bills by £12 per head in Westminster alone?
On the likely size of poll tax bills, why should we pay any more attention to the Secretary of State's figure of 992 £380 than we did when he assured us that this year's bill would average just £278? Why, this year, has he not published a list of indicative poll tax levels for each authority? Dare he not do so?
Do not the draconian rules that the Secretary of State has announced on capping mean that a local authority that increases its budget by less than the rate of inflation—that is, it makes cuts in real terms—could still find itself capped on the basis of an SSA which the Secretary of State concedes is far from being precise? When will the provisional criteria that he has announced become firm? In other words, when will local authorities know exactly where they are? Do not the new rules and the new powers that he intends to take in the wake of the Lambeth judgment mean that every poll tax bill will, in effect, be the Secretary of State's bill? The Government's fingerprints will appear on every poll tax bill that arrives through the letter box next spring.
Why has the Secretary of State left the £15 million threshold as it is without uprating it for inflation, as he has for the business rate? Is not this merely a device to exclude Tory councils from the capping net and to save the Secretary of State from the embarrassment of having to cap those Tory councils? What about Tandridge, spending 30.5 per cent. above its SSA? What about Torbay, spending 84.7 per cent. above its SSA? What about Brentwood, spending 108.5 per cent. above its SSA? Why are they not caught by the capping provisions?
Is not it the truth that this is still a Government and a Secretary of State up to their old tricks, trying to shift the blame for the poll tax from where it belongs, with them, on to those who are already suffering as victims—local authorities, local government independence and those millions of people who must pay the bills and suffer the cuts that this wicked tax has made inevitable?

§ Mr. Patten
In that welter of hyperbole, I detected two main strands of argument. First, the hon. Gentleman asked me a series of questions about the business rate. I make it clear once again that, thanks to the change to the UBR, business rate payers will pay £1 billion less than they would be paying if we had stuck to the previous system. Manufacturing industry, in which the hon. Gentleman and others affect to have some interest, will as a result of our changes see a real terms fall outside inner London. This year, small shops will pay £10 million less in aggregate in real terms—2 per cent. less—[Interruption.] A revaluation was supported by the Labour party and by the Liberal party. It is a revaluation which, quite properly, takes account of what is happening in different parts of the country because of the economic growth of the past decade.
The hon. Gentleman referred to the balance between the contribution from the taxpayer and that from the business rate payer. If he believes that we should cut the contribution from the business rate pool, is he saying that we should either cut provision for local authorities or make the taxpayer pay more? That is the simple alternative. As ever with the Opposition, the question is, where is the beef? They tell us that they want more services and smaller bills for ratepayers and community charge payers. Where will the money come from? They resolutely refuse to answer that question.
993 The hon. Gentleman, in what I guess I must argue was an uncharacteristic slip, referred to the increase in grant as about 1 per cent. Actually, the increase in grant is about 7.65 per cent.—

§ Mr. Gould
indicated dissent.

§ Mr. Patten
Yes, it is, and that is not including the amount that will go to community charge payers through transitional relief. It does not include the amount that will go to community charge payers through community charge benefit. The hon. Gentleman should look more carefully at those figures.
In another strand of his argument, the hon. Gentleman said that a 19.4 per cent. increase in total standard spending was unrealistic. Where is the shadow Chancellor? It is preposterous to say that a 19.4 per cent. increase is unrealistic. It is a realistic judgment. It takes account of what we think local authorities should reasonably spend next year and it feeds through to SSAs across the country. I do not think that the Opposition will grumble when they see the increases in the SSAs in their authorities.
The hon. Gentleman referred to capping. I shall comment only briefly because I dare say that this will not be our last opportunity to discuss capping. Over the past year, I have been pressed again and again by local authorities to announce well in advance my criteria for capping. Some Labour local authority leaders told me, "If only you had told us the criteria, we should not have had to be capped." I have done them a favour. Now, any authority that is capped will have volunteered for it because we have set out fair and realistic criteria that take account of the relationship between what local authorities spend and what they can reasonably spend. I hope that, now that we have set out those criteria well in advance, local authorities will be able to budget sensibly in the interests of their community charge payers.
The hon. Gentleman asked about the SSA methodology. He accused us of trying to help Conservative authorities through the changes that we have made in respect of tourism. I ought to tell him that among the authorities that will be helped are Camden and Bradford and that, thanks to vigorous representations from two of my hon. Friends, Blackpool and the surrounding areas will also be helped, so the hon. Gentleman is well off the mark.
The hon. Gentleman also referred to collection rates. I am pleased—and I am sure that he must be—that the Audit Commission figures which will be contained in a press release today and in an extensive document to be published tomorrow make it abundantly plain that since August there has been an increase of 30 per cent.—about one third—in the number of those paying. Those figures confirm what other figures have shown: the payment rate is almost 90 per cent. generally and it is 92 per cent. in district council areas. I hope that we can now look to the Opposition Front Bench and to all Opposition Members to denounce those who would be free riders and especially to denounce those Members of Parliament who want their constituents to pay higher community charges so that they can get off scot free.
The hon. Gentleman said that, as a result of the proposals put before the House this afternoon—I note that he said nothing about the announcements later in my speech about the standard community charge, although I shall leave that on one side—community charge bills next spring would have my fingerprints on them. I can only say 994 that I hope that more and more local authority community charge bills will have Conservative fingerprints on them because we know from Trafford, Southend, Hillingdon, Ealing and elsewhere that Conservative-controlled local authorities provide better services at a lower charge. That is true today and it will be increasingly true in the future.

§ Mr. Robin Squire (Hornchurch)
My right hon. Friend's statement contained many welcome elements. In particular, I would highlight the reduction in the weighting on the educational special needs element of the education budget, which was pressed on him by many local authorities throughout the country. I am pleased that he has responded. Will my right hon. Friend continue to treat with contempt all criticisms of alleged inefficiency and inadequacy of Government budgeting in that sector until and unless the Opposition are prepared to categorise how much and who will pay?

§ Mr. Patten
On additional educational needs, the result will be a reduction in the percentage from about 24 to 22½ per cent.

§ Ms. Hilary Armstrong (Durham, North-West)
Disgraceful.

§ Mr. Patten
The hon. Member for Durham, North-West (Ms. Armstrong) knows that the percentage before SSAs was 12 per cent., so she cannot accuse us of savaging that element in the grant distribution formula. My hon. Friend the Member for Hornchurch (Mr. Squire) is right in saying that we received a large number of representations on the subject, from a large number of local authorities among other bodies. We were right to make the adjustment that we have announced today.
With regard to efficiency and other matters in local authorities, I notice that the Labour party's latest proposal for replacing the community charge, were Labour—unlikely as it may be—to have an opportunity to do that, would involve the reintroduction of the most unjust of all taxes which takes most from those who can afford least. As Opposition Members will know, those remarks were made by the Leader of the Opposition.

Several Hon. Members
rose—

§ Mr. Speaker
Order. It would help the Chair greatly today if hon. Members asked one question rather than a series of questions. If that happens, I hope that I shall be able to call most of the hon. Members who wish to participate in the debate.

§ Mr. Ronnie Fearn (Southport)
While I welcome certain parts of the statement, especially the reference to tourism which I believe stems not from Eastbourne, but from pressure from many tourist areas, does the Secretary of State agree that his statement will be another nail in the coffin of local government finance which he has fully restricted? Will he also comment on the fact that the authorities that will face difficulties will have to make cuts in social services, education buildings and in amenities which are already suffering? Will he also—

§ Mr. Speaker
Order. In fairness, I asked for one question. I know that the hon. Gentleman leads for his party on this matter, but three questions is overdoing it.

§ Mr. Fearn
Small businesses all over the country are being affected. They are going to be affected to the tune of 15 to 20 per cent. and not 10.9 per cent.

§ Mr. Patten
With regard to small businesses, as the hon. Gentleman knows, about 45 per cent. of businesses will be out of transition by next year. About 20 per cent. of businesses, a lot of which are small manufacturing businesses, will actually see falls in cash terms in their business rates. That is three times the proportion of businesses that will see increases at the top end of the range.

§ Mr. Fearn
indicated dissent.

§ Mr. Patten
If the hon. Gentleman disagrees, he can table parliamentary questions about that. However, those figures have emerged from the calculations made by the valuers.
I am sure that the hon. Gentleman will be pleased to learn that the educational element in the SSAs will be increasing by just over 16 per cent. and that should be enough to continue to provide the quality education that we all want to see.
With regard to the hon. Gentleman's reference to nails in coffins—and at this stage I would not wish to go back to dead birds—we are under an obligation, having made a settlement as substantial as this for local authorities, to do all we can to ensure that that money helps to continue to improve services and to abate increases in the community charge. It would be monstrous if that money saw another splurge in local authority spending. I for one am not going to allow that to happen.

§ Miss Emma Nicholson (Torridge and Devon, West)
I thank my right hon. Friend most warmly for his commitment to help the rural areas and the environment by concentrating on tourism. The next time he examines the SSAs, will he see whether there is any way in which he could take low administrative costs into account, particularly when he is considering charge capping because so many local authorities, generally Labour, have very high administrative charges which may not be readily apparent and Conservative counties like Devon, which my right hon. Friend kindly visited last week, have very low administrative charges? The good guys should be rewarded and the bad guys' knuckles rapped.

§ Mr. Patten
My hon. Friend has raised a relevant matter. The list published the other day by the Department of Education and Science showing the administrative costs of local education authorities not surprisingly reveals that the highest costs are the responsibility of Labour-controlled local authorities. That should be of considerable interest to parents and community charge payers. We all want to see more money concentrated on those who sit behind desks in schools instead of on those who sit behind desks in offices.
On the overall matter of SSAs, I enjoyed my discussions in Devon the other week with a number of county councillors and county officers. I am sure that my hon. Friend will notice with pleasure the increase in the SSAs affecting local authorities in her constituency.

§ Mr. Peter L. Pike (Burnley)
Having had three months in which to think about the announcement that he made in July, will the Secretary of State now admit that, if the Government had a single ounce of fairness in dealing with 996 the failure of the poll tax to take account of ability to pay, the £3 billion that he announced in July would have been far better used in giving better poll tax rebates? That would have helped the poorer sections of the community, many of whom cannot afford to pay the poll tax now.

§ Mr. Patten
If I were to follow the advice of the hon. Gentleman's hon. Friends, I would simply say no, but I shall be a little more extensive. First, I am sure that the hon. Gentleman will welcome the huge increase in the SSA affecting his own constituency. Secondly, I am sure that he is extremely pleased that the community charge benefit is a great deal more generous than the benefit available for domestic ratepayers and that we have doubled assistance going through transitional relief principally to those living in low rateable value accommodation.

§ Mr. Robin Maxwell-Hyslop (Tiverton)
Does my right hon. Friend now have in place a mechanism for estimating accurately the cost of new duties placed by Departments of central Government on local government? It is absolutely clear this year that it is not yet in place.

§ Mr. Patten
I believe that we take proper account of additional responsibilities on local authorities, but I want to respond rather more positively than that to my hon. Friend's quite proper question. Over the years there has been a tendency in the House to try to place new responsibilities on local authorities without at the same time willing the money to meet the cost of those responsibilities. We must be much more self-disciplined, therefore, in the responsibilities that we place on local authorities. As long as I am in my present job, I intend to follow that advice.

§ Mr. Jeff Rooker (Birmingham, Perry Barr)
Following the nationalisation of the business rate, which was opposed by the Labour party, does not it follow that, if under this system £1 billion less is paid by the business rate than under the old system, £1 billion more is paid by hard-pressed poll tax payers?

§ Mr. Patten
I point out to the hon. Gentleman the substantial increase in support from taxpayers in this settlement—the 7.65 per cent., leaving aside transitional relief. I am interested in whether the hon. Gentleman's point of view is entirely shared by the Opposition Front Bench. Opposition Front-Bench Members seem to say that businesses should pay less. The hon. Gentleman's argument is that businesses should pay more. We have got it about right.

§ Mr. Robert Banks (Harrogate)
May I congratulate my right hon. Friend on his excellent statement, in particular his announcement about the tourism element of the SSA, which will be hugely welcomed? In future, will he look at ways in which benefits can be positively made to low-spending and efficient authorities?

§ Mr. Patten
I certainly hope that, when one is dealing with less-efficient authorities, my proposals on charge capping take account of differences between efficient and less-efficient authorities. On my announcement, we do not propose that any authority spending at or below SSA should come within the community charge capping criteria. But that should not encourage some local authorities to believe that they can increase their spending by the percentage increase in SSAs and think that that is behaving prudently. If a local authority has behaved 997 prudently in the past and spent below SSA, it should continue to behave in that way. Its community charge payers will not thank it if it still manages to keep below SSA but increases its spending by a large amount.

§ Mr. Tony Banks (Newham, North-West)
Can the Secretary of State explain how Wandsworth's area protection grant was calculated, and why it is one of the largest in London? Why has Wandsworth got the largest inner London education grant and one of the largest total external support levels in London? Could it be anything to do with the fact that Wandsworth is Tory controlled, and that this statement is bent from start to finish?

§ Mr. Patten
If the hon. Gentleman had not been so uncharacteristically brief, he might have gone on to ask me why Westminster was paying £75 into the safety net. I am sure that he will know that the amount received by Wandsworth is considerably less than that received by a number of other inner-London boroughs—for example, the borough of Lambeth next door. The hon. Gentleman should perhaps compare the community charges set in those boroughs.

§ Mr. David Shaw (Dover)
Will my right hon. Friend confirm that the message from today's statement is that the game is up for Labour authorities, and that they should stop wasting their time creating more and more committees and inventing foreign and defence policies that are irrelevant to local authorities? They should stop giving out jobs for the boys—as has happened in Liverpool, Derbyshire and other areas—and concentrate on providing services with increased efficiency, better value for money and the quality that the consumers—the public—demand.

§ Mr. Patten
Alas—and I think that it is an "alas" that can be heard loudly from both sides of the House—there are one or two examples of what the Labour party understands by fiscal prudence in local government, which do not provide an adequate lesson for anyone. Indeed, they provide a lesson on how not to behave in public life.
My hon. Friend is entirely right. It would be nice if all Labour local authorities tried to provide decent services at a reasonable price. I believe that the local authority in Dagenham has set a rather low community charge. I hope that all local authorities—Conservative and Labour—will remember their responsibilities to their community charge payers.

§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Will the Secretary of State explain to the House, simply and honestly, why—following the selection of the needs of local authorities—the standard spending assessment is so manifestly unfair? Why does the index for the system allocate to Wakefield metropolitan district council's education department 30 per cent. less than it allocates to Barnet, with all its environmental and financial advantages? There must be a simple answer. The House will be aware that Barnet is in the Prime Minister's constituency. Will the Secretary of State tell the people of Wakefield why they have been treated in this way?

§ Mr. Patten
If the hon. Gentleman had compared his constituency borough with Haringey rather than Barnet, he might have been able to produce some rather more dramatic figures. The SSA for the hon. Gentleman's 998 borough will, I suspect, increase by more than the average that I announced earlier. I hope that that will go some way towards satisfying him.
The methodology used to calculate SSAs and distribute grant is based on a year or more of discussions with local authority associations. It is as fair a system as we could produce, but I am prepared to listen to fresh evidence about it from the hon. Gentleman's local council, or from any others.

§ Sir Anthony Grant (Cambridgeshire, South-West)
The fact that my right hon. Friend has made this early statement will be welcomed by everyone except those without the faintest idea of what their alternative policy would be. I want to ask my right hon. Friend one specific question: has he any more proposals about the cost-benefit factor, bearing in mind the absurd anomaly—about which I told him earlier—that Oxford benefits from this, whereas Cambridge does not?

§ Mr. Patten
My hon. Friend has, for once, thrown me. I am not quite sure that I understand what he meant in relation to cost benefit. Responding as a graduate of Oxford, and putting my prejudices behind me, I can only say that the local authorities in my hon. Friend's constituency will benefit substantially from the increases in SSA that I have proposed. Whether similar increases will be experienced in the constituency, for example, of my namesake, I cannot recall.

§ Mr. Chris Smith (Islington, South and Finsbury)
Will the Secretary of State give us the answer that he failed to give earlier? Why on earth does Wandsworth deserve £18 protection grant when Islington and Hackney, where the needs are far greater, get nothing whatever?

§ Mr. Patten
Because of its low rateable values. That is exactly the reason why many constituencies represented by Labour Members are provided with area protection grant. The hon. Gentleman, who knows a good deal about these matters, will have to hunt for a long time and over a lot of ground if he believes that the area protection grant is the main reason for what is happening in Wandsworth. The main reason for the low community charge and the good services in Wandsworth is that it is run by a good Conservative council.

§ Sir Charles Morrison (Devizes)
The new supernumerary payment for police is enormously welcome to several local authorities. Is my right hon. Friend aware, for example, that it will assist the efforts of the newly Conservative-controlled Wiltshire county council to set a community charge of, not £380 or even £379—the level that would have been set if the previous Lib-Lab coalition had remained in power—but about £356?

§ Mr. Patten
I look forward to being a beneficiary of good Conservative administration in Wiltshire. My hon. Friend made a serious point about police protection. Several local authorities have had to take on a considerable burden—as I know myself—over the past few months and years because of terrorist attacks and other reasons. It is wholly right that we should recognise that in the SSAs.

§ Ms. Diane Abbott (Hackney, North and Stoke Newington)
May I return the Secretary of State to the subject of Wandsworth, which fascinates all of us who represent London boroughs? I want to think the best of the 999 Secretary of State. I do not want to think that there has been a squalid fix, so will he explain why Wandsworth has the highest inner London education grant?

§ Mr. Patten
The SSAs in Wandsworth are a great deal lower than in the hon. Lady's constituency. I very much hope that the constituents of the hon. Lady, of her hon. Friend the Member for Newham, North-West (Mr. Banks) and those in other London constituencies which at present have Labour local authorities will learn from what is happening in Wandsworth and provide excellent services at a reasonable charge.

§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)
Will my right hon. Friend accept that, after 30 years in local government politics and 10 years as chairman of finance, I still find the figures a mystery wrapped in an enigma, as someone greater than any of us said? Next year could he at least produce comparable figures so that those of us who represent people understand what the basic figures mean and what the past means? It does not help anyone in the House not to understand a blind thing that the figures mean. All that we have is one set of initials after another. If we are to take part on a sensible basis in local government finance for our people, can we at least understand the figures, or are we not meant to understand them? As far as I understand it, Birmingham will receive 19 per cent. more. Is that true or not?

§ Mr. Patten
On comparable figures, one of—

§ Mr. Beaumont-Dark
Are we getting 19 per cent. more?

§ Mr. Patten
I shall try to answer my hon. Friend, recognising as I do his expertise in these matters. [Laughter.] That was meant to be a compliment. As my hon. Friend will know, in the first three or four years of the new system we have had the safety net, the area protection grant, to help some local authorities which we believe were disadvantaged by the shift from Exchequer equalisation. That complicates some of the simplicities which would otherwise be abundantly plain not only to my hon. Friend but even to me. I hope that, as the area protection grant unwinds, comparisons will be even simpler than they are at present. I was not keen on a major overhaul this year because I wanted to make those comparisons easier rather than more difficult. I am glad that my hon. Friend supports me in that.
Although I do not have a slide rule with me to make the precise calculation, I can tell my hon. Friend that Birmingham will get a much bigger SSA.

§ Mr. Dennis Skinner (Bolsover)
Why does not the Secretary of State admit that he has fiddled the figures to aid Tory marginals at the next general election? Why is it that, according to the SSA, if the Derbyshire grants had been allocated on the same basis as those for Wandsworth and Westminster, rather than having a poll tax, we would have been giving £308 to every poll tax payer instead of collecting a penny piece? The people of Derbyshire are yearning for the chance to get rid of this lousy Government and their evil tax and to replace the tax in the first year of a Labour Government.

§ Mr. Patten
If my purpose in making this announcement—

§ Mr. Skinner
Answer my question.

§ Mr. Patten
I will do so directly to the hon. Gentleman and with the great regard that the whole House shows him. If my purpose in these figures were to help secure the Conservative party's chances at the next election, I should like the hon. Gentleman to explain why we are making £133 a head available to his constituency through the safety net.

§ Sir Peter Emery (Honiton)
Although I congratulate my right hon. Friend on clearing up several reasonable anomalies which have worried many people, does he realise that the figures as published are not understood by the ordinary charge payer? Would he consider publishing the indicative level estimate of community charge, as he did last year, because that allows the community charge payer to compare what the Government think with what the local authority delivers?

§ Mr. Patten
I had to publish even more figures last year and, doubtless, run the gauntlet of my hon. Friend the Member for Birmingham, Sparkbrook—

§ Mr. Beaumont-Dark
How dare my right hon. Friend say that!

§ Mr. Patten
I meant my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), and I agree that it is not easy to make that confusion.
My hon. Friend asks for more figures. Last year we had to produce what my Department likes to call exemplifications for all local authorities of what the community charge would have been if the local authority had spent exactly as we wanted. We had to produce those figures because of the safety net and the introduction of the transitional relief scheme. Thank God, those reference points stand and we do not have to publish similar sets of figures again because people tend to regard them as predictions. If I produced figures for local authorities, all the figures would be £380, because that is what the community charge at standard spending should be. Nevertheless, I believe that many local authorities should be able to produce a community charge lower than that.

§ Mrs. Rosie Barnes (Greenwich)
Does the Secretary of State accept that all pretence of increased local accountability has gone from this tax? As central Government have imposed an increasingly tightened straitjacket on local authorities, voters, rather than expressing their views on their local authorities' performance, are likely to use the ballot box to give their verdict on the tax itself.

§ Mr. Patten
It is unarguable that many local authorities used the introduction of the new system as a smoke screen behind which they brought in much higher increases in spending—after all, the increase in spending this year was 13.5 per cent. That resulted in much higher community charges than anyone on the Conservative Benches would have liked to see—I cannot speak for those on the Opposition Benches. In those circumstances, it is reasonable in the early years of the tax to contemplate using the powers that I am given under the Local Government Finance Act 1988 to charge-cap local authorities. The hon. Lady's constituency receives £285 under the safety net and that authority should be able to budget sensibly with such support. I hope that it will learn to do so.

§ Mr. Robert G. Hughes (Harrow, West)
Does my right hon. Friend agree that the charge-capping proposals he has announced today will be widely welcomed in the country, simply because they will protect people from high-spending local authorities? They will not protect people from high-spending authorities seeking to spend more money on services, but, in general, from Labour local authorities which have entirely lost control of their spending.

§ Mr. Patten
That is perfectly correct. No local authority that spends at, or below, SSA will come into the frame for the charge-capping criteria I have announced. I repeat what I said earlier: local authority leaders pressed me to set out the criteria for charge capping for next year before they set their budgets. I have done so and local authorities know precisely where they stand. Therefore, any local authority that comes within the charge-capping criteria when it sets its budget will, in effect, be volunteering to do so.

§ Mr. Kevin Barron (Rother Valley)
Earlier this year, the electorate of the Rotherham metropolitan borough council area reaffirmed their allegiance to the Labour party and the Labour council. That was followed by the Government making that local authority cut £7.9 million from its budget this year. Is not it true that the criteria that the right hon. Gentleman has announced today are nothing more than a message to the people of Rotherham and elsewhere that if they support the Labour party they will lose any accountability regarding the poll tax and that everything will be run from Whitehall from now on?

§ Mr. Patten
No, that is not the message. The criteria indicate that I am prepared to use the powers given to me statutorily to cap local authority spending. I have also made it clear today that I want the substantial increase in external support to local authorities to be spent not only to help to continue to improve local services, but to abate increases in the community charge.

§ Mr. Bob Dunn (Dartford)
Is the Secretary of State aware that some small district councils in the south-east are suffering pressure on two counts; first, as a result of the loss of business rate income and, secondly, because those local authorities have a small population? On the latter, can my right hon. Friend confirm, either today or in writing, the precise source and year for obtaining population figures used in the calculation of the SSA? Secondly, will he undertake—

§ Mr. Speaker
Order. There is a ration of one question today.

§ Mr. Patten
I know of my hon. Friend's concern about that and how vigorously he has represented his local authority and constituents on it. The population figures are arrived at in a variety of ways, but basically they are obtained from the numbers on the community charge register and from figures from the Office of Population Censuses and Surveys. I hope that my hon. Friend's local authority has been in touch with the OPCS, but if I can give him any further assistance on that matter I shall be pleased to do so.

§ Mr. Martin Redmond (Don Valley)
Will the Secretary of State undertake to meet representatives from the six northern capped authorities to discuss the inadequacies of the SSAs?

§ Mr. Patten
My right hon. Friend who is now the Secretary of State for Wales and I met representatives of those local authorities earlier in the year, sometimes collectively, sometimes individually. We are always prepared to receive representations from local authorities. We spend a good deal of time between the autumn and spring receiving local authority representatives to discuss a variety of matters. When the hon. Gentleman sees the standard spending assessments for his and other local authorities I do not think that he will be too worried about them.

§ Mr. Nicholas Winterton (Macclesfield)
I warmly welcome the average increase of 19.4 per cent. in standard spending assessments for the next financial year, but would my right hon. Friend say whether he believes that it will adequately make up the undoubted underprovision for Cheshire county council and the responsible and well-run Macclesfield borough council in the current financial year? Does my right hon. Friend think that it is appropriate that local authorities, hard pressed as they are, should assume responsibility for resources for community care that were hitherto funded entirely by the national health service?

§ Mr. Patten
When my hon. Friend looks at the figures he will discover that the standard spending assessment for his constituency will go up substantially in percentage terms by comparison with others. As my hon. Friend knows, in future his constituents will not have to make the £51 contribution to the safety net that they have been making.
We have made available adequate resources for phasing in the community care proposals, the first year of which will be 1991–92, and we want to ensure that we make adequate provision for future years. One of our considerations when planning phasing was the cost of going ahead, which was exaggerated by some of the local authority associations.

§ Mr. Harry Cohen (Leyton)
The Secretary of State has left out one set of figures from his poll tax package—the huge number of job losses that will flow from it. Those jobs will involve home helps for the elderly, community care for the disabled and mentally ill and social workers for children at risk. When battered babies die, will the Secretary of State be around to pick up an ounce of responsibility?

§ Mr. Patten
The hon. Gentleman referred to jobs. One important factor is that those who have jobs should be there to do them. He may recall that the Audit Commission recently produced a report on sickness absence in 10 London local authorities, of which six were Labour and the others Liberal Democrat or had no one party in overall control. Of the six worst, it was discovered that if they could reduce sickness absence to the average of Confederation of British Industry members, £26 million and £27 a head on the community charge would be saved.

§ Mr. Keith Mans (Wyre)
In the coming months, will my right hon. Friend consider publishing a set of statistics to show the number of full-time equivalent staff employed by shire counties as that would give a clear indication of where commuinity charge payers' money is being used to pay bureaucrats rather than provide services?

§ Mr. Patten
I am certainly prepared to consider providing that information. I do not think that we can provide it at present, but it is an extremely good idea and I shall see what we can do about it.

§ Mr. Allen McKay (Barnsley, West and Penistone)
Does not the Secretary of State accept that the problem of central Government is that, during the past 10 years, they have sought to abdicate their responsibilities to local government without giving local authorities the finance to carry out those responsibilities? The Secretary of State has met our local authorities, and from his statement it seems that their words have fallen on stony ground. The Secretary of State made a statement about the average of £380, which my authority would be happy to accept so that it could stop the deterioration in services, including education services. If the Secretary of State is that concerned, he should come to see the damage that he is causing.

§ Mr. Patten
The hon. Gentleman will know that his local authority is receiving £150 from the safety net—

§ Mr. Skinner
A phoney argument.

§ Mr. Patten
It certainly is not. I know that many Labour local authorities would very much like to receive support from the safety net.
The hon. Member for Barnsley, West and Penistone (Mr. McKay) has made vigorous representations on behalf of his constituents and I am sure that he will continue to do so, but I do not accept, given the figure for help from the safety net that I have just mentioned, that he is being entirely fair.

§ Mr. Spencer Batiste (Elmet)
My right hon. Friend stressed the importance of collecting the charge. Is he aware that, in Leeds, many standing orders which were properly submitted and acknowledged many months ago still have not been processed; and that, due to industrial action, even cash payments are being turned away by council staff? In his calculations of the outstanding arrears due on the charge, will he say how much is due to incompetence and mismanagement by Labour authorities?

§ Mr. Patten
The usual suspects are in the dock; the figures that my hon. Friend mentioned are appalling. The major ingredient in the lower collection figures in some areas has been administrative incompetence, not the activities of the campaign supported by one or two Opposition Members. I very much hope that in the coming months and next year local authorities will make sure that they collect the community charge. In so far as they do not, those who pay lawfully and responsibly will have to face larger bills, and that is intolerable.

§ Mr. James Lamond (Oldham, Central and Royton)
Does the Secretary of State realise that among the 90 per cent. about whom he was boasting who have begun to pay something towards their poll tax there are many elderly people and people on low incomes who cannot pay? They want to stay within the law and they pay what they can, but they cannot meet the full bill. Does he realise that no amount of tinkering with the poll tax will cure that problem or make them accept it? Why does not he abandon it altogether and go back to the rating system which they understood and under which they were able to pay?

§ Mr. Patten
The hon. Gentleman should know that we are spending £2.25 billion on community charge benefit, that next year we shall spend about £500 million on the transitional relief scheme, and that pensions will rise substantially next year. The best way in which Labour councillors and local authorities can help the groups to which the hon. Gentleman referred is by setting a reasonable community charge.

§ Dame Elaine Kellett-Bowman (Lancaster)
I thank my right hon. Friend for listening to our pleas to increase the significance of the tourist input and weighting for the elderly, and for calculating that on up-to-date figures, but may I point out that he said in his answer that Wandsworth receives area protection because it has low rateable values? As I told him earlier today, we have in Lancaster 5,106 houses of below £56 rateable value and 4,647 of between £57 and £80 rateable value. That makes a total of 17 per cent. of housing, in addition to which many mobile homes are occupied by elderly people in order to cut their costs. My right hon. Friend has given area protection to Burnley; why has not he given it to Lancaster? Will he change his mind and give it to us forthwith?

§ Mr. Patten
I am grateful for what my hon. Friend said about tourism. I shall certainly look at the arguments that she puts forward in her second point. She will appreciate that one reason why we increased the transitional relief scheme was precisely to help people living in the sort of accommodation to which she referred. Of course they are people who would be seriously hurt by revaluation and the return to domestic rates which the Labour party supports.

§ Mr. Bob Cryer (Bradford, South)
Does the Secretary of State accept that his reputation as the gauleiter of Marsham street is preserved intact by his statement, and that it represents a cut, given the annual rate of inflation of more than 10 per cent., because it is only a 7.65 per cent. increase in central Government support? So it is a continuation of the policy of the past 10 years of cutting central Government support to local authorities which, after all, provide not bureaucratic services but services for the mentally handicapped, in education, in housing and in social services—services which should be sustained and supported, not crimped and attacked, as the Government have done in this statement.

§ Mr. Patten
The hon. Gentleman has reminded us all once again that a joke from him is no laughing matter. He overlooked the fact that we are increasing aggregate external finance by 12.8 per cent. next year—a large increase in support for local authorities. The best thing that could happen to the hon. Gentleman's constituents would be the return in Bradford of a Conservative administration under Councillor Pickles.

§ Mr. Paul Marland (Gloucestershire, West)
I congratulate my right hon. Friend on his willingness to continue to review the workings of the community charge, to update and improve it. Is he aware of the tremendous resentment among those who have paid against those who have not paid the community charge? I am advised that the costs of taking the non-payers to court is not covered by their contribution to the legal costs. Will my right hon. Friend consider increasing the contribution to the legal costs of court appearances made by non-payers of the community charge?

§ Mr. Patten
I shall look at the point. I think that the broad thrust of my hon. Friend's argument is entirely right. There is growing resentment on the part of those who have paid against the small minority who are freeloading. I hope that local authorities will remember that they have the whole of next year to collect any community charge that has not been paid this year. I hope that they will make a sensible distinction between what is uncollectable and what is uncollected, and that what they regard as uncollectable will be as small a percentage as possible.

§ Ms. Joan Walley (Stoke-on-Trent, North)
It is all very well for the Secretary of State to talk about meeting local authorities, but precisely what account has he taken of the all-party representations made by Staffordshire county council, which made it clear that the first year we stood to lose £33 million from our budget because of the way in which the SSA was formulated? Will he tell me, now that we will be below the 19 per cent. national average, how he expects Staffordshire county council to afford the extra spending that has been highlighted by the report of its social services department on statutory social services?

§ Mr. Patten
I imagine that when the hon. Lady looks at the SSA for her district council and sees that it has risen by more than the average she will sing the Government's praises. The figures for local authorities fall either side of 19.4 per cent.—in some cases above it, as in the case of the district council to which she referred, in some cases below it, as in the case of her county council, although only fractionally, I think.

§ Mr. Stephen Day (Cheadle)
Overspending local authorities such as Stockport always complain that they are treated unfavourably compared with their neighbours. Will my right hon. Friend confirm that the formula and criteria that apply in determining grants apply equally to all local authorities?

§ Mr. Patten
Absolutely right: they apply to all local authorities. Opposition Members tend to ignore the substantial contributions made to Labour local authorities, but I am sure that in the course of the debates that may lie ahead we shall have many opportunities to point out those contributions.

§ Mr. Peter Hardy (Wentworth)
The Secretary of State will expect his statement to receive justifiably careful scrutiny, but will that scrutiny reveal considerable changes in the method of reaching his determination? For example, will there be much less reliance on the outdated figures contained in the 1980–81 census, and will there be an end to the assumption that snow lies on the ground more in Westminster and Wandsworth than in the rest of the country?

§ Mr. Patten
I do not accept the hon. Gentleman's last point. He should look at the figures for places such as Lambeth. When he examines the figures that I have announced and the methodology, he will see that we have made a few adjustments this year. They are all entirely justified. I think that the next census is in 1991 and will have to be taken into account in future distributions.

§ Mr. David Madel (Bedfordshire, South-West)
My right hon. Friend will be aware of the long history of overspending by the Labour-Liberal Democrat-controlled Bedfordshire county council, which is presently spending 1006 15 per cent. more than its budget last year. May I take it that, if that is repeated, in 1991–92 the council will be charge-capped? Does he agree that next year the council should put the community charge payer first rather than its big spending programmes?

§ Mr. Patten
I think that the local authority to which my hon. Friend refers increased its income this year by about
16 per cent. My hon. Friend is entirely right to say that that is unacceptable and that local authorities such as that one and others should budget in future to provide decent services at a price that community charge payers can afford. That is wholly within the bounds of the possible as some local authorities, including some comparable to the one mentioned by my hon. Friend, have proved.

§ Mr. Ron Brown (Edinburgh, Leith)
Surely the central point is that the Tory Government have been cheating on local councils for some time. Over the last 10 years about £10 billion has been cut from local budgets because state funding has been denied to many parts of England and Wales simply on the diktat of the Government. He will find resistance to the poll tax all over the country because many people cannot afford to pay and will not pay. A short time ago—

§ Mr. Speaker
Order. The hon. Gentleman should bring his remarks to a close. The statement does not affect Scotland and perhaps I should not have called him.

§ Mr. Brown
Some 30,000 people were on the streets of London protesting against the poll tax. If that number were multiplied several million times, it would indicate the strength of opinion against the Government, their policies and the poll tax.

§ Mr. Patten
The hon. Gentleman will recall that some of those who demonstrated recently in London were on anarchist weekend breaks from other European capitals.

§ Mr. Barry Field (Isle of Wight)
Does my right hon. Friend know that the Isle of Wight is the biggest and best attraction in the south for visitors from England? I thank him for the tourist calculaton revision. Can he reassure me that his Department have looked carefully at the arguments set out in the document "An Island Apart" and will he confirm that the SSA calculation takes into account built-up roads? If the Isle of Wight had a universal speed limit, it would automatically get an increase in the standard spending assessment.

§ Mr. Patten
My hon. Friend was one of those who made eloquent representations about changing the SSA methodology and taking proper account of tourism. We listened to him as we listened to others. As I said earlier, of course we shall take account of further representations on the SSA methodology. I am sure that if we implemented all the representations made by my hon. Friend the Isle of Wight would get rather more.

§ Mr. John Evans (St. Helens, North)
The Secretary of State's refusal to improve the social services SSA for St. Helens and the other northern metropolitan authorities is an outrage. Will he give an absolute guarantee that the Government will pick up the entire bill for whatever settlement the teachers receive and that poll tax payers will not be additionally burdened? Will he make it clear to his hon. Friends that St. Helens is a well-run and efficient local authority?

§ Mr. Patten
When the hon. Gentleman looks at the figures, he will see that there is a substantial increase in the SSA for St. Helens. He may have heard me say earlier that the education element in the SSAs is increasing by 16 per cent. I am sure that he is also aware of the point made extremely strongly in an admirable letter in this morning's edition of The Independent from the director of the South Bank polytechnic, a former inspector with Her Majesty's inspectorate. I am sure that the hon. Gentleman will accept that there is no mechanistic relationship between the amount spent on education and the quality of that education.

§ Mrs. Edwina Currie (Derbyshire, South)
Is my right hon. Friend aware that we would be delighted to have job cuts in Derbyshire in the overflowing publicity department of the county council? We would love to have cuts in the £17 million subsidy, as it will be next year, for school meals in Derbyshire for which the price will not have increased for 10 years. That is where the grants go in Derbyshire. They subsidise baked beans and free council newspapers. If the council carries on like that next year, will my right hon. Friend cap it again?

§ Mr. Patten
I hope that the leader of Derbyshire county council will pay rather more attention to my hon. Friend's argument than he has done in the past. I also hope that Derbyshire will take account of the criteria that I have announced and will bring in a budget to provide good services at a reasonable cost for Derbyshire charge payers, who have been much put upon in the last few years.

§ Mr. Harry Barnes (Derbyshire, North-East)
Under the SSA for north-east Derbyshire, 45 per cent. of the bill has to be paid by poll tax payers and less than 15 per cent. comes from various forms of central Government funding. Is not this due to the fiddled nature of the SSA formula? If an area is mixed and has rural and urban provision, it loses on density and sparsity grants. If people move out of the area to work, they also lose. If the area has a mixture of middle and working class people, it fails to meet the social deprivation provisions. That affects Derbyshire as a whole, which is sorely treated by the Minister.

§ Mr. Patten
No, that is not true. First, the hon. Gentleman's constituency will see a substantial uplift in SSAs. Secondly, we take account of social deprivation. I am sorry that my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has left the Chamber, because, as experts on local authorities in all parts of the House will know, it is difficult to find an adequate way of reflecting some hon. Members' concerns about economic factors in the SSA methodology. We shall continue to look at any fresh evidence that is received on that.

§ Mr. Patrick Thompson (Norwich, North)
I welcome my right hon. Friend's early and clear statement on charge capping. Is he aware that in Norwich there is concern that community charge bills may be elevated as a result of a non-payment campaign? If that happens, will he make sure that the blame is placed firmly on those who took part in that campaign—the Labour-controlled Norwich city council? Will he use his charge-capping powers where appropriate?

§ Mr. Patten
My hon. Friend is right once again to draw attention to the chance that we have given local authorities 1008 to budget sensibly by setting the criteria on charge capping ahead of the season during which local authorities are starting to construct their budgets. I repeat that, in the light of my statement, local authorities that are capped will themselves have deliberately chosen that course of action.
My hon. Friend mentioned collection. I am sure that every responsible hon. Member believes that everybody should pay his community charge. If, at the end of the year, some community charges are uncollected, local authorities have next year to collect them. However, we must remember that some local authorities, of which Lambeth is one, are still collecting rates from years ago.

§ Miss Kate Hoey (Vauxhall)
In working out his standard assessment charge, has the Secretary of State taken into account the decision made last week by his own Department that there would be an end to the subsidy for private sector leasing for homeless families? Does he realise the repercussions that that will have on people in bed-and-breakfast accommodation, not just in boroughs such as Lambeth, but in many Tory authority areas? Does he appreciate the extra charge that that will place on the poll tax? Will he say more about how he considered the question of homelessness in working out the SSA?

§ Mr. Patten
The hon. Lady was asking whether I took that into account in setting the level of the figures that I announced earlier. The answer to that question is, yes I did. On homelessness, as the hon. Lady will know, last year we made available, over two years, a package worth £250 million for London and the stress areas. We shall make further announcements about rooflessness and homelessness later next month.

§ Mr. Kenneth Hind (Lancashire, West)
My right hon. Friend will be pleased to know that the people of Lancashire, in Blackpool, Blackburn, Hindburn, Burnley, Pendle and Rossendale, are grateful for the area protection grant. Will he confirm that, as a consequence of his announcement of total external support, £600 for every community charge payer in Lancashire will go to their local authorities, from Government and industry?

§ Mr. Patten
Local authorities in Lancashire will be receiving substantial support from Government and business ratepayers. I hope that local authorities in Lancashire, particularly the county council, will recognise that fact and will also recognise their responsibility to set a prudent budget, which is more than Lancashire county council did this year.

§ Mr. David Clelland (Tyne Bridge)
The Secretary of State has made much of the increases in SSAs, but does he not understand that a 19 per cent. increase in an unrealistic SSA does not result in a realistic one? Unless the SSA is allied accurately to what a council needs to spend to maintain its services, the council will be caught by the ridiculous criteria for poll tax capping. That will mean that the city of Newcastle upon Tyne will find it impossible to contain its spending within a 9 per cent. increase, which is what the increase will be, as inflation is running at 10.9 per cent., with the result that there will be severe and painful cuts in services, which will be entirely his responsibility.

§ Mr. Patten
I am not sure what the hon. Member would regard as an acceptable increase in total standard spending or in SSAs. Let me give him one example of what we are being asked to do. Some local authorities, although not all, 1009 say that, instead of allowing for total standard spending next year of £39 billion, we should have allowed for £41 billion. That would have meant an increase in local authority spending of one third in two years. I think that that is not tolerable, and I doubt whether the shadow Chancellor of the Exchequer would regard that as tolerable, certainly not in his Gladstonian mode.

§ Mr. James Cran (Beverley)
Will my right hon. Friend take this opportunity to speak directly to my constituents, who happen to be the paymasters for local government in Humberside, and assure them that his proposals will lead to no repetition next year of what happened last year, whereby Labour-controlled Humberside county council increased its spending by 11.5 per cent. and took about £70 per person more than was necessary? If he cannot do that, will he use the opportunity of the boundary commission report that he has on his desk to give us a permanent solution to overspending in Humberside by abolishing that council?

§ Mr. Patten
I note my hon. Friend's enthusiasm for the consequences of the Local Government Act 1972. I have my own views on aspects of that legislation. I have today set out clearly and explicitly my firm intentions about the criteria that should be applied to local authority excessive spending next year. I have explained how I intend to use both the powers that are available to me under the Local Government Finance Act 1988. I hope that it will not be necessary to use those powers, but if local authorities try to place on their charge payers a burden that is too substantial, I will not hesitate to use my statutory powers.

§ Ms. Hilary Armstrong (Durham, North-West)
How does the Secretary of State justify the change in weighting affecting the under-fives, which will penalise those authorities such as North Tyneside and Durham, which are Labour authorities, that provide the opportunity for the youngest of children, while at the same time ensuring that authorities such as West Sussex, which provide virtually no opportunity for children under five, will be quids in? He could have saved money. He has chosen instead to make sure that this country stands alone in Europe as the one nation that will not support opportunities for under-fives.

§ Mr. Patten
I know that, like me, the hon. Lady is extremely interested in this subject. The SSAs for her constituency have gone up by well above the average figure, which I mentioned earlier. As for the overall weighting given to the additional educational needs indicator under the SSAs, we have increased it from 12 to 24 per cent. However, as I said earlier, as a result of an adjustment of 1.5 per cent. it comes back down to 22.5 per cent. next year. I can assure the hon. Lady that I was pressed by local authorities to do a great deal more.

§ Mrs. Maureen Hicks (Wolverhampton, North-East)
My right hon. Friend has dealt with homelessness and education. Does he agree that while there is a ridiculously wasteful situation of 100,000 empty council homes and 2 million empty school desks—a fair share of which are in my local authority—it is right to keep making councils more accountable? I welcome his decision to extend his powers on capping, because the community charge payers have to pick up the bill for the waste.

§ Mr. Patten
It is true that empty houses and half-empty schools cost community charge payers a great deal of money. We have spoken about Wandsworth a number of times today, and we shall have opportunities to celebrate its successes in the future. One reason why it has managed to do so well is that it has a much better record on issues such as empty houses and schools than other local authorities.

§ Mr. Jim Cousins (Newcastle upon Tyne, Central)
Does the Secretary of State accept that bankruptcies are rising, the economy, especially in the retail sector, is having a hard time, there are more than half a million appeals against business rate revaluations, and that in my city a third of the business ratepayers are in arrears with their payments? Will he guarantee that local authorities will riot be thrown into crisis because of a shortfall in the collection of business rates?

§ Mr. Patten
The hon. Gentleman has underestimated the number of appeals. I think that the figure is more like 600,000, although we were expecting about I million. He will know that one result of revaluation and the UBR is that businesses, especially manufacturing, and warehousing, outside inner London and certainly in the north have done particularly well. Overall, small shops will be paying 2 per cent. less in real terms than they paid last year. I t is true that there are some areas where the retailing sector is going through difficulties. That has much more to do with the necessary measures that we are taking to abate inflation than with the UBR. The hon. Gentleman might remember that business rates are typically about 1 to 2 per cent. of turnover and represent 25 per cent. of occupancy costs in business.

§ Mr. Richard Holt (Langbaurgh)
My right hon. Friend's statement will be welcomed in the north of England, particularly as the full realisation of the transfer of UBR income from the south to the north shows a real commitment in regional policy to that area. I am pleased that my right hon. Friend has listened also to the many representations made to him. Will he continue to keep under review the anomalous situation whereby, in low rated houses in the north of England, individuals are being unfairly treated by the alteration in their rateable value when it comes to calculating their community charge?

§ Mr. Patten
It was largely because of representations from my hon. Friend and other hon. Friends in similar constituencies that we concluded that it was necessary to reduce the threshold for the transitional relief scheme from £3 to £2, with the result that we shall be spending about twice as much on the scheme, which will go overwhelmingly to people living in low rateable value accommodation.
My hon. Friend has also called on us on several occasions to extend the transitional relief scheme and not to phase it out as rapidly as we had been proposing, and we responded to that as well. When my hon. Friend's constituents in low rateable value accommodation find themselves as couples receiving £52 more next year than this year, they will have my hon. Friend to thank.

§ Mr. John P. Smith (Vale of Glamorgan)
Is the Secretary of State aware that nothing that he has said this afternoon changes the fact that in my constituency Tom Jones, the international singing star, will be paying exactly the same poll tax as an old-age pensioner who came into 1011 my surgery on Saturday and broke down in tears because she is on a fixed income of less than £70 a week and cannot afford to pay the poll tax? What is the right hon. Gentleman's honest opinion?

§ Mr. Patten
First, if Tom Jones is as well-heeled as I imagine he is, he will be paying about 15 times as much as the poorest people in the community if account is taken of his contributions through tax and those through the community charge.
Secondly, I am sure that a single pensioner in the hon. Gentleman's constituency would be horrified at the prospect of once again being faced with a rating system, especially one that was operated after revaluation, and paying the same in rates as four or five wage earners in the property next door.

§ Sir William Shelton (Streatham)
My right hon. Friend may be aware of the damning report produced by the district auditor last month on Lambeth council's finances. He said, among other things, that by May or June of this year about 40,000 community charge bills had not been sent out. The new chief executive has spoken of near catastrophe in the finances and as a result of the corruption of the administrative system. Will my right hon. Friend confirm that should there be a need to cap the community charge of Lambeth next year, despite the fact that Lambeth has the highest total external support of any London borough, he will have the necessary powers in place by next spring?

§ Mr. Patten
It is my intention to ensure for the future that there is not a scintilla of doubt about local authorities' budgets having to be transferred into a lower level of community charge after capping. It is astonishing that a local authority should be so keen to ensure that whatever happens to its budget its community charge payers will be clobbered. I feel extremely sorry for my hon. Friend's constituents. I am horrified at the activities of a Labour local authority that has consistently governed a borough so irresponsibly for so many years.

§ Mr. Speaker
Mr. Stott.

Several Hon. Members
Hear, hear.

§ Mr. Roger Stott (Wigan)
You must call us in alphabetical order, Mr. Speaker.

§ Mr. Speaker
Front-Bench spokesmen do not get quite the same consideration.

§ Mr. Stott
If the Secretary of State wanted an example of a local authority that managed its affairs well and was responsible, reasonable and non-profligate, does he agree that he would need to look no further than the metropolitan borough of Wigan? The price that we paid for our prudence and efficiency was to be charge-capped by the right hon. Gentleman earlier this year. He arrived at that judgment on the basis of a formula which has been widely attacked by my right hon. and hon. Friends. The formula is fatuous in the extreme and dishonest. When will the right hon. Gentleman and his Ministers listen to the reasonable and moderate men and women who lead our councils, who put to him views that he has already heard about the appalling state of affairs that face authorities that have been poll tax-capped and the iniquitous way in 1012 which the SSA formula has affected them? What he has said and outlined this afternoon amounts to no more than tinkering at the edges, without taking into consideration anything that local authorities have told him.

§ Mr. Patten
Would that it were the case that all those who run our local authorities were moderate and responsible men and women. I concede that in many areas there are authorities that are run by a majority of Labour or Conservative councillors where individuals are acting in the best traditions of public service. Unfortunately, not a million miles away from the hon. Gentleman's constituency, as he will know, there are examples to the contrary.
One of the major representations made by leaders of the several councils which we capped this year was that before they set their budgets in future we should set out without any doubt or qualification our intentions on criteria for charge capping so that they could budget accordingly. That is why I have made my statement as early as I have. I do not believe that the formula that we have announced could possibly be argued by anybody as being defective. The hon. Gentleman's constituency has received, I think, £69 through the safety net, as was its due.

§ Mr. David Martin (Portsmouth, South)
In welcoming the more generous transitional arrangements for small businesses where the owner lives over the shop, may I ask my right hon. Friend to give further guidance about the arrangements for bed-and-breakfast accommodation? It is a matter on which he has received many representations, including those from myself.

§ Mr. Patten
As my hon. Friend will know, we put out some proposals for consultation earlier in the year. We have received many representations, and these have demonstrated that there is not a consensus. We shall soon be making our announcement on the arrangements that we shall use to try to square the various circles that have been presented to us.

§ Mr. Dick Douglas (Dunfermline, West)
We know that Scotland was the trailblazer for the poll tax. We know also that the Secretary of State's statements are often trailblazers for those of the Secretary of State for Scotland. I ask the Secretary of State for the Environment to clarify one or two brief points.

§ Mr. Speaker
One brief point, please.

§ Mr. Douglas
In paragraph 22, what does the right hon. Gentleman mean by "job-related houses"? Do these houses have to be owned? What occupations is the right hon. Gentleman talking about? Are the police included?
Secondly, will the Secretary of State confirm—

§ Mr. Speaker
Order. That is not fair. Everyone else has asked only one question. The hon. Gentleman has no great status in this, as the statement does not affect Scotland.

§ Mr. Douglas
I have the status of having had a sheriff officer in my house to—

§ Mr. Speaker
Order.

§ Mr. Douglas
With respect, Mr. Speaker—

§ Mr. Speaker
Order. This statement concerns England.

§ Mr. Douglas
I know that it is about England. Let me tell right hon. and hon. Members that if they had paid attention to legislation that passes through the House that 1013 will affect Scotland, it would not have been necessary for the Secretary of State to make his statement this afternoon.
As for the balance of local government expenditure, am I right in saying that the Secretary of State now expects a third of local government revenue to come form the poll tax? If the right hon. Gentleman is thinking about yielding to temptation, he should understand that people are not yielding to temptation when it comes to non-payment. Instead they are yielding to the temptation of having to feed their bairns and look after their old, rather than pay a hated tax.

§ Mr. Patten
Many of the definitions that we shall use for the standard charge are in tax law. If the hon. Gentleman wants more information about that, I should be happy to let him have it.

§ Mr. Douglas
Will the police be included?

§ Mr. Patten
Hold on a moment. These are categories that we shall have to consider in relation to existing tax law. I have mentioned some categories and some individuals who will be affected. The hon. Gentleman asked an extensive question and I am trying to answer it.
Secondly, the hon. Gentleman asked about the proportion of local government spending that would be paid for by the community charge. Taking account of contributions for transitional relief and community charge benefit, that which is met by the community charge payer will be just over 25 per cent. There will be variations from one part of the country to another. I think that the hon. Gentleman will find that when he studies the comparisons between Scotland, England and Wales.

§ Mr. Harry Greenway (Ealing, North)
Is my right hon. Friend aware that the new Conservative-controlled Ealing council will certainly reduce the wickedly wasteful spending of its Labour predecessor, and with it the community charge? Does he know—

§ Mr. Gould
What about services?

§ Mr. Greenway
Services will be improved at the same time. Is he aware that business is being attracted back into Ealing because we have a good, sensible Conservative council? Will he ensure that the people of Ealing and its council benefit from the additional business rate that will be generated by business being attracted back to Ealing?

§ Mr. Patten
I am sure that a Conservative council in Ealing will encourage economic development through several of its activities. I am sure, for example, that it will be able to provide good-quality services at a reasonable cost, which will encourage several commercial sectors, and that it will encourage local residents such as the Leader of the Opposition, who I am sure must be grateful to have such a good local authority.
May I return to a question that I was asked earlier by the hon. Member for Dunfermline, West (Mr. Douglas)? I said that we would be using definitions that are familiar in tax law. [Interruption.] Let me continue. I said that we were talking about people such as clergymen, service men and teachers. If a policeman has to live on the job, as it were, but has another home, he will qualify, too.

§ Mr. John Greenway (Ryedale)
I thank my right hon. Friend for what appear to be substantial increases in the SSAs for North Yorkshire and North Yorkshire districts. 1014 As he will know, those increases are based on a target community charge of £380, which is £102 higher than this year's charge. Is not it clear that authorities that set community charges at or about the target for this year will have to spend less than the SSA for next year, or there will be large rises in community charge bills?

§ Mr. Patten
Yes, that is certainly the case. I very much hope that local authorities will take account of that when considering their responsibilities to their community charge payers.

§ Mr. Andrew Mitchell (Gedling)
Will my right hon. Friend confirm that for constituencies such as mine, which has a low-spending, effective and efficient Conservative-controlled borough council, but which suffers under a high-spending and profligate socialist county council, his new, improved, restyled Bill, when issued next year, will make clear who is responsible for overspending?

§ Mr. Patten
I very much hope that that will be so. It will make clear what proportion of the bill is the responsibility of the county council.

§ Mr. Michael Stern (Bristol, North-West)
Is my right hon. Friend aware that the stringent criteria that he has set out this afternoon for maximum spending by councils will be particularly welcome to hard-pressed community charge payers in areas such as the Labour and parrot-controlled county of Avon? Does he agree that it is to be hoped that one effect of the criteria that he has announced will be that instead of making just financial adjustments councils will, for the first time, consider their spending levels?

§ Mr. Patten
I agree with my hon. Friend, not least in relation to Avon, in which I also have an interest.

§ Mr. Tony Favell (Stockport)
More grant for town halls means more taxes. Will my right hon. Friend take an early opportunity to find out from the Opposition's spokesman whether he is in favour of more grant for town halls? I am sure that the shadow Treasury team would like to know. If not, could we not have gone home an hour and a half ago and taken the dog for a walk?

§ Mr. Patten
The Opposition are opaque on that issue. When the shadow Chancellor of the Exchequer is here they are in favour of fiscal prudence, but when their other Front-Bench spokesmen are here they are in favour of spending more money.

§ Mr. Ian Bruce (Dorset, South)
I welcome widely the three changes in tourism grant, education and police, which are part of the submission by Dorset county council and the district councils to my right hon. Friend, but, before the final settlement is reached, will the Government reconsider the cost adjustment factor? The Government say that, in logic, certain counties will have to pay more because of the cost of living in an area, but drawing a line around the south-east and excluding counties such as Dorset, Cambridgeshire, Wiltshire and Avon will cost us much money. Hampshire is receiving an extra 4.5 per cent. That would be another £18 million on our grant, which would take it from £28 million to £46 million. It makes a great deal of difference. Dorset county council overspent its SSA by 4 per cent. It would have been below its SSA if we had had that money last year.

§ Mr. Patten
At present, we have a satisfactory way of calculating differences in costs only on a regional basis, but I continue to be prepared to consider other suggested formulae.

§ Mr. Michael Jack (Fylde)
My right hon. Friend may be aware that in the past three years Lancashire county council has spent £2,400 million of the public's money but posted efficiency savings of only some £22 million. That is a pathetic performance. The people of the Fylde coast, while welcoming his excellent announcement on tourism and the money that that will bring, will worry that the inefficiency of Lancashire county council will remove the benefits that he has conferred on them. To that end, so that they may judge its efficiency, will he publish figures of best practice in local government so that they can keep a close eye on the robber barons in county hall?

§ Mr. Patten
My hon. Friend will know of the part that the Audit Commission plays in encouraging best practice in local government. He has always been interested in greater energy efficiency. The Audit Commission demonstrated not long ago that local authorities could save £100 million a year by best practice in energy efficiency.

§ Mr. Jacques Arnold (Gravesham)
May I congratulate my right hon. Friend on switching his population analysis from the Office of Population Censuses and Surveys figures, which unfairly underestimated the population of some boroughs, notably Gravesham, to the numbers on the community charge register, which will favour efficient registering authorities? May I also express my disappointment at the continuing failure to classify the borough of Gravesham as being among the fringe boroughs? It continues to be the only district so close to London that is not classified as a fringe borough.

§ Mr. Patten
I am afraid that I have not quite done what my hon. Friend thought in the first part of his question that I had done, but I shall nevertheless look into that issue and into the second point that he made and perhaps write to him on both.

§ Mr. Chris Butler (Warrington, South)
Does my right hon. Friend think that it is fair for councillors to continue to collect allowances that are paid for the community when those councillors do not pay their community charges, or that itinerants who use community services so easily continue to escape their liability?

§ Mr. Patten
Other people's consciences continually amaze me. I cannot understand how Labour councillors can conceivably collect allowances and refuse to pay their community charge, while expecting other people to pay their charges and taxes to pay for their allowances.

§ Mr. David Blunkett (Sheffield, Brightside)
Has the Secretary of State examined his conscience about the impact of poll tax capping on children in schools, on the elderly receiving social services and on those in need? Will he confirm that if we take the settlement for this year with the one that has been announced this afternoon for next year, we find that the contribution from central Government to local spending has decreased from 38.6 to 35 per cent., and that the amount from the poll tax is predicted to increase from 28.6 to 32.3 per cent.? As a consequence, we see not an increase of 7.6 per cent. in the 1016 amount of central Government grant but a revenue support grant increase, year on year, of 1.9 per cent., which is nothing like what has been suggested.
Will the right hon. Gentleman also confirm that, in the major change in the assessment of the other services bloc for tourism, which was welcomed by Conservative Back Benchers as though it were a major change, he took into account the feelings of his constituents in Bath, such as Mr. Troop, who on the "World at One" today, speaking as a business man, said that Thatcherite sustained growth, theme park Britain will not be able to feed or clothe itself in the future? He said that at that rate—I think that he was talking about the national business rate—we will be eating novelties and postcards.
Does the right hon. Gentleman have any comfort for those in hard-pressed industrial areas who want unemployment taken into account in standard spending assessments and want the safety net retained rather than phased out because of the effect on services in the real world where this rate matters, not the postcard world of those in Eastbourne and elsewhere who have praised the Government this afternoon?

§ Mr. Patten
Mr. Troop is one of my constituents, although not one whose views are shared by the Bath Association of Retailers or the Bath chamber of commerce. I am sure that, in the light of what he apparently said on radio, he will be delighted by the fact that manufacturing industry outside inner London will pay less in rates than under the old system. That seems to me to be precisely the sort of issue that Mr. Troop—who, incidentally, is in retailing—would very much welcome.
On the adjustments that we have made to SSAs, I am sure that the hon. Gentleman is pleased that we have listened to the representations that we received from Sheffield about heavy goods vehicles and have taken them into account in the adjustments.
As for support for local authorities, the most important figure is the AEF figure, which I have given several times—a 12.8 per cent. increase. The hon. Gentleman overlooks the scale of the specific grants and special grants that we are paying. Overall, the increase in grants is 7.65 per cent. I do not expect the hon. Gentleman to blazon that argument, because it does not appear to suit his own. What the hon. Gentleman conveniently ignores in the other figures that he gave is the contribution that we make to community charge payers through the transitional relief scheme, community charge benefits and so on.
On the hon. Gentleman's first point about spending on education, I draw his attention to a letter this morning in The Independent by the director of the South Bank polytechnic, pointing out the inspectorate's work in Labour boroughs which spend a great deal of money on education but which were badly letting down their pupils in the past. Thank heavens we are starting to get away from that.

§ Mr. Speaker
I have been pleased to be able to call every hon. Member who wished to put a question to the Secretary of State because today there have been exceptional circumstances. I now understand that it is not necessary for me to call on the Government Front Bench to move motion No. 2 on the Order Paper. I would not wish my actions this afternoon to be taken as a precedent. 1017 I wish that it were always possible to call all hon. Members who wish to put questions, as I was able to do today. I think that the Secretary of State now deserves a cup of tea.