Local Government Finance (England)

HC Deb 29 January 1991 vol 184 cc800-88

4.4 pm

The Secretary of State for the Environment (Mr. Michael Heseltine)

I beg to move, That the Revenue Support Grant Report (England) 1991–92 (House of Commons Paper No. 93), a copy of which was laid before this House on 21st January, be approved.

Mr. Speaker

With this it will be convenient to consider the next four motions on the Order Paper: That the Population Report (England) (No. 2) (House of Commons Paper No. 94), a copy of which was laid before this House on 21st January, be approved. That the Revenue Support Grant Distribution (Amendment) Report (England) (House of Commons Paper No. 95), a copy of which was laid before this House on 21st January, be approved. That the Special Grant Report (No. 2) (House of Commons Paper No. 96), a copy of which was laid before this House on 21st January, be approved. That the Rate Support Grant Supplementary Report (England) 1989–90 (House of Commons Paper No. 12), a copy of which was laid before this House on 15th January, be approved. Divisions will take place at 10 o'clock.

Mr. Heseltine

The House will expect me to say something about the progress of the review of local government structure and finance that I announced on 5 December. As I have said, the review will be a thorough one. I wish to consult widely. I have already had a constructive meeting with the hon. Member for Berwick-upon-Tweed (Mr. Beith), and I have agreed to meet him again. I have met the leaders of the local authority associations, and I shall meet them again next week. I have met individual local authority leaders from all parties and 1 have an extensive programme of further meetings. I have also arranged to attend a meeting between my right hon. Friend the Secretary of State for Scotland and the hon. Members for Moray (Mrs. Ewing) and for Dunfermline, West (Mr. Douglas). My hon. Friends the Minister of State and the Parliamentary Under-Secretary of State are also consulting widely.

I repeat my invitation to the parliamentary Labour party. It seems curious that the Labour party is co-operating in my review at every level, with the exception of the party leadership.

Depending on the progress of our discussions, I hope to give a first indication of our thinking in the spring. By the nature of the review, anything that I can say then will be unlikely to deal with all the issues that must be addressed, but it may make sense to focus the national debate—to rule some things out and some things in.

I have already announced to the House changes that will have major practical implications for the incidence of the community charge. The community charge reduction scheme will provide £1.7 billion of help to more than half of all charge payers next year. Together with the settlement that we are discussing today and the community charge reduction scheme, I believe that local authorities will have it in their power to hold bills actually paid by charge payers to below £300 on average.

The help will be particularly directed at those couples and single people who experienced the largest increases in their bills last year. Virtually all those who previously had rates bills below three quarters of the average for their areas will benefit.

The House will wish me also to address the issue of the community charge as it affects our service men serving in the Gulf.

Mr. Robin Maxwell-Hyslop (Tiverton)

Before my right hon. Friend leaves his first point, there is a certain amount of lack of information. What about people who had no rates bills at all because they were not householders and who now get community charge bills?

Mr. Heseltine

If such people are disabled or elderly, they are entitled to special assistance, which is part of already established regimes with which the House will be familiar.

Mr. William O'Brien (Normanton)

What about the others?

Mr. Heseltine

That is the answer to the question. The schemes that exist have already been fully explained to the House. If no scheme relates specifically to them, they are liable to the charges. One of the purposes behind the introduction of the community charge was to bring into its incidence all the adults in the community. Therefore, it follows that people who did not qualify as home owners before the community charge was introduced would be likely to come within its incidence afterwards. That was one of the necessary purposes.

Mr. Jeff Rooker (Birmingham, Perry Barr)

Will the Secretary of State point out by example what he meant by help relating to disability? There is no such help. It is based only on income. That is not the answer to the question posed by his hon. Friend for Tiverton (Mr. Maxwell-Hyslop).

Mr. Heseltine

The hon. Gentleman is not correct. Disabled people qualify for the transitional relief scheme and for the new community charge reduction scheme. [Interruption.] I have done my best to answer the question.

Several Hon. Members

rose—

Mr. Heseltine

We have had two specific questions, to which I have given an answer. There is a great deal of detail to deal with in this speech and I intend to make some progress. I intend to deal with the important issue of the affect of the community charge on our service men in the Gulf.

On 5 November, we advised local authorities that, where a service man is posted until further notice outside Great Britain, community charge registration officers should use their discretion to assume that his liability for the personal community charge ceases from the date of posting. There are arrangements for service liaison officers to inform community charge registration officers of postings to enable this arrangement to work efficiently. The spouse of any service man who is posted will continue to be liable to the personal charge where she remains resident in this country. We have advised authorities that, where a service man has an outstanding community charge liability at the date when he is posted, no action should be taken to recover the amount due until the service man's return.

Mr. Julian Critchley (Aldershot)

My right hon. Friend will be aware that in Rushmoor, which covers Aldershot and Farnborough, the register has dropped by more than 2,000 because of the number of service men going to the Gulf. Were the revenue support grant to remain the same as last September, most of my constituents would be paying £14 a year more in poll tax. Is he able to help with that?

Mr. Heseltine

I am grateful to my hon. Friend for putting that question to me. I have considered the effect of service men leaving their local authority areas to serve in the Gulf. Most local authorities would be able to absorb the problem within the normal flow of population which effects all such movements of people from one year to the other. That deals with the problems of most authorities when service men move overseas.

My hon. Friend the Member for Aldershot (Mr. Critchley) is seeing my hon. Friend the Minister for local Government and Inner Cities tomorrow about the particular consequences for his constituency and his local authority, given that many service men are involved. We have no specific proposals, but we should like to listen to what my hon. Friend has to say. If it seems that there is a substantial problem, we may consider it in the light of the consultation.

Mr. Dave Nellist (Coventry, South-East)

What happens—God forbid, all of us hope that this does not happen—if a service man who is exempted from the point of departure from these shores does not return? Will their spouses, because of joint and several liability and as has happened with families of trawlermen under Scottish legislation, be levied with a tax for which that service man was liable before leaving these shores? Yesterday, The Guardian and The Times reported that the Department is considering abolishing court hearings for non-payers. That will mean that service men's widows, instead of being prosecuted by councils, will have to initiate proceedings to prove their innocence, unless the right hon. Gentleman says that those service men will be totally exempt.

Mr. Heseltine

The hon. Gentleman raises a hypothetical circumstance which is within the discretion of CCROs. We hope that those circumstances will not arise, but I have explored them and will consider them further if necessary. The existing arrangements are adequate to cope with such a—

Mr. John McAllion (Dundee, East)

rose—

Mr. Heseltine

No. The House understands that these matters provide for endless intervention, and one makes no progress with one's speech. Many of the questions that will occur to hon. Members will be covered by my remarks.

My right hon. Friend the Secretary of State for Defence made it clear in response to a question from my hon. Friend the Member for Portsmouth, South (Mr. Martin.) on 18 October that no service man was to be financially worse off as a result of service in the Gulf. I can confirm that that assurance applies to auxiliaries and territorials who are posted outside Great Britain and become liable to the standard community charge as a result. That arrangement already applies to regulars. The Ministry of Defence will pay to such people compensation equal to any excess of their standard charge liability over the personal community charge which they had been paying before posting.

I should like to say a word about the apparent anomaly that has emerged in the different treatment of single and married service men for community charge purposes. Under Queen's Regulations, a single soldier who has been living in barracks is deemed to have lost any right to return to that accommodation after an absence of 61 days. Our advice to local authorities is that, if the service man returns within that period, he is liable for the personal charge during his absence, whereas, if he returns after 61 days, he should be treated as having had his sole or main residence elsewhere during that period and should not be liable for the personal charge at the address.

However, personnel living in married quarters or in their own homes are assumed not to have changed their sole or main residence until they have been absent for six months—by analogy with the practice adopted by CCROs in respect of other groups, such as merchant seamen. So it is possible for two people—one single, and one married—to be posted to the Gulf, for both to return after, say, 62 days, and for the single person to have no personal community charge liability for that period even if he returns to the same barracks, whereas the married soldier is liable for the whole period. This may seem like an anomaly, but, of course, it applies to any posting outside Great Britain, not just postings to the Gulf.

Also, there is some analogy with the position under the rating system. The single soldier posted outside Great Britain would have ceased to have liability for the rating element of his accommodation charge, whereas the married soldier would have remained liable for a rating charge in respect of his family home. So I do not think that this is the anomaly that it may at first appear to be.

The House will appreciate that the last time we issued local authorities with guidance on the treatment of service personnel was early in November, and that events since then have moved on. There have come to light new cases that were not wholly covered by our guidance. We therefore plan to issue to authorities fresh guidance building on the advice that we have already given them. I shall put details before the House at the earliest opportunity.

The hon. Member fore Sheffield, Brightside (Mr. Blunkett) has today written to me suggesting that we should go further, and introduce legislation exempting from the community charge all service men in the Gulf. I am not convinced that this is necessary. I believe that, if community charge registration officers use their discretion in the way we have advised, service men will be treated equitably. If, however, there emerge problems that can be dealt with only by legislation, I shall come back to the House as soon as I can.

At this time of the year, is is customary to hear of cuts—often of horrendous proportions—in local government services. Indeed, one could be forgiven for believing that the 1980s in some way saw the decimation of what local government was asked to provide.

It may help hon. Members if I remind them of the simple facts.

When the Conservative Government were elected in 1979, local authority manpower—at nearly 2 million full-time equivalents—was at an all-time high. In the following two years, we managed to persuade authorities to look more critically at their manpower requirements. This resulted in a welcome reduction of 80,000 employees, But the encouraging trend was short-lived. Local authority manpower has steadily increased and, on a comparable basis, is now back to virtually the level of 1979. Local authority total revenue expenditure increased from £43 billion, at 1990 prices, in 1979–80 to £51 billion in 1990–91—a 17 per cent. real-terms increase.

Mr. Robert B. Jones (Hertfordshire, West)

In view of the larger numbers of socialist councils, my right hon. Friend should not be surprised at what has happened to manpower figures. Is he aware, for example, that in Hertfordshire, where, between 1985 and 1989, the county council had a Labour and Liberal majority, the number of employees increased by 5,000 and that spending was at a level £40 million above the rate of inflation?

Mr. Heseltine

My hon. Friend brings a sad example to our attention. However, the situation is even worse than he suggests. When one looks at the situation in the country at large one finds that Conservative authorities are much more careful about the interests of their charge payers, and that they consistently levy lower charges.

Mr. Dennis Turner (Wolverhampton, South-East)

Taking into account the legislation that the Government have imposed on local authorities, is it any wonder that there should have been manpower increases? Consider, for example, the hundreds of people who, in my area, as in every other, have had to be employed to collect the infamous poll tax.

Mr. Heseltine

The hon. Gentleman must be fully aware that the increases had been going on long before the community charge was introduced. I am grateful to hear him talking about increases in manpower. I am not sure how he squares that with the language about cuts that we continually hear from the Labour party. The whole essence of what I am trying to say to the House is that manpower is broadly where it was, at the highest level ever, in 1979, but that the real expenditure of local government is 17 per cent. higher than it was at the beginning of the decade. Spending across almost all services has increased significantly.

Two examples illustrate my point. In 1981–82, spending on the police amounted to £1.9 billion. In 1989–90, it amounted to £3.8 billion, which is an increase in real terms of 30.3 per cent. Similarly, in 1981–82, spending on personal social services amounted to £1.8 billion, increasing in real terms by 30.1 per cent. to £3.6 billion in 1989–90. The reality is that there has been a consistent real-term increase in local authority expenditure throughout the 1980s.

The settlement announced on 31 October is realistic by any standards. It provides for an increase in total standard spending—that is, the amount that it would be appropriate for local authorities in aggregate to spend—of 19 per cent. to £39 billion. When viewed in isolation, that is a considerable increase. When set in the context of the substantial growth in local government spending over the past decade, it gives the lie to the suggestion that local government is being forced to make damaging cuts—[HON. MEMBERS: "No."] It is interesting that, despite all the figures, the Labour party goes on talking about that.

I have a copy here of a publication of the National and Local Government Officers Association called Public Service. It is interesting because it examines the various authorities that were capped last year. The House will be fully aware of all that was said about the consequences to public services if the capping legislation was enforced and if the cuts were brought about. The newspaper has done the admirable service for all of us of surveying what happened in some of the capped authorities so that we can see what the horrendous consequences, about which the Labour party talked, were in practice.

Let me give an example. Rochdale's budget was cut by £8 million, but there were no compulsory redundancies. Bristol's budget was cut by £7.6 million, but there were no redundancies, no cuts in services and no charge increases, and almost £5 million was saved on financial adjustments. The rest was due to cuts in committees. I do not intend to go further.

Mr. Eric Illsley (Barnsley, Central)

Will the right hon. Gentleman give way?

Mr. Heseltine

No.

This newspaper, admirable as it is in this one rather narrow respect, is available freely for hon. Members to study. There is a difference between what is said in advance about cuts and what happens in practice.

Even in the face of the level of provision about which I have been talking, there is still some complaint that we have not "provided for inflation". That reflects an attitude in certain quarters that inflation is an automatic factor which has to be built into the public expenditure profile, and which must be provided for and perhaps even nurtured.

The realistic point is that inflation must be tackled vigorously if we are to get it down. The clear implication is that, while central Government, industry and every householder have to tighten their belts, local government can be expected to ride on as if there had been no change in its economic fortunes. The logical extension of that argument—that the taxpayers, the business rate payers and the charge payers should fund the high-spending aspirations of the town hall—is set on one side as if there were no logical connection. I regard that as unacceptable.

Mr. Illsley

Utter rubbish.

Mr. Heseltine

It is not utter rubbish; it is far worse than that.

Mr. Bryan Gould (Dagenham)

I have been trying to follow what the Secretary of State is saying, but I find it somewhat confusing. Is it not the case that, if an increase in central Government grant or an increase in permitted expenditure is lower than the prevailing rate of inflation, the real effect is a cut? Is not that the inevitable consequence of the right hon. Gentleman's settlement, and is not that the very point that has been made by the Opposition and by local authorities?

Mr. Heseltine

I am coming, helpfully, to the Audit Commission's view on the question that has been put to me by Opposition Members. Some people suggest that local authority budgets have been cut to the bone and that therefore, if we do not provide 100 per cent. of the inflationary increases, as the hon. Gentleman asked, we shall impose further cuts. That is to confuse cash spent with the quality of service delivered, without any attempt to get value for money.

Since 1982, the Audit Commission has systematically worked its way through many of the services of local government. It has discovered that there is scope for £1.3 billion of value-for-money improvements. Opposition Members would call that a cut. We say that it is expenditure that should long since have been rooted out and avoided. That £1.3 billion, only half of which has so far been delivered in economies, was related to only 40 per cent. of local authority expenditure. Quite obviously, there are opportunities for value-for-money reductions without a reduction in service. Those opportunities have been drawn to the attention of local government and of charge payers, formerly ratepayers, by the Audit Commission.

What do we hear from Labour Members? They want to get rid of the Audit Commission. That body, which is systematically improving the quality of services by advice to local government, with all the benefit that flows to the local people concerned because they get better services at lower or the same cost, is to be stopped from pursuing that correct interest in taxpayers' money.

Mr. Gould

I am sorry to ask the Secretary of State to allow me to intervene again, but he really cannot get away with that total misstatement of Labour's position. We have made it clear that the audit function of the Audit Commission should be retained and strengthened. It should be placed in the context in which not just the accountants' narrow view of cost cutting prevails, and it should also be placed in the context of value for money and the quality delivery of services. That is the difference between the right hon. Gentleman's side of the argument and ours.

Mr. Heseltine

The hon. Gentleman simply does not understand. We have auditors whose interest is to establish the rectitude of the accounts and whether the books add up. That is an important form of auditing. As I understand it, the hon. Gentleman is keen on that. That is retained. What about the pursuit of value for money, comparative statistics, and quality of service? That is another essential feature of the Audit Commission's activities. The Labour party has defined the function of the Audit Commission as it now exists.

Of course, Labour Members are not prepared to have comparative statistics. They are not prepared for somebody else to monitor the value that is delivered by local government. Why? It is because they know perfectly well that the authorities over which they preside cannot stand the scrutiny of any outside organisation. That is a classic example of the Labour party softening the climate of public expenditure without anyone having regard to the detail that matters.

Mr. David Winnick (Walsall, North)

Will the Secretary of State give way?

Mr. Heseltine

I shall not give way to the hon. Gentleman.

Mr. Robin Squire (Hornchurch)

I am grateful to my right hon. Friend for giving way to an hon. Member on his side of the House. Does he agree that the matter is worse than he has so far stated? Not only is there a highly suspect question mark over the future of the Audit Commission, but compulsory tendering has been thrown into the balance by the Labour party. We are talking of £3 billion-worth of local government contracts every year, and an estimated 20 per cent. savings—all to the benefit of community charge payers—which have been thrown out the window by the Labour party.

Mr. Heseltine

My hon. Friend says that the matter is worse than I have put it. He may be right. I am known for the moderation with which I describe the vagaries of the Labour party.

Several Hon. Members

rose—

Mr. Heseltine

My hon. Friend the Member for Hornchurch (Mr. Squire) has greatly reinforced the point that I wanted to make. If time permitted, I would deal with the benefits of compulsory tendering.

Mr. Winnick

Will the Secretary of State give way on that point?

Mr. Heseltine

No, I shall not give way, if the hon. Gentleman will forgive me. We must make progress.

Parliament has given me powers to cap authorities whose budgets are excessive, or which increase their budgets excessively from year to year. I shall use those powers if it proves necessary. Whether or not it will be necessary is in authorities' own hands. None of them should doubt our determination to ensure that they do not spend more than the nation can afford.

The criteria that we intend to use for next year were set out clearly on 31 October, and I reaffirm them now. Let me also explain the process in more detail, because there has been some misunderstanding about it and I would not be suprised if some hon. Members—

Mr. Winnick

rose—

Mr. Heseltine

Perhaps I could make the point before we explore it.

Some of my right hon. and hon. Friends are particularly interested in the way the capping machinery works. We have published the intended criteria for deciding whether a precept or demand on the collection fund is excessive, or has increased excessively between this year and next. It is now for authorities to fix their budgets in that knowledge. When they have done so, I must consider those budgets and make my legal decisions on the criteria to be used. That will determine which authorities are capped.

At the same time, I shall propose the numerical level of the cap for each authority in the light of the information I have about their individual circumstances. The capped authorities then have 28 days within which to accept my proposed level of cap or to suggest an alternative level. Only thereafter, if an authority has not accepted my proposed level of cap, do I bring forward to the House an order finally fixing the level of its cap.

These arrangements apply to all authorities, including the single-service police, and fire and civil defence, authorities, which have expressed a number of concerns to me. I believe that the intended criteria are fair and reasonable for all authorities, but if an authority has budgeted in excess of the criteria I adopt, I must in proposing and fixing the level of its cap take its particular circumstances into account.

Mr. David Ashby (Leicestershire, North-West)

Would this capping apply to the Wimbledon commoners, who have increased their community charge by about 300 or 400 per cent. from last year?

Mr. Heseltine

My hon. Friend knows that there is a £15 million cut-off, and that authorities below that point are not brought within the capping regime—for which the House is profoundly grateful. Certainly my hon. Friends are profoundly grateful that we have only a limited number of authorities with which to deal.

Mr. Winnick

Is the right hon. Gentleman not in fact dealing with the main complaint that we hear, which he dealt with when he was on the Back Benches—that the basic system of the poll tax is unfair and will not be accepted by the overwhelming majority of the people? Those people take precisely the point about the poll tax that he made in speech after speech in denouncing it. Why, as Secretary of State, does he keep it going?

Mr. Heseltine

I generously gave way to the hon. Member hoping that he wished to make a constructive point on the matter that I was discussing, but it was a more general point, which he will doubtless explore, Mr. Speaker, if you are good enough to let him catch your eye.

Turning to the standard spending assessments, it is of course essential that we use the most equitable formulae for dividing the resources available, although it does not automatically follow that we are all agreed. We looked once more at the methodology used for calculating SSAs, and our conclusion was that, by and large, it was fair and appropriate. Nevertheless, after listening carefully to what authorities and their associations had to say—and their advice was often conflicting—we accepted that some improvements were necessary, and these were detailed in the consultation paper. In some instances, there have been changes in the provisional SSAs published at the time of consultation compared with those which are now final, owing to the incorporation of new information.

It is worth reiterating at this stage that an authority's SSA is specific to it—a point which is often misunderstood. SSAs represent our view of the amount of revenue expenditure which it would be appropriate for an authority to incur to provide a standard level of service. They take account of each authority's social, demographic and geographical characteristics and the functions for which it is responsible. They are calculated by applying the same formula to various indicators which reflect the particular characteristics of each authority.

Thus, although two neighbouring authorities may be of the same size and have the same population, differences in such matters as pupil numbers, population densities or road lengths will cause SSAs to differ. But the important point is that SSAs are calculated evenhandedly for each authority, taking full account of the particular characteristics of its area.

Dame Elaine Kellett-Bowman (Lancaster)

My local authority of Lancaster feels strongly that the all-ages social index militates harshly against it compared with places such as Blackburn, Burnley or Preston. We are a very economical council but we are made to appear extravagant because our standard spending assessment is so much affected by various considerations such as the all-ages social index.

Mr. Heseltine

I fully understand my hon. Friend's point, but it means that the needs indicators chosen for distribution of the SSAs showed greater requirements in the other authorities to which she referred. It is not within our gift to do anything but follow the statistics upon which the calculations are made. It is essential that these matters are dealt with on a formula basis. Ministers do not have any discretion once the criteria have been established. They must follow through the logic of where the criteria take them. I hope that my hon. Friend will understand that that is the basis of the legislative framework of the community charge.

Mr. Churchill (Davyhulme)

Will my right hon. Friend explain why the standard spending assessments have been cut for the metropolitan authorities by £8 million and for the counties by £2 million, whereas those of the London boroughs have been increased by £11 million? Why should the rest of the country pay for London's profligacy?

Mr. Heseltine

Perhaps my hon. Friend has not had time to absorb the full detail of what I am putting to the House. In this settlement, the SSAs are increased by 19.4 per cent. over what we have announced for this year. That is 7 per cent. up on the budget which local authorities set for the current year. Those increases spread right across local authorities. There may be some switch within them as a consequence of judgments that we have reached about the incidence of each SSA and its formulae, but the whole thrust of what has happened is a substantial increase in SSAs across the whole of England.

Perhaps I may now consider the other side of the equation—

Mr. John Evans (St. Helens, North)

Will the Secretary of State give way, on the north-west?

Mr. Heseltine

We have had one question from the north-west, but I give way to the hon. Gentleman.

Mr. Evans

Does the Secretary of State accept that anyone who examines local government in the north-west must agree that St. Helens metropolitan district council is probably one of the most efficient councils in the region? Will he explain why St. Helens was the only Merseyside authority to be poll tax-capped last year?

Mr. Heseltine

There is only one answer to that question: it came within the capping criteria. The criteria were set out, the budgets were set and the authority came within the criteria. There is nothing complicated about that. The answer would be exactly the same this year.

Let us move on to the other side of the equation—the funding of all the expenditure involved in financing local government. As the House knows, local authority revenue spending is financed predominantly from three sources: central Government grants, business rates and the community charge. The first two sources, which are referred to collectively as aggregate external finance, are increased this coming year by £3 billion—from £23.1 billion this year to £26.05 billion in 1991–92. That includes £485 million to finance the area protection grant—the new government grant which subsumes the old safety net and the grant to areas of low rateable value. The most significant aspect of this grant, from the charge payers' point of view, is that, from next year, central Government will meet the cost of the safety net.

As we announced in October, we propose that the business rate for next year should be 38.6p in the pound, an increase in line with the rate of inflation. The burden on business will therefore remain broadly the same in real terms as it has been since 1989–90. This stability of the business rate, where business knows from year to year the maximum increase that it can be asked to meet, contrasts markedly with the previous system, whereby business was frequently asked to contribute higher and higher amounts to authorities' growing spending. Locally set poundages rose by an average of 37.4 per cent. more than the rate of inflation between 1979 and 1989.

Mr. Michael Latham (Rutland and Melton)

Is my right hon. Friend aware that, in many small market towns, including some in my constituency, shops have had sharp increases in rateable values as a result of revaluation? Will he reconsider the five-year transition period? I believe that he has powers under the legislation to extend it, if necessary.

Mr. Heseltine

The provision is that, at the end of the five years, we can review the transitional position. That is not a commitment one way or the other on what we may decide, but the power to review is built into the system. I hope that helps my hon. Friend.

Mr. Robert B. Jones

My right hon. Friend rightly stresses, in regard to the uniform business rate, that people in individual local authority areas can plan from one year to another because they know what the maximum increase will be. Therefore, is it not incumbent on my right hon. Friend to say whether the five-year period will be extended, for exactly the same reason?

Mr. Heseltine

If we were intending to have a review at the end of the period, it is not realistic to suggest that we will bring the review period forward by announcing that it will happen before the time originally envisaged. Although I understand the point made by my hon. Friend, I do not want to go further than the already known arrangements.

Mr. Gould

1 rise again in spirit of genuine inquiry, because I may not know the answer and the Secretary of State may be able to enlighten me. If he will not move on the question of extending the transitional period and will not look at it until the five-year period has elapsed, surely any possible relief under the transitional arrangements would then by definition come to an end, because it would then be too late.

Mr. Heseltine

It would be within our gift to decide to extend the period, or to introduce a new scheme for relief, whatever it might be. Theoretically, it would be possible to make such a decision. There may well have been a revaluation of business properties before then. The arrangements were designed to avoid the fact that there are great gaps between revaluations and all the problems that flow from that. No doubt hon. Members will wish to keep this in mind, but it is not yet on the immediate agenda.

Mr. David Bellotti (Eastbourne)

The Secretary of State referred to the increase in the business rate. Can he tell us what percentage that is as a rate of inflation? Is it 9.3 per cent.? Is that the rate of inflation which the Secretary of State intends to use for the increase in the business rate?

Mr. Heseltine

I think that the hon. Gentleman wants to know the rate of increase in the business rate. I believe that it is 10.9 per cent. If I am wrong, I will ensure that the figure is corrected in the reply to the debate.

Once the House has approved the settlement, it is for local authorities to set their budgets. I believe that many authorities will aim to provide a satisfactory level of service while setting a charge no higher than £380. Already there are many signs of authorities being determined to charge less than that.

But this is not the end of the story. The headline charge is not a true reflection of the average charges that people actually pay. This year, the headline charge was £357. With benefits and transitional relief, the actual charge payable was about £280. Already, community charge benefits help more than 7 million people. As I said earlier, the community charge reduction scheme will provide an extra £1.2 million of new money to help about 18 million charge payers. I have deliberately chosen this means of providing help, rather than increasing RSG, so that every penny of the £1.2 billion will go towards reduced charges, not to finance yet more spending.

I think that I said £1.2 million a moment ago; the not unreasonable explanation is that that was written in my speech, but it should have been £1.2 billion. I hope that the House will forgive me for having misled it for those brief moments.

The combination of community charge benefits and the new community charge reduction scheme will, if local authorities play their part, result in average charges actually paid of less than £300.

Sir Timothy Raison (Aylesbury)

Going back to the point raised by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) on the community charge reduction scheme, I think that the scheme and transitional relief are admirable and the right mechanism to use for dealing with hardship, but I should like to raise one example. Let us assume that a couple aged, say about 20, who two years previously were living with their parents, have got married and set up home. The wife may not be working. Such a couple could not receive any relief, as I understand it, unless they qualified for rebate. Surely such people are likely to be hardest hit by the scheme. There should be some way of finding the equivalent of transitional relief for them.

Mr. Heseltine

My right hon. Friend has raised an important point. The difficulty we had within the confines of the legislation was to find how best to use the money that we could afford to help the maximum number of people. My right hon. Friend has raised an example of people who would not benefit from the scheme which we have put forward. If we had had the legislative framework and the resources to extend the scheme we might have wanted to help that category, but it was not possible within what we could do this year. I must say that honestly to my right hon. Friend.

I have made the point that the actual level of average charge paid is a great deal less than the headline figure about which we hear much more frequently

Mr. David Wilshire (Spelthorne)

Before my right hon. Friend leaves the point about how low charges could be, given the help by the Government, and given the fact that councils can look for value for money, will he agree that the work of keeping charges down will be severely hampered by those who deliberately flout the law by refusing to pay their charges, and that the Labour party is instrumental in pushing charges up through that tactic?

Mr. Heseltine

My hon. Friend makes a most eloquent point. I cannot do other than agree with what he said. It is not just that Labour Members refuse to pay the charge and therefore set a wholly unacceptable example as Members of the House: it is that, the more one examines the performance of Labour authorities throughout the country, the more one realises that, in practice, a Labour-controlled authority is more likely to set a high charge than a Conservative authority. It applies to all classes of authority. The House is entitled to an indication of the figures because it will help. The charge payer will make a judgment about whether there is a differene in the level of services.

Mr. Allen McKay (Barnsley, West and Penistone)

rose—

Mr. Heseltine

No, I am not giving way. I am about to give a detailed exposition of how much it costs to have a Labour authority, and I will not be blown off course by interruptions from Labour Members who, I would have thought, would want to know what it costs to vote Labour in any area. Let us go solemnly through the figures.

In the London boroughs, if a person is lucky enough to live in a Conservative-controlled borough, the average charge is £285; if he lives in a borough controlled by other than the Conservative or Labour parties, it costs £331; if he moves into a Labour borough, it will cost him £420. If we move to the metropolitan districts, the charge in a Conservative metropolitan district is £309; in a metropolitan district controlled by other than the Conservative or Labour parties, the charge is £334; in a Labour metropolitan district the charge is £369.

If we move into the shire districts, we may find a set of statistics—I am sure they will come out at the elections—which show that there is no difference in Labour or Conservative authorities, but there is a snag; it is called the safety net. The safety net is the amount of contributions that are now being transferred to the centre. When we strip out the safety net, we discover that, in a Conservative-controlled shire district, the charge is £317; in a shire controlled by other than Conservative or Labour, the charge is £355; in a Labour shire district the figure is £408.

The figures are utterly uncontroversial; they are matters of fact. It is a very expensive privilege to live in a Labour-controlled local authority area. Most privileges entail something in terms of value for money but it is highly questionable whether one receives additional value for money in respect of the large extra costs of living in a Labour-controlled local authority area. But, at this late stage, I do not wish to make controversial points—[Laughter.]

Mr. Wilshire

We can stick to the truth.

Mr. Heseltine

My hon. Friend is absolutely right; we must stick to the truth.

Mr. John Battle (Leeds, West)

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I think that the case has been clearly set out. The hon. Gentleman will have enjoyed what I said. He can now go and defend Labour-controlled authorities on the hustings up and down the country.

The level of charge next year will also be affected by the efficiency and diligence of authorities in collecting this year's charge. The latest figures show that, by the end of December, authorities had collected 75 per cent. of their expected total yield for the year. That is encouraging, but it is important that authorities should press ahead with collecting the charge for the remainder of the year, using their enforcement powers where charges are not paid. Those who do not pay the charge merely deny councils funds for their services and shift the burden of payment on to those who pay.

Four formal reports give effect to the settlement. The Revenue Support Grant Report (England) 1991–92 sets out my determination of the amount of RSG for that year, the amount of that grant that I propose to pay to receiving authorities and to each specified body, and my specification of the distributable amount of non-domestic rates.

The Population Report (England) (No. 2) contains rules for calculating the relevant population of the area of each charging authority.

The Special Grant Report (No. 2) sets out which authorities will receive area protection grant and inner-London education grant, and the amounts of grant payable.

The Revenue Support Grant Distribution (Amendment) (England) amends the Revenue Support Grant Distribution Report (England), which sets out the basis on which I propose to distribute RSG to receiving authorities.

In addition, the Rate Support Grant Supplementary Report (England) 1989–90 corrects the effects of an error in respect of road lengths in the London borough of Croydon used in the calculation of the borough's grant-related expenditure assessment for 1989–90.

The settlement provides a sound funding base for local authorities throughout England for the coming year. With an extra £4.25 billion of central support, it is sufficient to allow each and every authority properly to discharge its functions and liabilities, provided that it continues to exercise due diligence in rooting out inefficiency and waste. Generous benefits and other forms of relief make possible a national average community charge payment of less than £300. No one who examines the settlement carefully and in detail can reach any conclusion other than that we have struck the right balance. Local government is well provided for in 1991–92. I commend the settlement to the House.

4.52 pm

Mr. Bryan Gould (Dagenham)

I think that it is fair to say that the arrival of the Secretary of State at Marsham street raised hopes that many of the mistakes made in the introduction and administration of the poll tax would at last be corrected. After all, the Secretary of State was one of the few senior Tory politicians who had consistently criticised the poll tax and refused to swallow the propaganda that has constantly assured local government poll tax payers and, indeed, the House, that the tax would be fair and workable. The Secretary of State expressed a proper degree of scepticism about all that. He said: The problem is that, from the moment the proposals appeared, their unacceptably regressive nature forced concession after concession, to the point at which today we are left with few of the originally claimed advantages and all of the self-evident disadvantages."—[Official Report, 18 April 1988; Vol. 131, c.621.] Here was a man, it seemed, who was not easily persuaded by arguments and assertions that appeared to fly in the face of the facts. Unfortunately, he was in a tiny minority in the Tory party. Although the poll tax probably only ever counted a handful of Tory Back Benchers among its committed supporters, those committed supporters unfortunately included the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), and the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), and their lead—their insistence that the poll tax was the right answer—was enough to persuade many others that the problems of the poll tax, so evident from the experience of all those who had anything whatever to do with it, were always just on the point of being overcome. I see some of those hon. Members on the Conservative Benches today; they know who they are. They were persuaded to believe what they knew could not be true. They believed what they wanted to believe.

That steady refusal to face the facts and the constant recourse to delusion and self-deception go a long way to explain how the whole sorry saga of the poll tax came to pass. Tory Back Benchers have constantly been told that local government expenditure is at one level when, in reality, it is at a different and much higher level. On the basis of that false assertion, a whole structure of miscalculation has been erected. Revenue support grant has been fixed at levels which, it was asserted, represented substantial increases when, in reality, the grant made painful cuts in services inevitable. On that false basis, hon. Members were told that the poll tax last year would average £278; it turned out to be £357.

Other false assertions were made. Hon. Members were told that calculations could safely be made on the basis that inflation was running at only a proportion of its true rate—the same true rate which the Secretary of State and his predecessor have chosen to apply to the increase in the business rate. They were told that calculations could safely proceed on the assumption that 100 per cent. of the poll tax would be collected, whereas the widespread experience —now confirmed by the Audit Commission—has been of collection levels damagingly lower than that.

Mr. Wilshire

Does the hon. Gentleman agree that one of the factors leading to non-payment has been the campaign waged by the Labour party and that, had the Labour party been reasonable and sensible, levels of collection would be a great deal higher than they are?

Mr. Gould

I do not think that I shall bother with that calumny, except to say yet again that that is not the Labour party's policy and that we have made it clear that, however unfair and unworkable the tax may be, the obligation of poll tax payers is to pay what is due from them.

Mr. Heseltine

I am interested in what the hon. Gentleman said about collection. Would he care to comment on the fact that Barnsley, Calderdale, Gateshead and Copeland have collected 93.3, 90.9, 90.8, and 90.8 per cent. respectively of their budgeted poll tax?

Mr. Gould

I am delighted to congratulate those authorities on their achievement. But, as the right hon. Gentleman will know, the Audit Commission, which has looked at the matter in detail, has forecast non-collection levels of a substantial size for a variety of categories of local authority—in the case of the London boroughs, amounting to perhaps 10 per cent. of their expected collection level. That is a serious blow to local authority finances, and augurs badly for the level of poll tax to be fixed in the coming year.

Hon. Members were also told, in this farrago of misrepresentation, that local authorities that set poll tax levels higher than forecast were profligate or extreme and, without exception, Labour-controlled. The truth is that dozens, scores, perhaps, hundreds, of Tory councillors, to their great credit, made it clear that their experience did not bear out that false claim.

In the light of that welter of deception, it is little wonder that the poll tax figures never added up. It was not just the unfairness of the tax or the size of the bills that angered people; it was the Government's refusal to face the facts and to assert that much of the trouble arose because Ministers would not concede what was manifestly true.

It was in the hope that he would cut through the web of self-deception and delusion that the Secretary of State was welcomed to his new responsibility. It was hoped that the long-term critic of the poll tax would have no truck with the half-truths and fictions that had been put in place to deflect the truth. It was hoped that he would tell the truth, unpalatable though it might be, as a means of sorting out what then had to be done.

It is disappointing to say that we have to record that the Secretary of State's statement has shattered all those hopes. Far from setting the record straight, he has repeated all the misstatements and the attempts at deception made by his predecessors.

So it is that the Secretary of State reports that local government spending for 1991–92 will be £39 billion rather than the £40.8 billion which local authority associations are adamant is required if they are to meet their obligations. So it is that he can then maintain that his settlement represents a 19 per cent. increase, whereas, in reality, he has settled on an increase of only 7.1 per cent. above this year's spending level, and his revenue support grant will rise by only 1.9 per cent. or £183 million.

So it is that the Secretary of State continues to maintain that, for the purpose of assessing the acceptable increase in local government spending, inflation is only 7.1 per cent. rather than the 10.9 per cent. which he chose to apply to the business rate. So it is that he adheres to his predecessor's estimate that the poll tax this coming year will average £380, whereas everyone in local government and beyond knows that it will be well above £400.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

The hon. Gentleman has highlighted today, as he has many times in the past, the difference between what the Government have said the charge should have been and the reality for the poor charge payer. But will he at least agree that, whatever details he might argue about, the first poll tax figure represented no less than £2,500 million of spending above the rate of inflation? Had that not happened, the average poll tax would have been about £70 per adult less than it was.

Mr. Gould

I do not doubt the hon. Gentleman's sincerity in putting forward that point, but I suggest that he discusses it with some of his Conservative colleagues in local government—for example, in West Oxfordshire. I think that they will confirm that the poll tax bills were so much higher than forecast because the Government deliberately understated the level of local government spending and the rate of inflation, they deliberately ignored the range of new commitments imposed on local authorities by the Government and they refused to accept that anything other than a 100 per cent. collection was possible. I simply invite the House to cast aside the figures and to recognise that that is where the problem arises.

None of those mistakes, deliberate or otherwise, has yet been corrected. I well understand how anxious hon. Members are about the matter, but for all those who want to believe again that, at long last, the poll tax ills have been cured, I simply say that their hopes will again be dashed.

Mr. John Bowis (Battersea)

The hon. Gentleman has referred to a number of items that he finds unpalatable. Did he find unpalatable the advice from the Association of Labour Authorities that Labour-controlled London boroughs should set the highest community charge that they could get away with? Will he take action to ensure that that does not happen this year?

Mr. Gould

That again is a calumny, and it has no significance. There is no evidence that Labour-controlled local authorities in London or anywhere else did other than set the lowest possible poll tax. The level of poll tax for the coming year will, again, be in line with what is required to try to maintain services and to keep the bill as low as possible.

The truth is that the Secretary of State has changed virtually nothing. All the fine words about fundamental change have left unchanged a revenue support grant, a method of calculating standard spending assessments and a set of capping criteria. The poll tax remains, with all its imperfections and, as a consequence, with all the protective misrepresentations that it now needs in order to conceal the truth. The Secretary of State was not even able to offer help to those groups, such as student nurses or non-working partners, whose cases cry out most loudly for reform.

Yet it will be claimed, and with some justice, that the Secretary of State has at least changed something. He has done away with a discredited transitional relief scheme and replaced it with a proper scheme, trading in realities and not inventions and, so it is said, backed by real money. I wish that all that were true. I wish that hon. Members who so desperately want to be let off the poll tax hook and who want to believe that the new scheme will do the trick were right, but I am sorry to say that the Secretary of State has not only repeated parrot fashion the delusions and deceptions of his predecessors but has, in the matter of his new community charge reduction scheme, invented some new ones of his own.

Let us examine the Secretary of State's claim that he has found £1.2 billion of new money. We should immediately be warned about the reliability of that assertion when the Secretary of State insists that that sum should be added to what he claimed was the £3 billion of new money already provided, when we know that £2 billion of that supposedly new money comes from the beleaguered business rate payer.

The truth about the £1.2 billion is hinted at in the Chancellor's statement on the same subject. He says that, because of the balancing effect of the changes, the overall public expenditure planning total will not be increased by the scheme. We need to know what that balancing effect is. Where does the new money come from, if not from increased public spending? What other budgets are being raided? Is not the explanation at least partly that those who will benefit from the community charge reduction scheme are very largely those who this year are receiving a rebate? For many of them, what they gain by way of relief under the new scheme will be lost by way of rebate. That is how the trick is pulled. It is not new money, but money transferred from one budget to another. I challenge the Secretary of State to disclaim or deny that point. I also challenge him to come clean about where that money really comes from.

Nor has the Secretary of State succeeded in removing the constraints which so limited the value of the transitional relief scheme. No one who has moved home since 1 April 1990 will qualify, and yet, as the Audit Commission found, in London that could mean that half the population is disqualified from help.

Mr. Richard Holt (Langbaurgh)

Come on.

Mr. Gould

Yes, in some London boroughs there is a rate of movement of address of between 40 and 60 per cent.

Mr. Squire

I suspect that there are two different figures. There is the number of people who move home, which is a significant proportion, and there are those who move from low-rated properties, who would benefit from this. Will the hon. Gentleman clarify that?

Mr. Gould

The hon. Gentleman is right. My point is that, by virtue of that limitation, that large proportion of poll tax payers, whether or not they qualify in other respects, will simply be outside the ambit of the scheme. I am sure that the hon. Gentleman agrees.

No one who lives in a household of more than two poll tax payers will receive any benefit—an anomaly which is recognised under the Secretary of State's new scheme in the case of those in sheltered accommodation, and very welcome that is, but not for others in similar circumstances but not living in sheltered accommodation.

Let us look at the Secretary of State's assertion that he has corrected the most obvious fiction about the transitional relief scheme—the fact that the calculation of the relief was on the basis of an invented poll tax figure rather than on the bill faced by poll tax payers. On 17 January, the Secretary of State said that the new scheme will compare the old rates bill, which, incidentally, is itself an assumed figure, with the actual poll tax bill being paid. That is simply not the case. That is another example of Ministers inventing a fact when the truth is inconvenient.

As the Secretary of State's statement makes clear, he has entered a new set of figures based on a new assumed poll tax figure for the purposes of his scheme. In most cases, the comparison will not be between the rates and the actual bill for 1991, but between the rates and a new assumed poll tax at the 1990 level, adjusted for the removal of the safety net. Poll tax payers will be left to bear in full any disparity between the assumed figure and their actual bills for 1991.

Mr. Wilshire

Can the hon. Gentleman explain how last year's figure, whether or not it is adjusted, can be described as an assumed figure? The English language is quite clear. Last year's community charges were real, for people paid them.

Mr. Gould

I agree with the hon. Gentleman. The term "assumed" poll tax is not my phrase. If he will examine the Secretary of State's statement, he will find a table that sets out in detail the specific poll tax figure for every local authority throughout the country. So much for those Conservative Members who pretend that we do not understand the scheme; it is they who are so clearly ignorant of its provisions.

Mr. Robert B. Jones

The hon. Gentleman claims that the scheme will not benefit households in which there are more than two people eligible to pay the community charge, but he must know that that is not the case. A substantial number of elderly people who live with their families in my constituency are benefiting at this very moment from transitional relief and they will benefit more in the future. Why is the hon. Gentleman misleading the House?

Mr. Gould

The hon. Gentleman may be able to cite isolated cases and, as I do not want to mislead the House, I admit that my claim that nobody would benefit was too sweeping a generalisation. However, because of the limitation that only two bills can be counted, the vast majority of those living in a household in which more than two people have to pay the poll tax will not benefit. I am sure that the hon. Gentleman accepts that that is a fair and accurate reflection of the situation.

The true significance of the new scheme is the need to introduce it at all. Ministers congratulate themselves on protecting—to use their word and that used by the hon. Member for Wolverhampton, North-East (Mrs. Hicks)—18 million poll tax payers by relating their bills to the rates. The irony that the Government are protecting people against their own poll tax seems lost on Ministers. If that protection is a partial equation of the tax to the rates, why not do the job properly and restore a fair and modernised rating system, as we propose?

The consequence of the Government's continued deceptions and delusions are painfully clear. The Secretary of State's failure to grasp the nettle means that poll tax bills in the coming year will still be much higher than the Government dare to admit. The figure will certainly average in excess of £400. Local authorities will find themselves trapped between an inadequate RSG and the threat of capping. They will be forced not only to fix their poll tax at a higher level than they would wish, but to implement the most painful cuts in grants to voluntary bodies and close leisure facilities, luncheon clubs for the elderly, day nurseries and legal advice centres. The cuts will also hit the level and effectiveness of policing and the morale and efficiency of fire services.

Mr. Rooker

The Secretary of State did not spend much time on policing. Is my hon. Friend aware that the West Midlands police authority and its chief constable believe that the figure set by the Secretary of State will force the authority to get rid of 100 officers? Both the authority and the chief constable were told by Lord Ferrers last autumn to ignore the standard spending assessment because it was imperative, in accordance with Government policy, not to cut the West Midlands force. Where do the figures come from? How can the Secretary of State defend a cut in the number of police officers in the west midlands as a direct result of the figure that he has fixed, when that contradicts the view of the Home Office Minister responsible for policing?

Mr. Gould

My hon. Friend's point is replicated throughout the country. I have received letters and other representations from authorities of all sizes, functions and persuasions, who are adamant that the cuts will be extremely damaging and painful—particularly in respect of police and fire services.

Mr. Dennis Skinner (Bolsover)

Is my hon. Friend aware that, in the magnificent lobbying by the fire service today, it was pointed out that Derbyshire's chief fire officer, for example, has warned of cuts of close to £1 million as a direct result of the poll tax and because the Government have allocated additional money to Derbyshire that reflects inflation of only 1.4 per cent., whereas we all know that it has been running at between 8 and 10 per cent. for most of the year? There will be a similar effect on local authorities throughout the country that operate their own fire services.

Mr. Gould

The point that my hon. Friend makes so powerfully in respect of his own local authority is borne out by the experience of many others.

Mr. Robert B. Jones

On the point made by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), could not the cost of the extra police officers required in Birmingham have been met had it not been for the expense of the 149 trips to 31 foreign countries paid for by Birmingham city council last year?

Mr. Gould

The fact remains that the pattern of deep and painful cuts in essential services to which I referred will be repeated throughout the country. The hon. Gentleman will soon discover that that experience will not be confined to Labour-controlled authorities.

Ms. Hilliary Armstrong (Durham, North-West)

My hon. Friend may be interested to know that I met today teachers and parents from Warwickshire, which is not a Labour-controlled authority, to discuss a proposal to be put before its education committee on Thursday, which will mean the closure of either nine nursery schools or 26 nursery classes. Parents from all over Warwickshire have contacted me because they are up in arms over the Government's insistence that local authorities should take responsibility for their services, while the Government are making vicious cuts in local government grants that will affect young children for the rest of their lives.

Mr. Gould

Conservative Members must be either deaf or blind if they have not yet become aware of the cries of pain from their local authorities. We have certainly heard them and understood their significance, and we recognise the damage that the Government's action will inflict on local services.

Mr. Robert G. Hughes (Harrow, West)

I understand why the hon. Gentleman is anxious to shift attention away from Birmingham, but that is where many of the difficulties that created the need to implement such a scheme started. Would not Birmingham be able to solve some of its economic difficulties and problems of homelessness if it did not keep empty 2,500 of its properties? The same goes for many other Labour councils throughout the country that keep thousands of people out of the properties they own.

Mr. Gould

The number of empty properties in Birmingham is less than the national average. Incidentally, when the hon. Member for Hertfordshire, West (Mr. Jones) intervened earlier on the question of policing levels in Birmingham, I forbore out of courtesy to point out that Birmingham is not a police authority.

The incontrovertible cuts of which I have spoken will bring disruption and chaos to many local authorities in planning their budgets and finances, but the real losers will be all those who depend on local government services to maintain minimum standards. They will frequently find occasion in their day-to-day lives to curse a Secretary of State who has inflicted such damage on local government.

The Government's actions do not augur well for the so-called fundamental review, which remains shrouded in confusion over its aims, timing and likely outcome. Press reports suggesting that the Prime Minister had offered the prospect of a conclusion before May have, I understand, been disowned. Today, the Prime Minister wrote to me and was able to say no more than as soon as we are in a position to announce the result of the review we shall do so. We cannot take that as a serious commitment, and must therefore assume that his earlier remarks to the 1922 Committee were again contingent remarks—I suppose they were a British equivalent to the Nixonian term "inoperative".

Dr. Keith Hampson (Leeds, North-West)

Will the hon. Gentleman give way?

Mr. Gould

No, I am just about to end my speech. The Prime Minister may not have a clue as to what to do about the poll tax. In the light of his speech today and of his revenue support grant statement, it is increasingly clear that the Secretary of State does not have a clue what to do about the poll tax. However, the British people have a clue—they want a Labour Government to sweep the poll tax away.

5.20 pm

Mr. Robin Squire (Hornchurch)

I shall refer to several of the comments of the hon. Member for Dagenham (Mr. Gould), who is my next-door neighbour, geographically, and whom it is usually a pleasure to follow in debates. Although my right hon. Friend the Secretary of State has just left the Chamber, there must be something of an element of déjà vu about returning to the Front Bench and introducing several rate support grant reports. However, in this case the overall effects of the reports are beneficial, not only in comparison with last year but when considering the past decade or so, and I congratulate him on that. It is clear evidence that the Government are listening to representations made from both sides of the Chamber about aspects of the system. In the main, I shall talk not about the system but about the reports and the proper response to them.

The hon. Member for Dagenham was a little curmudgeonly to talk of the Government's listing aggregate external funding and saying that it includes businesses, companies and tax paid. After all, one cannot have it both ways. Either the Government are to be criticised for ensuring that local authorities determine about 25 per cent. of their funding, because the local business element is the majority 75 per cent., or one could say that the money is legitimately used as part of a Government exercise and is part of national funding of local government. I simply do not understand the hon. Member's argument, and I think that it was a bogus point.

The increase of £3 billion is a large figure by any definition, and the 12.8 per cent. increase is substantially in excess of current rates of inflation, plus—as hon. Members know—there is no need for the payment of safety nets in the forthcoming year, so most authorities have done significantly better than the rate of inflation. [Interruption.] I know that the hon. Member for Dagenham is listening to me, or at least I think he is. He will shortly be listening to me—

Mr. Terry Lewis (Worsley)

I am listening.

Mr. Squire

I am grateful. The hon. Member for Worsley is most helpful.

During the speech of the hon. Member for Dagenham, one might have thought that transitional relief was reaching virtually no one. That is not my understanding. I have carefully read the same papers as the hon. Gentleman has and can say only that in my authority, where the average rates bill in 1989–90 was £501, every couple paying the average rate will gain £105 next year. Many right hon. and hon. Members will find similar figures when they examine the accounts for their areas.

Therefore, it is monstrous to imply that this is a tiny change which will affect very few families. I was talking about the average. People in smaller than average homes—many of whom might have bought their homes from the local authority—will make larger gains. My right hon. Friend the Secretary of State and his team deserve congratulations on the size of scope of the transitional relief.

Within the context of the settlement, it was right for the Government to stress again that they expect councils to make savings and to make progress on savings which have been identified by the Audit Commission. Hon. Members who have gone through the Audit Commission's reports will be aware just how wide is the scope for local authorities to make savings, for example, in the area of excess school places—a very large figure indeed—regardless of whether the local authority is under Labour or Conservative control. Collectively there is a lot of wasted money.

Mr. Evans

Will the hon. Gentleman give way?

Mr. Squire

I shall finish this point and then I shall willingly give way to the hon. Gentleman.

One of my hon. Friends mentioned the speed with which empty properties are re-let. That is another area which, apart from its impact on homelessness, is a significant financial element.

Mr. Evans

I support the hon. Gentleman's contention about the number of empty places in schools and the necessary restructuring. Does he agree that the decision of the Secretary of State for Education to allow almost any school in Britain to opt out, under the Government's legislation, is wrecking local authorities' proposals to restructure their education service?

Mr. Squire

The hon. Gentleman has an interesting point. It is my understanding that the Secretary of State has considered applications closely and rejected those where the school in question was clearly due to be closed because of a relative lack of popularity—and so he should. However, the hon. Gentleman is moving into wider areas, which we both recognise and may disagree upon. If a school is popular and faces closure because of the arbitrary whim of a local authority, it is right and proper that it should be protected and that parents who choose such popular schools should have their choice endorsed.

I referred to the Audit Commission in an earlier intervention, and I noticed that the Labour party is a little confused about its options on the Audit Commission. I have no doubts and believe that the commission is doing a powerful job. Until recently I thought that that fact was recognised on both sides of the Chamber. The Commission does not invariably attract the approval of either the Government or Conservative Members. At times it is critical of Government, Government Departments and Conservative authorities. However, it brings a degree of independence and objectivity which I suspect are otherwise absent from our discussions.

It is a local authority's responsibility to draw up standards and to ensure that they are met and it is the Audit Commission's responsibility to say whether the authority is meeting those targets or letting down its charge payers. Sadly, there remain too many instances where that is the case. On these occasions it is customary to mention the position in one's own borough, and I should be foolish if I did not do so in this context, although I promise that I shall not make a long speech.

I welcome the small improvement in the way in which additional educational needs are measured and I have passed my congratulations on to the Front Bench. What concerns me are ethnic minorities, as my hon. Friends on the Front Bench have heard me say on several occasions. I take second place to no one in wanting significant amounts of money to be devoted to areas where there is a large number of people for whom English is a second language. That requires considerable resources, and it should be seen as part and parcel of the system.

However, the present system goes much further and talks about two generations of families. I contrast my borough of Havering with Redbridge which, as my hon. but silent Friend the Member for Basildon (Mr. Amess), the Parliamentary Private Secretary to the Minister, knows, has a considerable number of second or third-generation Asians. Redbridge will benefit substantially more than Havering in the forthcoming year—to the tune of £18.6 million—despite the fact that it has 4,200 fewer adult inhabitants.

I do not criticise Redbridge for that; that is the luck of the draw—the way the cookie crumbles. Nevertheless, I believe that it is unfair, not only to my borough but to others. In most other respects, Havering and Redbridge are very similar, with similar demands, services and life styles. The figure is not only rising, but moving further and further from the level to be expected in a proper distribution system.

My right hon. Friend was uncharacteristically shy about giving the details of improvements that he has made to the standard charge. The charge—which affects many people with second homes—needed reform; several local authorities were exercising their freedom in an unreasonable way. I particularly welcome the maximum multiplier of half that will in future apply to those who are required in live at their place of work, but who also have a home of their own: that will help many people in London.

I am also pleased that people with empty granny flats in their houses will in future be given a zero multiplier, rather than the potential multiplier of one or two, and that those whose homes are awaiting sale after repossession by a mortgage lender will also be given a zero multiplier. Surely it is right for us to provide such relief for a category of people—let us hope that it is a small category—who have already suffered so much through the loss of their homes. Similar reliefs are being extended to those experiencing difficulty selling their homes and to elderly people who live in a home or hospital but who have kept on their old homes. Those are important improvements; although, for some reason, the hon. Member for Dagenham failed to mention them, I am sure that, on balance, he welcomes them, too.

The Labour party has a tendency to talk of abolition. I have mentioned the Audit Commission and, in an intervention, I also mentioned competitive tendering. Competitive tendering goes to the heart of not only local government but health service funding; according to the best estimate, the health service is now saving some £130 million a year—which is being devoted to the sharp end of health care—as a result of such tendering. It too is now being ruled out on the diktat of the public sector unions; yet Labour tells us that it is not being dictated to by the unions—that that is all a bad dream of yesteryear.

Surely the fact that the tendering market in local government amounts to some £3 billion is reason enough for it to be conducted as efficiently as possible. It may surprise hon. Members who have misjudged me to learn that I have never suggested that competitive tendering should invariably take place in the private sector. What I do suggest, very strongly, is that, unless checks are made regularly—and, if such checks are voluntary, they will not be undertaken in many authorities—those who ultimately pay the bills will lose out as a result of the abolition of competitive tendering. I urge Opposition Members, especially those with open minds, to reconsider their party's pledge.

My right hon. Friend the Secretary of State spoke of the possible outcome of the current review. Let me make three final points. First, I urge my right hon. Friend and his colleagues to look carefully at the precepts. I want local authorities to be more accountable to their charge payers for the money that they control and the way in which they spend it. I speak from experience of London, but I am sure that the same applies in other parts of the country.

At present, a substantial proportion of the bills that end up on my constituents' doormats are determined not by the local authority—I am not talking simply about county council versus district council—but by the police, the probation service and goodness knows what other bodies. The local authority then passes on those levies, with no means of control, which, of course, reduces its accountability. I urge my right hon. Friend to give careful consideration to whether, for instance, the Metropolitan police budget should be not only determined but controlled by central Government—

Mr. Robert G. Hughes

And paid for.

Mr. Squire

My hon. Friend knows about these matters. Yes, it should be paid for by central Government in one way or another, because it certainly cannot be controlled effectively by local authorities.

Secondly, if we wish students to make some payment in the form of local taxation—and I consider that right—we need to change the basis of the system. As a result of the review, the community charge as we know it may cease to exist; but if any form of annual payment is to be retained, my right hon. Friend must give careful thought to the creative ability of students to move from digs to digs in a period of five or six weeks and thus legally avoid any liability.

Students are, after all, creative individuals: the hon. Member for Worsley is well aware of that. We know that students engage in that practice and it will no doubt continue in every university town in the country. We need to change to a system involving an annual payment—of a licence fee, perhaps—to a single central authority, arguably the one within which the college or university falls, and drawing a veil over where the students concerned will be living for the duration of the academic year.

My third point relates to the poorest group in the community, those receiving income support. I supported the proposal—which predates the community charge—for a minimum payment of 20 per cent. towards local services from those on income support, who would then be compensated by an increase in the level of income support. Now, however, everything tells me that, on balance, that was the wrong decision—for all the reasons given by the Audit Commission in respect of the bottom 10 per cent. of the population. My view is reinforced by representations from local authority treasurers, who tell me that an average of 35 to 40 per cent. of their departments' time is spent collecting the money due from those on income support. Even if we allow for an element of exaggeration, that is a staggering figure.

If we wish in the near future to extend to local government an olive branch—a sign that relationships between central and local government could not be better—one of the biggest reliefs that we could give local authorities all over the country would be an assurance that under a new system, whatever form it may take, people on income support will not he expected to pay the charge. It is not worth it; in this context, I question even the accountability argument.

Thank you, Mr. Deputy Speaker, for giving me an early opportunity to speak. I commend the reports and will support them in the Lobby.

5.37 pm

Mr. John Evans (St. Helens, North)

Let me say at the outset how much I agree with what the hon. Member for Hornchurch (Mr. Squire) said about the imposition of a 20 per cent. payment on the poorest sections of the community. I trust that, on this occasion, his right hon. and hon. Friends on the Front Bench listened to what he said, and that other Conservative Members also support his suggestion—although it flies in the face of what many of them have said over the past four or five years. I am certain that local authorities, and treasurers in particular, fervently hope that Ministers will act on the hon. Gentleman's wise words.

When the House last debated this issue, on 5 December, I was one of those who gave the incoming Secretary of State the benefit of the doubt. Like others, I had heard and read what the right hon. Gentleman has said about the iniquitous poll tax during the election for the Conservative party leader. On that occasion, I referred to the many serious problems and anomalies that affect St. Helens, due to the poll tax, and I called on the Secretary of State to abolish it. However, I told him that, before doing so, he had the chance to prove his mettle by restructuring the SSAs, especially those relating to education and social services, and reintroducing unemployment as a factor in grant support. I told him also: If he fails to do that, we shall know that his leadership promises…were simply empty rhetoric."—[Official Report, 5 December 1990; Vol. 182, c. 360.] After the Secretary of State's speech today about the poll tax, his speech on 5 December and the promises that he made during the Tory leadership election can only be described as empty rhetoric. I suspect that the current exercise is little more than a squalid attempt to save the skins of Tory Members of Parliament with marginal seats in the north of England. They face particularly severe problems on account of local authorities, which previously had low rateable values, having to impose a high poll tax.

There has been no restructuring of the standard spending assessments for education and social services in St. Helens. Even more significant is the fact that no attempt has been made to reintroduce unemployment as a factor in the rate support grant settlement. Unemployment is rising sharply in all the northern metropolitan areas. More and more companies are closing down, which inevitably leads to redundancies. Unemployment was bad last year, but it is even worse this year. No account, however, is taken of that fact in the rate support grant settlement, although it always used to be taken into account in the settlement for metropolitan areas in the north of England.

Therefore, St. Helens has been badly hit by the legislation. I have said on previous occasions, and I shall say it again, that St. Helens metropolitan borough council is very well run. It provides an efficient service to its citizens and it has done its utmost to comply with every Government edict. It had never been rate-capped. However, last year it was poll tax-capped.

St. Helens will be worse off this year than it was last year. The local authority received £46.3 million in grant last year. The settlement for next year is £48.5 million—a £2.2 million increase. If inflation had been allowed at 10 per cent., St. Helens would have received rate support amounting to £50.9 million.

St. Helens is better off when it comes to the uniform business rate. Last year, it received £39.8 million. Next year, it will receive £47.7 million. If 10 per cent. inflation had been allowed, St. Helens would have received only £43.8 million. However, it has lost transitional relief amounting to £3 million. Taking into account, therefore, last year's settlement when St. Helens was capped for the first time, it is now £2.1 million worse off, if 10 per cent. inflation is allowed for.

It is monstrous for the Secretary of State to suggest that local authorities can ignore the rate of inflation. I remind him that a major part of local Government expenditure is accounted for by education, including the salaries of teachers and other employees. That expenditure is not fixed by the local authority; it is fixed by central Government. It ill becomes the Secretary of State to suggest that St. Helens can get away with 7 per cent. inflation and make good the problems that he has deposited in its lap.

St. Helens has done its utmost to ensure that its citizens pay the poll tax, but the level of non-payment runs at 15 per cent. The local authority is doing all in its power to bring that down. Those who are struggling to pay the poll tax greatly resent being charged for those who do not pay it. My constituents tell me that they believe that, because the Conservative Government imposed the poll tax in the first instance, those who argue against paying the poll tax should take up their argument with central Government, not with St. Helens and its other residents. They believe that non-payment of poll tax should be borne by central Government, not by them. They greatly resent having to shoulder that burden.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key)

In that case, I hope that the hon. Gentleman has made it clear to his St. Helens electorate that that is certainly not Labour party policy, let alone Government policy. It is entirely in the interests of their own pockets that charge payers should ensure that their neighbours pay the community charge.

Mr. Evans

I am passing on arguments that my constituents have put to me. They bitterly resent the poll tax and want it abolished. I have pointed to one of the anomalies. I know what Labour party policy is. It is to get rid of the poll tax. The Minister has always been a great supporter of the poll tax, but I hope to persuade him that Conservative party policy also ought to be to repeal the poll tax.

Mr. Illsley

St. Helens and my local authority, Barnsley, have been prudent by making provision for a certain percentage of poll tax to be levied to cover non-payment. The Secretary of State said that certain authorities—I am sure that he included St. Helens in that statement—have a high collection rate. The collection rate in Barnsley is 93 per cent. That shows that it is not a profligate, high-spending or irresponsible authority. It calculated the exact collection rate and allowed 6 per cent. for non-payment. A collection rate of 93 per cent. shows just how careful it has been, and just how ridiculous it is for the Government to assume that the collection rate can amount to 100 per cent. That is the problem.

Mr. Evans

I am grateful to my hon. Friend. He has spelt out the answer superbly. The Government were repeatedly warned that to insist on a 100 per cent. collection of the charge was absolute nonsense, and that it would never be reached. Since local authorities receive their grant on that basis, they face a dilemma.

It is also immoral that St. Helens poll tax payers should be required to make good the losses made in collecting the uniform business rate. Small businesses in St. Helens, particularly shops, are going bankrupt at an alarming rate. They cannot then pay the uniform business rate. Consequently, St. Helens poll tax payers have to make good the shortfall. The Minister should go into that matter in detail. St. Helens poll tax payers do not understand why they should have to make good that shortfall.

The Secretary of State may have created confusion over whether or not there will be a review of the uniform business rate within the next five years. He referred to the possibility of a revaluation within that period. If that becomes known in St. Helens, there will be almost a revolution. I hope that the Minister of State will clear up the confusion. If it is thought that there could be another revaluation within five years, those who pay the uniform business rate will interpret it as meaning that they will have to pay even higher rates.

The Minister for Local Government and Inner Cities (Mr. Michael Portillo)

There is no mystery about this. The hon. Gentleman must look at the statute. Statutorily we are required to have a revaluation every five years, and the next one will be in 1995.

Mr. Evans

The Minister was not in the House, but one of the first things that the Tory Government did in 1979 was to scrap the rating revaluation which was almost in place. Therefore, no one takes a great deal of notice of Government promises in this area. That was when the trouble started.

Another area of concern in my authority, relates to the proposition that the local authority will now have to pay to take non-poll tax payers to magistrates courts. The budgets of magistrates courts have been cash-limited, and I understand that, if the local authority seeks to prosecute non-poll tax payers, a fairly substantial charge will be laid upon it, adding further to the burdens facing my local authority.

My local authority has also asked me to make it clear that it resents the Government introducing new legislation and not making available the resources necessary of its implementation. For example, the Government introduced the Environmental Protection Act 1990 and the Children Act 1989, both of which my local authority supports as, I would imagine, do most people, but they are not making available the resources necessary for full implementation. Will the Minister of State consider that point? Either the Government should not introduce new legislation, however desirable it may be, or they must make the necessary resources available.

I want to ask the Minister a question about the Gulf which I asked during the Secretary of State's statement a few days ago. Whiston hospital is part of St. Helens and Knowsley health authority and is the regional burns unit. God forbid that any casualties should come from the Gulf and find themselves in Whiston hospital. I hope, as I am sure does everyone in the House, that all our service men and women come home safe and sound and whole in limb. The Secretary of State for Health has made it clear that extra resources will be made available to the health authority, but I must put on record the position facing the local authority.

I am sure that the Minister will accept the principle that if, unfortunately and sadly, any of our service men and women find themselves in that hospital, the chances are that they will be there for some time. It may be that the local authority will be called upon to make available housing and other services for the families of those service men and women. Can the Minister guarantee, particularly for an authority as strapped as St. Helens, that, if additional resources are called upon, the Department of the Environment will make good those costs 100 per cent. so that St. Helens can carry out the duties that it would want to fulfil?

The Secretary of State said that the SSAs were fair for each authority. That is nonsense. If we look at children at risk of abuse, can the Minister explain why the borough of Westminster receives twice as much per child as St. Helens? Surely, if a child is at risk, the authority is entitled to a standard payment. It cannot be right that one authority should receive twice as much as another.

Before the introduction of the poll tax, the average rates bill in St. Helens was £208. The average rates bill in Westminster was £501. Now, the poll tax in St. Helens is more than twice the poll tax in Westminster. Surely it is self-evident that something has gone badly wrong when figures can be reversed as neatly as that.

On the cost of education, the spending assessment per secondary pupil in St. Helens is £1,433 and in Liverpool it is £1,717. Therefore, a comprehensive school in Liverpool with 1,000 pupils receives £284,000 a year more than a similar school in St. Helens. Those two authorities are virtually next door to each other and have almost the same sort of problems. How can that make sense?

May I also point out to the Minister that a poll tax payer in St. Helens has to pay £8 per head towards the debts of the Mersey tunnel? That tunnel is of no economic value to the citizens of St. Helens. No one from St. Helens uses the Mersey tunnel. Can the Minister explain to me or my constituents why they should have to pay, when the citizens of Widnes, who are more likely to use the tunnel, do not have to pay a penny? Those are the sort of anomalies and nonsenses that we expected to have been removed, or at least to have been mentioned, in passing during the review.

The Minister knows as well as I do that St. Helens has never been guilty of profligacy. Indeed, on 5 December, the Secretary of State praised St. Helens. He said: In all our big cities, there are now collaborative projects which show the right way ahead…In St. Helens on Merseyside, Ravenhead Renaissance is a consortium of private sector companies and the local council. With Government support, it is regenerating a large run down area of the town."—[Official Report, 5 December 1990; Vol. 182, c. 322.] The right hon. Gentleman could have mentioned the Community of St. Helens Trust which has been in place for many years. Many Ministers have been to St. Helens and had discussions with the trust. It is an organisation run between local authorities and business and industry in the town. Its purpose is to successfully launch small businesses. That is another element of the co-operation between Labour-controlled St. Helens council and the local community. Yet St. Helens is now forced to consider every element of its services, which we believe have already been cut to the bone over the past few years, and almost certainly, in the ensuing year, we will face further cuts.

I invited the predecessors of the Secretary of State and Minister to come to St. Helens and go through the local authority's books. I invited them to publish any areas of waste or extravagance they could put their hands on. I repeat that invitation to the Minister and the Secretary of State. We would be delighted to welcome them to St. Helens. We would show them everything that is happening in the town, and we would be delighted to give them the books and invite them to comment.

Dr. Hampson

I accept what the hon. Gentleman said about the St. Helens trust. Nobody supported that more strongly than the present Secretary of State when he was previously Secretary of State for the Environment. I wonder whether the logic of what the hon. Gentleman said is that the council is unable to give spending priority to areas such as that because of the distortion caused by education being imposed as a cost on the shoulders of the local community. Because of the education budget, the council is obliged to cut in other areas. Is that not an argument for him to support the transfer of education away from local authorities, so that they can concentrate on genuinely important local matters?

Mr. Evans

If the hon. Gentleman catches your eye, Mr. Deputy Speaker, no doubt he will be able to make the speech that he is bursting to make on transferring education from local authorities to the centre. A debate will be held on that subject. My only fear is that in the past 12 years I have watched instruments of policy being removed from local authorities to Whitehall. I am not sure that that is the best answer. I shall read the hon. Gentleman's speech and see what points he makes. As he is a well-known supporter of the Secretary of State, it will be interesting to see whether he convinces the right hon. Gentleman of that.

The cause of the problems that St. Helens and other authorities face have is the poll tax. Every hon. Member knows that the poll tax has been, and is, a disaster and that one day it will have to be scrapped. We shall have to wait and see whether the Secretary of State can do that before the election or whether the Labour Government will have to do it after the election.

The right hon. Member for Finchley (Mrs. Thatcher) has gone. She was the major instigator of this iniquitous tax. As she has gone, surely Ministers have the guts to do what the Secretary of State said he would do in the leadership election—abolish the poll tax. The people of St. Helens are desperately anxious for that to happen.

6 pm

Mr. David Wilshire (Spelthorne)

I wish to contribute to the debate for three reasons. First, this time last year I was among the dissenters. It would be helpful if I commented on the changes that have been announced since and explain why I wish to commend them.

Secondly, I am one of the select band, or of the unfortunate group, whose minds have been numbed by service in local government. Those who have such experience—good or bad, depending on one's point of view—can help to clear for others the fog around the detail that is before us.

Thirdly, I wish to say a word or two about the aspects of this annual exercise that have an important bearing on the nothing ruled in, nothing ruled out review that is taking place.

I shall explain why this dissenter will be a conformist at 10 pm. This time last year, I readily supported the Government's global allocation of money to local government as a whole, but I disagreed in detail with the way in which it was distributed. Mine was not a particularly easy case. I had to argue that the county of Surrey and its boroughs needed more and inner cities needed less. It did not make me very popular or win too many arguments, but, nevertheless, that argument still applies and it must be put in perspective.

Surrey has the second lowest standard spending assessment per head in the country. Spending per head of population in Surrey—bearing in mind that we are considering spending for notionally the same level of service throughout the country—is £290 less than in Cleveland. Those who are concerned about the treatment of wealthy areas such as Surrey recognise that there should be a differential, but the argument advanced this time last year was that that difference was too great.

Two key issues had to be considered and they have been considered in the interim. The first was that the costs of neighbouring boroughs in the south-east varied little, yet allocations did. For example, Spelthorne, which is slap up against the boundaries of Heathrow airport and which shares the same environment and pressures as the London boroughs of Hillingdon and Hounslow, received significantly less under the "other services" allocation, yet its costs were the same.

The second issue that exercised my mind greatly last year was the education formula. Money for the generality of education was switched to special needs. In previous years, about 12 per cent. of that money had gone to special needs, but it increased to 24 per cent. That made the general education budget appear horribly overspent and caused a distortion in the figures, because special needs were calculated on the number of one-parent families, of which Surrey has fewer than average, on the number of people on income support, of which Surrey has fewer than average, and on the number of people who have a immigrant background, of which Surrey has fewer than average. It took no account of the number of statemented children, of which Surrey has considerably more than average. There was an injustice in that calculation.

I rehearse those objections of a year ago to make one key point—that, when the Government say that they will listen, they do so. When one can put a convincing case, stripped of rhetoric and party-political points, one receives a response. Both issues have been addressed in the calculations that we are considering.

The inner-fringe allocation for other services, which includes the borough of Spelthorne, is higher than the allocation to the outer London boroughs, so my first point was taken on board. The allocation of money to special needs education is down from 24 to 21 per cent., which is a significant step in the right direction. I wish to place on record my thanks and the thanks of councillors in my constituency for the Government's response.

Having said that, I tell my hon. Friend the Minister for Local Government and Inner Cities that there is still scope for more improvement. We shall continue to press him and his colleagues to listen carefully in the year ahead.

The second reason why I wished to contribute to the debate was that, as one of the select band or unfortunate few, I spent 11 years as a councillor under Labour and Conservative Administrations. Therefore, the points that I shall make based on that experience are not necessarily party political. Those 11 years gave me an insight into local government finance. It was mind-numbing, as I said before, and complex.

I shall give an example of the problems that we encountered. I urge hon. Members to listen carefully because heaven forbid that I should have to repeat it. I draw hon. Members' attention to annex IV of the Revenue Support Grant Supplementary Report (England) 1989–90, which we are debating in 1991; there is the start of the complexity. Paragraph 3 says: An authority's GRP for any level of total expenditure at or above the threshold level is determined by the following formula: GRP = GRP at GRE + 1.1p × threshold amount +1.5p × (total expenditure-GRE/population=threshold amount) I trust that hon. Members are clear about that. It is mind-numbing, but we are being asked to vote on it.

Even if, after 11 years one gets the hang of it—I am sure that Front-Bench Labour spokesmen share my enthusiasm for this—there is always that figure: take away or add the number one first thought of. In the example that I gave, it is 1.1p or 1.5p. In other words, if the formulas do not come up with the answers that are required, they are adjusted so that they do. It is an odd system, but Conservative and Labour Governments have used it, so I do not invite people to draw political conclusions from it.

My 11 years in local government suggest that six things must be considered before we vote at 10 pm: first, the global spending figure for the forthcoming year; secondly, the aggregate external finance figure; thirdly, how that AEF figure is distributed—in other words, the SSAs; fourthly, the capping criteria that are used; fifthly, the new invention, the community charge relief scheme; and, finally, the community charge spending calculation for local government generally and for each particular authority.

The global spending figure is not a community charge issue. Whatever system of revenue raising one has, someone will have to fix the global spending figure. I raise that point to make it clear that very little of what is being debated has any real and direct bearing upon the party political aspect of the community charge and its future. Whatever system of revenue raising one has, the global spending figure will always be controversial and tension will be inevitable every year when we come to debate the issue.

Local government, whoever is in control, will be all about articulating and responding to need; and central Government, whichever party occupies Downing street, will have to make statements about minimum standards and about what the nation can afford. Whoever is in power, we shall have to face up to the fact that there is not a bottomless bucket. Anybody who believes that getting rid of or changing the community charge would mean that the global spending figure did not have to be discussed every year is wrong.

As for next year, the £39 billion, which is 19 per cent. more than the figure that was set last year and, as somebody said earlier, 7 per cent. above actual spending for the current year, is fair and reasonable. I hear what people say about inflation this year, but inflation is falling fast and the prediction is that it will go down further. As the Audit Commission says, there is considerable scope for value-for-money exercises to ensure that better use is made of funds. The trap that we must all guard against falling into is simply taking this year's spending and adding something on. That is not the way to justify accounting procedures. The £39 billion, in the case of a well-run authority, could well represent service growth.

Neither is the second of the issues—the aggregate external finance—a community charge issue. Even if local authorities wanted to raise all their money from local people by a different system of collecting tax, somebody at the centre would have to address the question of unequal wealth. Whatever we do with the community charge, somebody, each year, will have to ask how poor the poor areas are, and that will always be controversial. Returning to my "Surrey versus Cleveland" point, I must say that we shall disagree for ever about where the definition lies. Equally, somebody will always have to take a decision on what percentage, irrespective of the method used to collect money locally, should come from the centre. Every year, whatever we do about the community charge, we shall have to have this debate.

It is important to understand how the tension, the conflict, should be managed. That takes the focus of the debate away from the community charge and puts it where it should be. This part of the debate should be about what services local government ought to provide. In other words, how big is the total spend? Asking that question helps one to arrive at a decision on how to split expenditure up. Secondly, what variations in standards across the country are acceptable?

If one cannot accept a variation in the spelling ability of children, the centre will have to take a bigger hand in the control of the service that is provided. I contend that the greater the control from the centre, the greater the extent to which money will come from the centre rather than from local people. That debate has nothing much to do with the community charge, but everything to do with the issues that are before us.

I think that the AEF figure of £26.05 billion for 1991–92 is fair and reasonable. It is 12.8 per cent.—above even the highest figure given for inflation—and,whatever may have been said, it includes £3 billion of new money to help local government. That sort of settlement, in my judgment, more than maintains the status quo. For next year it will mean that local authorities, if they go about running their business properly, can choose whether to reduce the community charge or to improve services—or to have a combination of both.

When one turns to the distribution of the money that comes from the centre one sees again that the SSAs are not a community charge issue in themselves. The SSAs reflect varying needs across the country and the varying affluence of different parts of the country. Differing needs and differing affluence existed before we had the community charge and they will continue to exist. Anybody who thinks that scrapping or reforming the community charge would result in our not having to have this part of the debate each year misunderstands the true nature of what is going on.

It is important that we should ask ourselves why the SSAs were introduced at the same time as the community charge. It was always assumed that there was a link because community charge meant SSAs. It did not. SSAs came about because there was a belief that the old system was "US" and had to be done away with, that, whether or not we changed the rating system, we had to bring in a system—

Mr. David Blimkett (Sheffield, Brightside)

"US"—useless.

Mr. Wilshire

If the hon. Gentleman wants me to say "useless" I am happy to do so. The old system was useless. It was clapped-out. It was an awful system. The hon. Gentleman and I had to try to understand it and work it. As the years went by, it got worse and worse, and it had to go. If hon. Members, whether on the Government side or on the Opposition side, want to change the community charge, let them not suggest that the whole grant system has to be chucked out as well. It is a wholly different issue. The old system was awful.

It is important to understand the theory of the new system. Its purpose was to address once and for all the question of needs—to assess needs. The other thing that it set out to do was to be simple. I concede that it was bound to take time to settle down. One must bear in mind the fact that simplicity in itself actually militates against the fine-tuning that hon. Members now seem to want. If all of us are not very careful, if we engage in special pleading —saying "Adjust this" and "Adjust that"—we shall end up with a system as complex as the one we got rid of, and in a year or two I shall be joining the hon. Member for Sheffield, Brightside (Mr. Blunkett) in describing it as useless. We must be careful. We must distinguish the SSA system from the community charge itself. There are still ways in which the issue needs to be addressed. I referred to the example of special education.

Capping is equally an issue about which we have to be clear. Despite the rhetoric, capping is not a community charge issue. Central Government will always need some means of enforcing control over local government. Even the Labour party, in its most extreme moments when it says that local government should be set free, says, in very small type and in brackets at the bottom, "unless". If one thinks about this in a detached way one must agree that the nation state has to control public expenditure. I repeat that capping in itself is not a community charge issue.

Dr. Hampson

I think that my hon. Friend will agree that, in quite a number of countries, local authority funds are not provided out of national Treasury accounts. It seems to me that the reason for the scale of local authority spending—more than one quarter of total public expenditure—is simply that the system, indeed the whole structure, of local government is determined by expenditure on education.

Mr. Wilshire

I accept that. My hon. Friend started by saying that we do not need to have controls, and he went on to explain why we do. If one wanted local authorities simply to provide rubbish bins and the odd seat, that would be a different matter. I shall come back to this point, as it relates to where I believe successive Governments have gone wrong.

I believe that what is set out for 1991–92 makes good sense. Giving advance notice is the best way of helping local government. During my days in local government, we always moaned about never knowing from one moment to the next what was required of us. On this occasion, local government has been told what is required well in advance and knows what is coming. If we are to have the present system of capping, the criteria are reasonable. The procedures for going through the mechanisms of capping are sensible and reasonable as well.

Control of whatever sort is bound to be controversial because somebody will always argue that control from the centre—this brings me to the point made by my hon. Friend the Member for Leeds, North-West (Dr. Hampson)—limits local freedom of action. However, the control need not be as controversial as it is. For some time now, the target of capping has been expenditure and my hon. Friend the Member for Leeds, North-West made the point that it depends what the money is spent on. The method that has been used until now has been to try to control income. If the target is expenditure and the means is income, we should not be surprised if confusion is the result.

We should, equally, not be surprised if we end up with ineffective control. I make the plea for future debates that, at some stage, we find a way to switch control from the mechanism of charge capping or income capping to controlling expenditure. A bonus from that is that the way in which income is raised becomes far less controversial if it is not the mechanism for trying to control expenditure.

The community charge relief scheme is the only community charge issue before the House today and we should all realise that. There are two ironies. First, we have in front of us a scheme that we all wanted, yet we are saying that somehow the community charge needs to be adjusted for 17 million people. That strikes me as slightly odd. Secondly, to bring in the help that we need, we have to fall back on the rating system and on rateable values as the means of calculating relief. However, the present scheme will give a great deal of help to many people.

I have never argued that the borough of Spelthorne has been in the vanguard in making complaints about the effects of the community charge. However, even in my borough—and how much more it must be the case in boroughs that have greater problems—the scheme will bring a great deal of help. In the current year, some 7,000 people out of 70,000 are getting some sort of relief. Although the figures have not been finalised, it seems that, in the year from April, the 7,000 will become at least 20,000 to 25,000. That is the measure of the extra help, and I am sure that my constituents will be grateful for it.

I trust that the scheme will be temporary. If it is left in place permanently, it will continue to undermine the financial accountability on which the community charge principle was built. Distributing relief in this way also confuses in the public mind who is responsible for the redistribution of wealth. If we were to have such a permanent scheme, my plea is that we should find a method of income support as a means of redistribution rather than using rebates in the hands of local government.

The way in which the Government calculate what the community charge should be is not in itself a community charge issue. It is only a community charge issue in so fair as the system that we have is the community charge. If we were to get rid of it, we should still have to make a calculation about what the method of income should mean to the individual payer. As my right hon. Friend said at the beginning of the debate, the figure of £381 is a norm or average for the country as a whole. It is certainly an achievable norm, and it may be worth testing that average figure against the real world.

In Surrey, £381 looks achievable. It seems that the lowest district charge in Surrey is heading for about £340 and that the highest is heading for about £470. It will come as no surprise to my hon. Friends that the highest figure comes from the one council that is not controlled by the Conservative party. The estimates are realistic and achievable, and the experience in Surrey suggests that other counties and boroughs could follow suit.

There are implications for the review that my hon. Friend the Minister and others are undertaking. I urge my hon. Friend to take on board the implication of the fact that only one of the six issues that I have mentioned is a community charge issue. However we raise local tax, central Government will always set expenditure limits and central Government money will always be needed. Wealth redistribution will always be required and central Government will have to have a fallback mechanism for enforcing their requirements. That means that, if all one reviews is finance, the review must go wider than simply addressing the method of local taxation.

Some say that modifications to the community charge are necessary, but they must not be dealt with in isolation. Modification is necessary and what has been done this year is timely, but the modifications—and any that are brought forward next year—will not produce a long-term solution. Even if abolition of the community charge is considered to be the way forward, that will deal with only one of the six issues that I have addressed. The review must go further than that.

Just as one cannot address the community charge in isolation from finance generally, so it is equally impossible to address the general question of finance in isolation from all the issues of local government. One must also address the questions of territories, services and local democracy. If I go too far down that track, I shall rapidly go out of order, so I will confine myself to two points about the review as it relates to the community charge.

The review must be comprehensive and it must proceed in the right order so that finance is dealt with at the right time. The review must start with territories and it must then deal with boundaries, with the single-tier issue, with service delivery and with local democracy. Only then should it move on to finance generally. Only after it resolves the general issues of finance, including all the six issues that I have mentioned, should it move on to the question of how one raises local revenue.

Finance is a means and not an end. If it is elevated to an end in its own right, we shall not get the cure that we want. The details of services, territories and local democracy must be worked out first so that finance—the means of delivery—is moulded to the new model that will come out of the review. It is therefore far too soon to come up with a solution to the long-term future of either the revenue support grant debate, which we are having today, or the community charge.

I suspect that the results of the review may make local government look so different that an entirely different system of revenue support grant or an entirely different system of local tax could look sensible. Perhaps—surprise, surprise—a modified community charge, given an entirely different definition of local government, could strike people of all parties as being both fair and convenient. However, for the time being, we must stick to the short term and we must stick with the present issues.

The Government have responded well to the issues that they are capable of addressing quickly. The reports represent substantial improvements compared with last year's procedures. However, there is no other realistic scope—I regret this a little—for improvement before I April this year. In the circumstances, I hope that all those who, like me, were dissenters last year will change their minds and say that there has been improvement which we should support while serving notice that, by this time next year, we hope that there will be even more change and improvement that we can support again.

6.29 pm

Mr. David Bellotti (Eastbourne)

This matter concerns some of the most vital services for our constituents. It is proper that we remind ourselves that, although we may be speaking of a little more than 25 per cent. of the country's expenditure, nevertheless we are helping to deliver important services. I refer to services such as education, housing, social services, care for the elderly, the police, environmental health and planning. The list is long. Those services are so vital that the time that we spend on this matter is most important.

The Secretary of State's first test is to assure the House that he believes in those services and that they should be delivered. The 7 per cent. expenditure increase over the previous year's budget does not meet the real needs for services. It is also a little hypocritical that the Secretary of State should confirm that, in looking at the figure for the increase in business rates, he took the level of inflation at 10.9 per cent., but that, in looking at the percentage for the increases in services and local authorities' needs, he took the figure of 7 per cent.

Mr. Portillo

Nineteen.

Mr. Bellotti

It is interesting that those different figures are arrived at to suit the Government. I am grateful to the Minister for reminding me of the percentage that he quoted. I shall demonstrate the percentage that the Government are quoting.

The high increase that is falling on business rate payers, who are currently finding it difficult to keep their small shops and businesses open, is not matched by the Government in cash terms. For example, the Government's own principal contribution to the revenue support grant, taking away the business rate increases, shows an increase of only 1.9 per cent. I shall be interested to hear the Minister confirm whether he considers that figure to be accurate.

I was interested in what the hon. Member for Spelthorne (Mr. Wilshire) said about aggregate external finance. Like me, he has served on local authorities for more than 11 years, and he knows that that is a key figure in the delivery of local services. The aggregate external finance this year will fall from 70 per cent. to 67 per cent. That means that local authorities will get less help from the Government-controlled part of the money that they need to provide their services.

We must remind ourselves that inflation is 9.3 per cent. or thereabouts. Therefore, one matter that the Minister must consider is what level of pay increases local government workers are likely to achieve this year. We were reminded that teachers account for most local authority wage increases, and that such increases should be in the region of 9 per cent. If they are in that region, where is the money to fund them? Are local authorities supposed to cut other services to pay the proper wages that they should'? Those questions remain after looking at the overall financial package that the Government are placing before us.

I shall refer to one or two authorities to try to demonstrate that it does not matter whether we are discussing Conservative-controlled, Labour-controlled or Liberal-Democrat-controlled authorities; the picture is still bleak for every local authority.

For example, East Sussex county council has fared rather well in terms of capital allocation. Nevertheless, a report clearly shows that the standard of our school buildings is such that we need to spend an enormous sum, which the Government will not permit us to spend, to bring those buildings back up to the required standard. We have one of the highest-rising pupil numbers in the country and our staying-on rate is one of the best. However, we are penalised by not being able to be able to invest in school buildings to provide for those pupils.

The Government are taking into account the balances that they expect local authorities to have. In the case of East Sussex, our balances this year, at only £3 million, mean that we are being doubly penalised for not holding money in the bank and for wanting to deliver services but not having the money for them.

I am not attracted to the argument that two or three Conservative Back-Bench Members have made about moving education into the centre to reduce the community charge or poll tax. I wonder whether those hon. Members are suggesting that they would leave local authorities with the sum of money that they currently have, but not require them to provide education. That could become a slightly atractive proposition, but I am sure that the Government would not do that. I am sure that they would remove the amount of money that they expect to be spent on education, leave local authorities with less money to provide fewer services and then provide education from the centre, where it could he controlled.

Having considered central Government expenditure in recent years, I am not convinced that they are very good at controlling expenditure. Local authorities are much better at doing that. I am attracted to the proposition, but I wonder what Conservative Members are actually saying when they make such points.

Mr. Andrew Mitchell (Gedling)

The hon. Gentleman's point is absolute nonsense. Perhaps I can help him by telling him that central Government expenditure between 1984 and 1989 increased by 2.4 per cent. Over exactly the same period, local government expenditure increased by 9.4 per cent. Elementary maths will tell the hon. Gentleman that, far from central Government expenditure increasing faster, local government expenditure increased faster—by a factor of four times over that period.

Mr. Bellotti

I am extremely grateful to the hon. Gentleman. I shall deal with his point straight away. As I was a county councillor since 1981, I shall be pleased to send the hon. Gentleman a list of the responsibilities that central Government have placed on local government and, therefore, the costs that local government has had to bear as a result. Central Government have not made available the money to pay for those services.

Mr. Mitchell

Will the hon. Gentleman give way?

Mr. Bellotti

The hon. Gentleman has made one intervention. I wish to proceed.

Mr. Mitchell

I am responding.

Mr. Bellotti

If the hon. Gentleman is responding, I shall give way.

Mr. Mitchell

I do not wish to compound the hon. Gentleman's ignominy. He made a point about the increase in local government expenditure as against the increase in central Government expenditure. He then tried to wriggle out of his first point. Although it is true that there has been a change in the allocation of responsibilities as between central and local government, it goes both ways. The hon. Gentleman will reflect on the success of the Government's right-to-buy policy, which has been a trend in the opposite direction. Therefore, he must accept that those matters go both ways.

Mr. Bellotti

I am grateful to the hon. Gentleman for elaborating his point. If one is on the receiving end in local government, one sees central Government burdens year after year. We should not continue the dialogue. The hon. Gentleman has made his point, and I have made mine. I hope that my next point will help him.

I now refer to the financing of the police of East and West Sussex. Lord Ferrers sent a letter to hon. Members pointing out the level of extra policing available. He said that, since the Government came to office in 1979, 179 extra police officers had been allocated for East and West Sussex. Of course, Lord Ferrers did not point out the extra responsibilities that had been given to those police authorities.

First, the policing of Gatwick airport has increased enormously because of the extra security that the Government properly wanted to be provided there. Secondly, the Police and Criminal Evidence Act 1984 has led to the need for extra staff in police stations. Those extra costs have fallen on Sussex police authority as a result of Government policy. The policy is not disputed, but the resources do not follow the policy. We have no extra police officers on the streets of East and West Sussex, because all the extra 179 police officers are involved either at Gatwick airport or in Police and Criminal Evidence Act duties.

It was stated that Eastbourne borough council is one local authority that has done particularly well this year. I pay tribute to my predecessor, the late Ian Gow, who last year led a deputation to the Minister because of the very poor settlement for Eastbourne borough council. Last year's settlement was 16 per cent. lower than the previous settlement under the grant-related expenditure assessment system. That is an appalling situation—one of the worst in the country. My predecessor's efforts have led to an improvement this year, but, taking the two years together, we are still well below the average of other districts in our county and well down the list of districts in the country.

My point is that Eastbourne borough council, like many other local authorities, is spending an enormous sum of money collecting the poll tax and that has not been reflected in the amounts of money which Government have been giving to local authorities. I am sure that, if the burden of the poll tax were removed by abolishing it, local authorities would be able to use the money that has been allocated in a more cost-effective and service provision-led way.

The position in another area not far from mine Sussex demonstrates how ridiculous the reports are. This year the Government have allocated, through revenue support grant, £89 to each person in Hove in East Sussex and £169 to each person in Adur in West Sussex. Yet there are a couple of streets—St. Richard's road and Bramblydene road—in which those two local authorities each have houses. So there are people living next door to each other, some in Hove and some in Adur, for whom Government contributions per head differ by 100 per cent. The cost of delivering a service in that area is almost the same, whether it be refuse collection, environmental health, planning, leisure or recreation. How can the Government say that they will give 100 per cent. more in one house than in the house next door? It is absolutely ridiculous and brings the poll tax into disrepute.

Those figures are very interesting when compared with figures across the country. In Westminster, for instance, the equivalent figure is £998. How can it be said that a person living in Westminster can have £998 from Government while people living in Adur get only £89? It really is ridiculous.

Earlier the Secretary of State said that there were those on the Opposition Front Bench saying that there were cuts when there was none. Warwickshire local authority is looking at its education programmes. But it had already made cuts of £0.75 million in its social services before examining the cuts now necessary as a result of these reports. Stockport authority has made cuts of over £2 million in its social services and more than 200 of its home helps and social workers will lose their jobs as a result of the reports.

The standard spending assessments do not take account of debt charges. When local authorities have very old housing, where the private sector is very unlikely to come in and pay and people do not have the sort of incomes that enable them to purchase from the council, a disproportionate cost falls upon them. I think particularly of Pendle, where the cost will now fall on the general fund and be met by poll tax payers. This seems very unfair, given that other authorities have advantages over authorities such as Pendle because of its historical housing provision.

The Secretary of State for the Environment referred to poll tax payers who are serving in the Gulf area. Some local authorities will bear an average burden in terms of meeting some of the refunds or the results of people not being charged, but other local authorities will be disproportionately hit. I know of four or five such authorities, of which Gosport is an example. The position there is very serious. I know that the hon. Member for Gosport (Mr. Viggers) has already raised the issue, but I refer to it again because it demonstrates the problem. The cost to Gosport council in terms of revenue lost as a result of our troops being engaged long term in the Gulf will approach £1 million in a year. No local authority can afford to lose that sort of money from its proposed budget.

Therefore, I call on the Government to try to meet that point wherever they can. It would be unfair for local authorities with high proportions of troops normally resident in their areas to have to meet that burden over and above the burdens they already bear. I hope that the Minister who will reply to the debate will give a little encouragement to local authorities that have to put up with that extra burden.

It is ridiculous that we can be told by the Secretary of State for the Environment that service men who are away for fewer than 61 days will be liable for poll tax, whereas those who are away for over 61 days will not. Could a more ludicrous situation be imagined in these difficult and tragic circumstances than for our troops to be coming home just at the point when a few hours one way or another would make a difference to paying the poll tax? In these very exceptional circumstances, surely all the troops serving for us in the Gulf should be exempt from poll tax. There should be no doubt about that.

What does the House think that local authorities should be doing to contribute to their communities? The reports are so tight that local authorities have great difficulty carrying out all their statutory functions and cannot even begin to address things that might benefit the local communities.

During the football world cup in Italy last year the stands, the stadiums and all the facilities were tremendous. On inquiry, it appeared that they had been provided through a mixture of central Government, local authority and private funding. But what do our Government do to help football clubs to provide stadiums which, we hope, will become the venues for the 1998 world cup? The Football Trust and the funds for it came about only as a result of a reduction in taxation—a movement of money, not extra money that the Government found.

There are currently 120 applications before the Football Trust, not one of which is a partnership proposal that includes the local authority. No local authority in this country could afford to join a community-inspired and led proposal to improve football stadiums. The Government are very quick to blame those who cause problems in football grounds, but very slow to provide the funds to improve them. I should like the Minister of State to find a mechanism to enable our football clubs to provide, in partnership with local authorities, the facilities that we should have in this country.

In Italy we saw 12 stadiums, which cost about £30 million each, and at the end of the world cup they were being used by the local communities for squash, indoor tennis, indoor football, weight training, and so on. If the Government do not believe that those things are worth providing money for, they should say that they do not want to involve themselves in schemes that benefit local communities and the people would know not to vote Conservative in future elections. But the Government do not say that and we do not get the facilities that we should have.

In our area in Sussex, Brighton and Hove Albion has, in the past few days, put on a tremendous performance in bringing Liverpool back to Brighton for a replay. But we are locked in a discussion to try to find a new stadium for the area. The local authorities cannot help with pump priming, the Government do not help very much and private enterprise, with interest rates as they are, cannot help. So our facilities are inadequate. The Government could do much to encourage the building of a new football stadium in the Brighton area. We shall need it, because I am sure that, after the replay on Wednesday, we shall welcome another Merseyside team to Brighton for another match.

The problems of local authorities will be solved only when we have a Government who believe in local services and wake up to the fact that the only answer is to abolish the poll tax. The poll tax is unfair, unjust and unworkable. Government grants to local authorities are unfair and almost inexplicable. The reports will do nothing to improve local government services, and that is why we shall oppose them.

6.49 pm

Mr. John Bowis (Battersea)

I apologise to you, Mr. Deputy Speaker, and to hon. Members who are waiting to speak, for the fact that I must slip out later for the best of reasons—that I have a meeting with some of my local councillors. I am interested to follow the hon. Member for Eastbourne (Mr. Bellotti), because, since my earliest youth, I was a Brighton and Hove Albion supporter. I spent many hours on the terraces. Since those days, when it was in the third division south, until now, when it has climbed the league and reached cup finals and the first division, it has not once appealed to the Government for funds to help it. It succeeded on its own initiative, and I shall continue to support it and other clubs which seek to raise money for stadiums.

It was interesting to hear a Liberal view on local government finance. We do not get too much of that in Wandsworth. Not only are there no Liberal councillors, but no Liberal candidate stood in the last borough elections in my constituency. That is down to the good sense and wisdom of the local Liberal party. Clearly, it congratulates the Conservatives on getting it right and sees no need to oppose them. I hope that my thanks will go via the hon. Gentleman to his colleagues, if there are any, in that part of London.

I wish to respond to some points made by hon. Members who have, perhaps temporarily, left the Chamber. The hon. Member for St. Helens, North (Mr. Evans) made a fair and valid point, and I hope that my hon. Friend the Minister will respond to it. He asked about social services and community services for people who may return injured from the Gulf. I am sure that it is the wish of the House that money is made available for such services in the same way as my right hon. Friend the Secretary of State for Health has swiftly responded to the need to provide extra finances for the health service, if necessary.

The hon. Member for St. Helens, North also made an interesting point about education. To some extent, we have covered that by our legislation to permit local education authorities to be a little more flexible in pay bargaining and remove some of the rigidity of central pay bargaining. I hope that the hon. Gentleman will find that that assists him in St. Helens, as it will assist people in other parts of the country.

My hon. Friend the Member for Hornchurch (Mr. Squire) made an interesting bid. I hope that my right hon. and hon. Friends on the Front Bench will consider it in the review. It related to people on income support and the amount of charge that they should pay. There is an alternative to not collecting the charge from them. We should enable them to continue to have a say in how their money is spent but insist that they pay 20 per cent., not of the actual but of the assumed charge. That would give local councils a great incentive to make sure that their charge was reduced to less than the assumed charge, as it is in Wandsworth. Income support recipients would then be in pocket. That would be an additional benefit to charge payers on income support, and something similar could be considered for students.

I have some sympathy for the hon. Member for Dagenham (Mr. Gould), who opened for the Opposition. If ever there was a poisoned chalice, it must be the Labour spokesmanship on matters of local government finance. For a start, he has the cross of his own policy, which is to burden the nation with the capital value tax plus revaluation. Then he has Labour councils all around the country which are hellbent on overspending and wasting the resources that they receive from taxpayers and chargepayers. Then he has the political element, to which I referred in an intervention, from the Association of London Authorities. The hon. Gentleman accused me of calumny, but it is in black and white. If there is any calumny, it is that of the Labour party in London against voters and charge payers in London.

Then the Opposition spokesman has behind him and outside the House supporters of non-payment, with all that that does for people who are much less well off than hon. Members. Non-payment places a greater burden on such people to pay for local services than if everyone paid his share. Lastly, the hon. Gentleman has the policy of coming cap in hand to the taxpayer to ask for more. One can do that only by asking taxpayers to pay more tax; that is yet another burden on both taxpayers and chargepayers.

This debate is something of an annual set piece. I suppose that we shall always have it; it will always be with us. We shall always have our rate support grant debate, irrespective of the type of system, as my hon. Friend the Member for Spelthorne (Mr. Wilshire) said. We should pay tribute to my hon. Friend the Minister and his colleagues—both officials and Ministers—at the Department of the Environment. In a past life, I have seen at first hand the painstaking and patient way in which they listen to representations from hon. Members and local authorities. They take on board suggestions made and come up with steady ways of refining and improving the system.

What has been missing from the debate so far is a message from the House to local government. Understandably, the debate is about the challenge to Government to assist in paying for local government services. What has been missing is the challenge from Government and Parliament to local government to use those resources efficiently and wisely and in the best interests of local people. If we do not get that right, local government will not be right.

So the debate is about balance. As Carlyle said, it is a vain hope to make men happy by politics". I suspect that the same is true of local government finance politics. Nevertheless, there should be a balance between the various interests. If we can get that right we can begin to see some progress.

We must understand that the resources for local government do not come out of thin air. They come out of the pockets of taxpayers and charge payers. The balance that we seek is three-way, if it is possible to have a three-way balance. It is not so much squaring the circle as squaring the triangle of balance between quality, need and cost. The Government can create the framework with the standard spending assessment system which allocates according to the services needed given the type of area. The Government can then help with the cost through the rate support grant.

I welcome the other measures introduced to assist the individual through targeted support by means of rebates and transitional relief systems, but local government can add quality through efficiency. That surely goes for the recipients of all central government finance who run local services, whether in the health service, education, local government and so on.

The figures for this year are fair. In my area of inner London, it is a fair settlement. It is much better than the third-third-third distribution between chargepayer, business rates and central taxation which one might expect. In inner London, £2.4 billion out of the standard spending assessment of £2.9 billion comes from external finance, which is to say from the Government, via revenue support grant, the uniform business rate and one or two other grants.

In Wandsworth, the standard spending assessment is £285 million. We have an expected community charge raising of £75 million. These figures are all based on a community charge which I hope will be an exaggerated version of what is paid at the end of the day, but that depends on many things—not least the willingness of some Labour Members who have second homes in my constituency to pay their fair share. I am sure that Labour Members who are present will encourage them so to do.

The total external support for Wandsworth is £235 million. Before any Labour Member seeks to compare like with unlike, may I say that the right way to make comparisons is to take the figures for comparable boroughs of inner London? Wandsworth receives less external support than the average for inner London. It receives £1,192 per adult, as opposed to the inner-London average of £1,397. The neighbouring boroughs in south London are Lambeth and Southwark. Taking the figures for RSG, Wandsworth receives £141 million, Southwark £150 million and Lambeth £201 million.

In total external support, Wandsworth receives £235 million, Southwark £236 million and Lambeth £268 million. If we translate reasonably comparable figures for reasonably comparable boroughs—comparable in the make-up of the electorate, problem areas and so on—we might assume that the community charges would be reasonably comparable. In practice, whereas Wandsworth has been able to come up this year with a community charge of £148, the charges in Lambeth and Southwark—before capping—are £548 and £390 respectively.

It is not the new system which has resulted in the figures. In the previous year, the average household in Wandsworth was paying £385 in rates, more or less the equivalent of two community charges, but in Lambeth the average household was paying £516, which is less for the average household of two people than one person is now being asked to pay in community charge. In Southwark, the figure is a little better, but not a great deal.

There has to be a message in all that about the efficient use of resources. I think that it is time the House sent a message back to local councils, particularly Labour-controlled councils. This does not apply to all Labour councils, but to many of them. It is time that they examined their efficiency and the quality and cost of their services in the interests of their local communities.

Mr. John Fraser (Norwood)

Wandsworth has just had to close three law centres and a large number of voluntary organisations. What is particularly sad is that it has begun to close youth clubs. Is the reason for the closure of the youth clubs the fact that the Government are too mean, that Wandsworth is too mean or that the youth clubs are too extravagant?

Mr. Bowis

There has been rationalisation of youth clubs, day centres, luncheon clubs and so on. I have been to one luncheon club, for example, where there were only 12 people. There were four law centres; there is now one, but that is comparable to many London boroughs. To have had four was unique. It was not a question of closing them; charge payers' support for those voluntary organisations was removed.

At the same time, Wandsworth pays £9 million in grants to voluntary organisations, substantially more than the average for inner London. It insists that the money which it raises from charge payers and hands on to the voluntary sector goes to the sharp end services and not to the umbrella organisations or to organisations for which alternative sources of funding are available. If the hon. Member for Norwood, (Mr. Fraser) would urge his colleagues from Lambeth to come and see us, we would be happy to assist them to find greater efficiency savings. To be fair, on some occasions they have done so.

Over the 12 years of Conservative management of the borough, Wandsworth has made £50 million of efficiency savings. If a council makes such savings while maintaining the quality of services, it has resources to improve the quality of life in the area and to keep charges low. Wandsworth provides 123 services, at a cost to the individual of £148. That is not a bad bargain in anybody's book.

The message of tendering is crucial to that record. It is sad to hear the Labour party committing itself to the abolition of competitive tendering. The hon. Member for Dagenham (Mr. Gould) has said that a future Labour Government would relieve local authorities of going out to compulsory tender. That is short-sighted. In Wandsworth, we have found that tendering is not only of benefit when the service goes out to the private sector—on those occasions, we have found that efficiency savings of 33 per cent. were made—but even when the in-house services applies for and gets the tender, the result being a 25 per cent. saving. So there are savings through the tendering process, whether or not the service eventually goes outside. To cancel that benefit to the local community is crazy.

When people talk about my borough, they sometimes say that we have cut services in order to get a low charge. That is not right. The first priority is to improve services, and the second priority is to make sure that the cost is as low as possible. That can be done. The staffing ratio for inner London is 3.7 per 1,000; in Wandsworth, it is 2.1 per 1,000. In refuse collection, savings of 50 per cent. have been made over the years. The reason is that, in the Labour borough of Southwark, one man collects one tonne of rubbish per day, whereas in Wandsworth one man collects four tonnes of rubbish per day. There are straightforward efficiency savings. The service is better, and the public are more and more satisfied with it; they are very satisfied with the lower cost.

The cost of running libraries has been reduced by 45 per cent. Book usage has gone up by 40 per cent. The arrears of rent in my borough are half the inner London average. Rent and community charge arrears can pay for services. If a council does not collect the money, it cannot provide the services. If Lambeth collected its rent and community charge arrears, based on last year's figures, it could pay for the equivalent of half the cost of Wandsworth's education service.

We have heard about the threat to district auditors from the Labour party.

Mr. Andrew Mitchell

Before he leaves the excellent reputation of his own borough in comparison with Southwark, my hon. Friend might be interested to know that Councillor Keeble, the council leader, said on Radio 4 not many months ago: There has not been a proper management structure in the housing department. Clearly, the deficiencies of the housing department are mirrored in the deficiencies of the cleansing department.

Mr. Bowis

My hon. Friend is absolutely right. One sees that again and again. The Audit Commission highlights the problems. It published a well-known comparison between inner-London Labour boroughs and inner-London Conservative boroughs. It was no great surprise that the result was that half the quality was provided at twice the cost in the Labour boroughs. That is what we are seeking to get rid of.

Quality is crucial. The efficient use of resources results in improved estate management, improved tower blocks, improved shopping parades, improved crime prevention schemes and improved enterprise, with many black businesses being assisted to start up. The capital programme resulting from sales receipts has transformed a miserable, wretched, rundown inner-city Labour borough into the thriving hub of activity and enterprise, attracting jobs and people to live there, that my borough is today. Surely, that must be the message.

Labour and Liberal-controlled authorities have the weapons in their hands: they can make efficient use of the resources from the taxpayer and the top-up resources from the community charge payer. I can assure the House that my borough will continue to make efficient use of local and national resources to provide quality services at reasonable cost. That is possible throughout the country —subject only to two threats in addition to the unwillingness of some Labour-controlled authorities to tackle the problems.

The first threat is non-payment, which was dealt with adequately earlier in the debate. The second is the problem of overspenders—those who simply cannot control their spending. Given that those problems are kept under control, we can wholeheartedly support the settlement, which is both fair and reasonable. However, the reasonableness and fairness of the settlement depend on the councils playing fair by their charge payers.

7.10 pm

Mr. John Fraser (Norwood)

Characteristically, the Secretary of State left the Chamber as soon as he could after the opening speeches. He was not an assiduous attender while he was not on the Front Bench but perhaps he ought to be slightly more assiduous in respect of debates for which he is responsible. Let me begin with a point on which I tried to intervene during the right hon. Gentleman's speech. As I could not catch him at the time, perhaps his hon. Friend the Minister for Local Government and Inner Cities will pass my remarks on to him.

The Secretary of State evaded some of the questions arising from the community charge reduction scheme. The first concerns some of the most vulnerable and poorest people in the community living in private, multiple-occupation accommodation, who never received a rates bill and always paid their landlords a rent inclusive of rates. In respect of those people, there was no apportionment of rateable value between one part of the property and another.

One bit of unfinished business left by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) concerns the question whether those people ever had their rent reduced when they began to pay poll tax. Many of them had no rent reduction at all and now they do not have a rate base upon which to claim under the community charge reduction scheme. Will the Minister consider whether the scheme can be widened to cover those people who have already been penalised once because they had to pay rates as an inclusive part of their rent and did not receive a rebate from their landlord when the rates were abolished?

The Secretary of State and a number of other Conservative Members spent some time drawing attention to the wide variations in poll tax as between one borough and another—a variation that certainly applies as between Wandsworth and Lambeth. They do not seem fully to have understood the multiplier principle that is at work with the poll tax.

Let me give the House an illustration. Imagine that four people contribute to a kitty for a round of drinks. Suppose that the Minister and the hon. Member for Harrow, West (Mr. Hughes), who is sitting behind him, represent the Government in that party of four. I draw that analogy because the Government pay about 50 per cent. of many local authorities' costs. Suppose that the hon. Member for Battersea (Mr. Bowis) is the business man in the group. I say that because, under the uniform business rate, business men typically pay about 25 per cent. of local authority costs. I am the poll tax payer—also responsible for 25 per cent. The four of us put a total of £4 into the kitty and I buy the drinks. I go up to the counter to buy what I expect to be £4 of drinks and the round comes to £4.40.

Under the kitty principle that used to apply under the old rating system—both with business rates and, more so, with equalisation in London—I could have gone back to my mates and said, "The round cost a bit more than you put in the kitty; I want an extra 10p from each of you," and they would have provided me with the money. Under the new local government finance system, the kitty principle no longer applies. That means that the poll tax-paying member of the group of four has to bear all the extra cost of the round. Although the extra cost of the drinks is only 10 per cent., it adds 40 per cent. to my bill. That is exactly what happens when there is a variation in expenditure arid a variation in service between one local authority arid another.

The example that I have given is typical of the sort of arrangements that apply to the sharing of the burden of expenditure in local government. If poll tax payers want the quality of their services to be increased by I per cent. —entailing an extra 1 per cent. in cost—the cost to them is an extra 4 per cent. If they want the cost of their services to be increased by 10 per cent., the cost to them is 40 per cent.

There is a converse side to the argument. The London borough of Wandsworth is favoured. It is receiving almost £20 million of special area relief in the current year. Proportionately, it also receives a large amount of external grant, and only about one sixth or one seventh of its expenditure is met by the poll tax payer. That is quite a small proportion compared with other boroughs.

Mr. Bowis

Of course it is, because, by efficiency savings, Wandsworth has been able to keep the charge low. If one keeps the charge low, it will be a smaller proportion of the total. That is mathematically simple. Nevertheless, Wandsworth has received less in external support from the taxpayer and business rate payer than has Lambeth.

Mr. Fraser

What the hon. Gentleman is saying and what I am saying are both true. Wandsworth can raid its balances and take out £25 million, thus reducing its poll tax by £150. If it then gets £20 million of special area support grant—one item of external support—of which Lambeth gets virtually nothing, the poll tax is reduced by £90 to £100 per poll tax payer. This year, Wandsworth has realised that the converse of what I have been saying is also true and that, where the poll tax share of the burden is relatively small, one can reduce the poll tax by 7 per cent. for every 1 per cent. by which one reduces expenditure.

Both trends are in operation at the moment. Some local authorities are particularly mean; I happen to think that Wandsworth is now one of them. It is achieving large savings in the poll tax as a result of relatively small percentage cuts in expenditure. But if a council wants to improve services, the cost to the poll tax payer becomes very heavy.

I want to return to Lambeth council—[HON. MEMBERS: "Good idea."] I do not represent Lambeth council; I represent my electors. We should remember that none of us here represents local authorities.

I have the dubious distinction of being the Member of Parliament who, on the Government's own forecasts, will have the highest poll tax in the world. I say that because only one other country had the poll tax and that was Papua New Guinea, where it proved rather unsuccessful and was abolished. I ought to be in "The Guinness Book of Records" because the prospective poll tax in my area is the highest in the world—£546, according to the Government's forecast figure for the assumed personal charge, Strangely, that is exactly the level of poll tax forecast by the Government three years ago, before the Local Government Finance Act 1988 completed its passage through the House.

Whatever may be said about the expansion of expenditure in my borough, it cannot explain the figure. As the hon. Member for Battersea (Mr. Bowis) pointed out, it is twice as high as the average level of rates used to be. That does not show that there is something wrong with Lambeth council, although there may be a few things wrong with it; the main fault lies with those who introduced the poll tax which had the effect of, on average, doubling the burden per head of the population in my borough.

Mr. Robert G. Hughes

The hon. Gentleman generously said that there might be something wrong with Lambeth council. Will he comment on the district auditor's report in October last year which, among other things, said: Lambeth operates in an ethos of crisis management rather than one of forward planning, with little obvious thought or vision of where it wants to be in three, five or ten years' time, and no strategy of getting there."? Is not that an accurate description of Lambeth council —an appalling level of services which are getting worse, charging a high community charge and not really caring about the quality of service that it provides?

Mr. Fraser

Various comments have been made, and that might be an understatement compared with others that one hears. I want to come to exactly that point about Lambeth's financial problems and, in particular, those of its treasurer's department.

The Government's assumed poll tax level means an enormous impoverishment of the second most deprived borough in the country. It means that £94 million a year gross is being taken out of the pockets of poll taxpayers in my borough, compared with £34 million in Wandsworth, £54 million in Lewisham and £58 million in Southwark —all comparable boroughs, except that, of the four, mine is the most deprived.

Mr. Andrew Mitchell

Will the hon. Gentleman give way?

Mr. Fraser

I shall give way only once more.

Mr. Mitchell

The hon. Gentleman is advising the House of the difficult position in which Lambeth finds itself. Was that decision improved by the decision last December to spend £42,000 on a stretch limousine for its mayor—a decision which even the hon. Member for Vauxhall (Miss Hoey) described as incredible?

Mr. Fraser

That is not a decision which I would have made. However, as I say, I am here to represent my electors, not to argue the case for my local authority. As always, I shall look at the matter overall in an objective way. I am not here to put forward a special defence for my local authority.

There is something fundamentally wrong with a tax that can double the average burden on people in the second most deprived borough in the country. Let me give some idea of the variation of deprivation in London alone. In two postal districts in Lambeth, SW2 and SW9—the focal points of riots on two occasions—unemployment is greater than all the unemployment in many of the outer London boroughs. That is one measure of our deprivation. Another measure is the fact that, according to the Government's figures, of the 172,000 poll tax payers in Lambeth, 80,000 have so far applied for a rebate. That must mean that more than half the people living in my borough are on the poverty line, and also having to pay a high poll tax.

The result is that the borough's financial institutions are beginning to break down entirely. It is about five years since my borough had any unqualified audited accounts. The books have not been closed off since 1985. People have often had to wait not months but years for their rebates to be calculated. People who have come to see me have had to wait for between four and six years for their rate demand with the rebate on it.

Mr. Andrew Mitchell

Will the hon. Gentleman give way?

Mr. Fraser

1 will not give way again. The hon. Gentleman must use his central office material in a pamphlet somewhere.

Lambeth has rent and rates arrears of £56 million—an average debt in rent and rates of £326 per poll tax payer. In other words, the level of rent and rates arrears in Lambeth is greater than some people's poll tax. Those are figures which the Government use as a sign of inefficiency and inadequacy in my borough. I do not deny that there are some elements of inefficiency there, but—

Mr. Mitchell

Will the hon. Gentleman give way?

Mr. Fraser

No, central office must wait, not me.

There are other elements at work. One, to which I have averted already, is the poverty of the population in Lambeth. If half one's population is applying for rent and poll tax rebates—rate rebates in the past—of course the system begins to break down. But it is worse than that. The change in the population is enormous. According to the election register, in many wards the change in the population measured in two snapshots, one year after another, amounts to between 15 and 25 per cent. The family practitioner committee's statistics of the change in the population amounts to about 35 per cent. a year. Some figures put the change in population even higher than that. When high levels of poverty, unemployment and mobility of population occur together, along with constant changes in the calculation of rebates and the way in which the poll tax is calculated—for example, the new charge reduction system—the financial system begins to break down.

Two things are apparent. One is that the people whom I represent cannot afford this system, and the other is that the local authority's administrative system cannot cope with it either. There are many signs that that is so. One of the greatest is that arrears still amount to 50 per cent., despite the fact that we are almost 10 months into the financial year. The level of poll tax and the complications of rebate, coupled with the other social factors that 1 have illustrated, mean that the system is partly breaking down and the situation may get worse.

Today we are supposed to have some relief. At the end of the year in which we had rates, the average burden on the population, in an authority which was supposed to be an overspender, was £250 per person per year. Then we had the poll tax which was supposed to make local authorities more accountable and efficient. The burden in the first year after capping was £522 per person per year. Now, because of the level of arrears and the low level of collection in my borough, the forecast level of poll tax for next year, after all the reliefs, safety nets and the rest, will be £546 a year. The Secretary of State—the gymnast on the Front Bench—has done a few somersaults and we find ourselves in a worse position than when we started.

What will be the consequences of all this? The social stability of a place such as Lambeth is always fairly fragile, but there is a great danger that in Lambeth it will break down altogether, particularly if a large number of poor young people are pursued through the courts, possibly even to prison. We are beginning to see the breakdown of the administrative and financial systems and the even greater breakdown of the social structure.

Despite all the help that is supposed to have been given to us, there will be cuts in council services next year. That has to be the case. We were poll tax-capped in the current year—a figure of £287 million—and the maximum amount by which we can increase our expenditure next year is 7 per cent. If the rate of inflation for local authorities runs at around 10 per cent. and expenditure can be increased by 7 per cent., that means a cut of about 3 per cent. Therefore, instability and costs will increase, but the quality of the services will deteriorate.

I want to see the reports scrapped and redrawn so that they will fulfil the short-term, temporary objectives originally presented by the Secretary of State. Otherwise, my constituents will be worse off. I endorse the demand made by the hon. Member for Hornchurch (Mr. Squire) to scrap the 20 per cent. payment made by the poorest and the disabled in the community, which would eliminate 20 or 30 per cent. of the collections and simplify the administration, even though that may sound like a defence of the poll tax—but my previous point deals with that. In that way, those who are receiving income support and who are otherwise very poor will not have to pay poll tax. The long-term aim must be to scrap the poll tax altogether.

7.30 pm

Mr. James Pawsey (Rugby and Kenilworth)

My hon. Friend the Minister may find it significant that Opposition Members have twice referred to Warwickshire and to the difficulty in which it finds itself.

I begin by thanking my hon. Friend the Minister for Local Government and Inner Cities and his departmental colleagues for the considerable courtesy that they have shown to me and others of my hon. Friends who represent Warwickshire constituencies. My hon. Friend the Minister welcomed a delegation from Warwickshire and had meetings with me and other Warwickshire Members of Parliament, at which we sought to persuade him of the problems confronting our county. I am grateful for the sympathy that he has shown in respect of Warwickshire's difficult situation.

I shall argue a narrow case this evening. It is difficult to separate the community charge from revenue support grant, since community charge levels will clearly depend on Government support. The standard spending assessment is a blunt instrument. It is national in its impact, but apparently makes no provision for the fine tuning that is necessary to right the obvious injustices that arise in its application.

This year, local authorities will spend in aggregate £39 billion, which is a substantial increase of about 19 per cent. over 1990–91. Although it is difficult to fault the global package, which is generous, criticism can justifiably be levelled at the way in which individual counties will be affected.

The impartial Audit Commission grouped counties into families, and when Warwickshire is compared with other counties in the same family group, anomalies immediately manifest themselves. Warwickshire, for example, receives revenue support grant of £101 per charge payer, yet the corresponding figures for Northamptonshire and Bedfordshire, which are in the same family, are £198 and £254—twice as much and two and a half times as much respectively. There is obviously something wrong with a formula that throws up such grotesque differences between similar counties.

Warwickshire receives less grant per head than any other county, except perhaps stockbroker Surrey. If my county had received only the average for the family in which the Audit Commission grouped it, the county's grant would have been £60 more per charge payer and the resultant community charge £60 less, which emphasises the indefensible differences produced by the SSA formula.

In a conversation with the county treasurer on 25 January, he advised me that Warwickshire's SSA for 1991–92 is only 6 per cent. above the 1990–91 precept, at a time when inflation is running in excess of 9 per cent. He reminded me that the interim advisory committee's pay award for teachers will be something between 8 per cent. and 10.1 per cent. Under the Edmund Davies formula, the police award will be about 9.75 per cent. With the best will in the world, Warwickshire cannot provide the same level of service as other counties at a similar cost to the charge payer, unless it receives about the same Government support. As I have shown, Warwickshire's grant is far from being the same as that for similar counties.

In the 1970s, I was a member of Warwickshire county council, and I assure my hon. Friend the Minister that it is not a spendthrift local authority that treats charge payers or their money irresponsibly. The reverse is true, as is borne out by a letter that I received from the leader of the county council, in which he informs me that the fire service SSA has been set at 31 per cent. below the level acceptable to Her Majesty's inspectorate. That emphasises the extent of the errors produced by a formula, which may be in tune with the majority of counties, but is sounding increasingly discordant in my own.

Warwickshire's police SSA has been set at 11 per cent. below the authority's estimated cost for 1991–92. If it is to operate within the financial constraints that have been imposed, the authority may have to reduce the number of policemen on the beat, just at a time when the county has received an increase in its force establishment. In other words, the Home Office sees a need to add to the number of police officers in Warwickshire, but the all-powerful SSA disagrees. That seems to be a case of the Department of the Environment knowing more about operational police requirements than the Home Office.

I am delighted to see my right hon. Friend the Minister of State, Home Office, take his place on the beat— [Laughter.] I meant to say, on the Bench. That was a Freudian slip. In any event, I am pleased that my right hon. Friend is present to hear my remarks about police SSAs. I do not doubt that he will make representations to his ministerial colleagues in the Department of the Environment about the difficulty in which Warwickshire will be if it is unable to fund the increase in police establishment that my right hon. Friend and his colleagues have made available to it. When two Government Departments disagree to such a marked extent, something is obviously hopelessly wrong.

Mr. Illsley

I agree with the hon. Gentleman's comments about the effect of insufficient SSAs on the police and fire services. The norm established by the Department of the Environment is totally at odds with Home Office recommendations in respect of most local authorities. The sentiments expressed by the hon. Gentleman accord absolutely with those that my right hon. and hon. Friends have been expressing for the past year.

Mr. Pawsey

Perhaps this is the first and last time that the hon. Gentleman and I will find ourselves in some measure of agreement. In due course, I look forward to being again in cheerful disagreement with him, and I hope that it will not be too long. I give way to the hon. Member for Ashfield (Mr. Haynes).

Mr. Frank Haynes (Ashfield)

I thought that the hon. Gentleman was going to call me his hon. Friend. We certainly agree with one another when we are in an important Committee, and we usually back one another up on the problems that come to that Committee. But the hon. Gentleman should be ashamed of himself for speaking as he has tonight for the simple reason that although he is now complaining about the poll tax and standard spending assessments, he has been in the Ayes Lobby and has voted for it on every occasion. Now he is moaning and groaning. We told them time and time again that they were wrong and now it is all coming out.

Mr. Pawsey

I have substantial respect for the hon. Member for Ashfield (Mr. Haynes), but he made a grievous error. When the community charge was introduced in this place in January last year, I was one of those hon. Members who voted against. The hon. Gentleman is normally pretty certain of his facts—that certainly is the case in the Committee on which we both serve—but in this instance I must tell him as straight and plain as I can that he is wrong. Perhaps he might even withdraw the comment. I shall give him the opportunity to do so.

Mr. Haynes

I apologise to the hon. Gentleman. I should have checked the voting record in Hansard. However, the hon. Gentleman referred to one vote. He has voted in favour ever since.

Mr. Pawsey

It is difficult to take the hon. Gentleman seriously after that. I am grateful to receive his apology. Conservative Members would expect nothing less, as his courtesy and chivalry are well known.

The hon. Members for Durham, North-West (Ms. Armstrong) and for Eastbourne (Mr. Bellotti) both referred to the problems being experienced by Warwickshire, specifically in nursery education. So far, I have referred only to the police and fire service, which are clearly affected. However, the education service also has to face up to the need to make major savings. The county council has decided that it will have to look to the non-statutory area of education and especially nursery education. In the four days since Friday last week, I have received more than 100 letters from my constituents, all objecting to the proposed savings that the county wishes to make in its nursery facilities.

I share the views of the overwhelming majority of my constituents who have written to advise me of their concerns. I am the chairman of the Conservative party education committee in the House, and I acknowledge the importance of education and nursery education. I deeply regret the fact that my county council is reduced to having to try to stay within its standard spending assessment by substantially cutting nursery education.

The formula is full of contradictions. For example, it is assumed within the magic SSA that Warwickshire will receive about £6.7 million in interest from receipts. But because it has consistently followed guidelines issued by the present Government, it has spent its reserves, with the result that the total interest from receipts will be only £2.2 million—a shortfall of about £4.5 million in that one instance.

I have not the slightest doubt that both the guidelines and the formula for the SSA have been carefully worked out on the Department's computer and I acknowledge the fact that it seeks to accommodate a wide range of differing local authorities—the good, the bad and the Labourcontrolled—but Warwickshire is treated unjustly by the SSA. More to the point, despite the substantial number of representations that I and my hon. Friends in Warwickshire have made, it is evidently impossible either to control or amend the formula. Apparently, it has been hewn upon some tablet of stone that is kept in the Department of the Environment and is outside any further human considerations.

Apparently there is no presiding human presence able to rectify the anomalies, with the result that my constituents, and those living elsewhere in Warwickshire, will be unfairly treated when compared with people living in neighbouring local authorities.

Mr. Lewis Stevens (Nuneaton)

Will my hon. Friend give way?

Mr. Pawsey

Yes, I shall give way to my hon. Friend, who is a fellow Member of Parliament for Warwickshire.

Mr. Stevens

I am grateful to my hon. Friend, and I share his concerns, especially about the proposal that nursery education in the county might suffer badly. Does he agree that there is a further problem with the formula in that having used it last year, when Warwickshire's proportion of the grant was extremely small and caused difficulties, it is continued and accentuated this year on the same basis? Once one is in a bad way, one's position gets worse.

Mr. Pawsey

My hon. Friend is right. He comes to the House with substantial experience in local government and he has served his constituents well. I can tell my hon. Friend the Minister who will reply to the debate that my hon. Friend is a well-known, hard-working constituency Member of Parliament. I willingly pay him that tribute and I urge my hon. Friend the Minister to listen to him with care.

My argument is that the difficulties facing Warwickshire are not due to local authority profligacy, or to councillors' stupidity, but solely to a rigid inflexible formula. For those reasons, and until a fairer formula is produced—one which does not discriminate against one county—I shall reluctantly vote against the reports at 10 o'clock.

Revenue support grant for Warwickshire is inadequate and a positive change is undoubtedly needed. I hope that my hon. Friend the Minister, for whom I have the utmost respect—I say that with all the sincerity that I can summon—will recognise that. Given the opportunity, I believe that he would recognise the anomalies in the formula and would remedy them. Therefore, I urge him to hold out some hope in his summing up that we shall see an improvement in Warwickshire's SSA and to change the formula that is causing so much difficulty and pain to my constituents and to other people living in Warwickshire.

7.40 pm

Mr. Joe Benton (Bootle)

I listened with great interest to the Secretary of State's opening remarks. Straight away, I must admit to great disappointment at the contents of his remarks. I speak with some experience of local government. Like other hon. Members who have spoken, I was in local government for 20 years. Recognising the present dilemma for local government, I am profoundly disappointed at the Secretary of State's comments. I am well aware of differing views on the poll tax, but the Secretary of State's speech did not do anything to recognise how the review will approach the problem. He made no reference whatsoever to injustices—for example, to low-income families and the unemployed, who have to pay 20 per cent.

Again because of my experience in local government, I recognise that there will always be difficulty and debate over how local government is funded. That has been the case for 20 years, and, no matter what alternatives are produced, they will never satisfy everyone.

Throughout today's debate, hon. Members, mostly Conservative, have criticised the "profligacy" of some authorities, reminding us constantly that the point at issue is the use of resources. I am prepared to accept the importance of that. My local authority, Sefton borough council, would be called mean by some; I prefer to call it stringent and careful. I am sure that, if the Secretary of State were present, he would say that Sefton was well known to him, for its spending practices have earned the praise of several Conservative Secretaries of State of the Environment in the past.

I joined the authority in 1974. At the time, it was Tory-controlled, and it remained so until three or four years ago. I assure the House that, throughout the ramifications of budget planning, there was no mention of growth; the word was always "cuts". It is to the credit of Sefton council that, whichever party was in power, it always obeyed the mandates, diktats and guidance of national Government in regard to spending.

I agree with the hon. Member for Rugby and Kenilworth (Mr. Pawsey) that resources are not contained in a bottomless pit, but there is a distinct difference between monitoring authorities' spending and putting authorities in a straitjacket.

Having consistently exercised prudence, Sefton must now make cuts amounting to £10 million in next year's budget. It cannot even stand still, or it will be poll tax-capped. For an authority that has played fair all along the line, that is a terrible dilemma; I hope that the Minister will be able to advise me, and advise Sefton, how it can be dealt with. One of the main problems is the fact that £5 million must be cut from the education budget, which badly needs the money. I know that many other authorities face similar difficulties.

The problems of the police force have already been mentioned. For the first time, the crime rate on Merseyside has fallen. How do the Government propose to reward its police force? By taking 100 policemen off the beat: their measures will undoubtedly affect recruitment.

Will the Minister tell us how Sefton can impose those cuts without depriving the public of services? As I have said, I realise that it will always be difficult to finance local government, but I appeal to Ministers to consider the injustices of the poll tax when conducting their review. The legislation should never have been on the statute book in the first place; it should now be repealed, and replaced by the Labour alternative.

7.45 pm

Mr. Robert G. Hughes (Harrow, West)

As some hon. Members have already pointed out, this debate is an annual event. It give us the opportunity to make a number of points about local government, often based on experience: the hon. Member for Bootle (Mr. Benton), for instance, made some very serious comments that related to his long experience in local government, including some specific references to the authority that he had served. As he said—and as any hon. Member who has served in local government, and has tried to wrestle with the attendant problems, will know—there are no easy answers.

I only wish that the opening speech of the hon. Member for Dagenham (Mr. Gould) had been equally straightforward. Once again, the hon. Gentleman adopted the "magic wand" approach: a Labour Government would get rid of all the problems, the annual settlement would no longer be necessary, and local authorities would somehow have plenty of money to spend. That simply is not true. It has not been true since Anthony Crosland told local councils, Labour as well as Conservative, that the party was over.

Moreover, it was not a Conservative Secretary of State who first embarked on the Government's present course to prevent profligate councils from milking the central Exchequer—of robbing other councils; we all know that that used to happen. It was the right hon. Member for Bethnal Green and Stepney (Mr. Shore) who changed the system, and he was right to do so. What is more, whatever Opposition Members may say to pacify their friends in local government, a Labour Administration would not change the system, and they know it. If they were honest, they would say so now.

No one can doubt that this is a good settlement for local government. The TSS—total standard spending—for 1991–92 has been set at £39 billion, 19 per cent. higher than that for 1990–91 and 7 per cent. higher than this year's budgets. Why the difference between the figures? Far too many local authorities, between setting their budgets and receiving the outturn figures, lost control of their expenditure—that is, they did not bother to control central Exchequer expenditure. They also agreed to wage rises that they knew could not be afforded. Should the Government pay? No: it is for local authorities to control their own expenditure in a way that is possible for them; and they can control what the Whitley councils decide to award the various categories of local authority staff.

It might be assumed from the stories related by Opposition Members that enormous cuts in council spending had been made—

Mr. Battle

The hon. Gentleman's remarks may lead to confusion. He should make it clear that some wage settlements result from national agreements to which local authorities must then adhere. Some of those agreements—those relating to the fire service and the police, for instance—are entirely out of the control of local authority negotiating powers. Is the hon. Gentleman exhorting authorities to contravene such agreements?

Mr. Hughes

Characteristically, the hon. Gentleman makes a fair point. Local authorities are bound to comply with national agreements—those relating to the police and the fire brigades, for example. However, some national agreements—the Whitley council agreements—are entirely of the local authorities' own making. Local authorities collectively reached a decision about what they would pay. Some of those agreements have led to exorbitant levels of pay. I do not believe that local authorities should be party to national agreements that involve their own staff. However, the hon. Gentleman was right to point to the fact that there are two categories.

Local authority spending during the last two years has increased by 25 per cent. That does not reflect enormous local authority spending cuts. My experience of local government, and considering it in a broader context since I became a Member of Parliament, is that it is good at maintaining services that it has traditionally provided and ensuring that there are sufficient staff to provide them. However, local government never considers the services that it may need to provide in the future. Moreover, it never looks at services where they might be able to make enormous savings.

Local authorities ought to introduce modern management methods. Some of them would reflect what is done in the private sector. They ought to ask themselves whether they are able to provide better services than anyone else, or whether they ought to contract them out to others. In some cases, they will have to take a difficult decision. However, contracting out those services would often lead to better services. When contracts have been put out to tender and bids lower than the local authority price have been received, the result has often been much better services and greater control over their delivery and the amount of money that is needed to provide them.

The Government have rightly announced that, next year, local authorities will have much less discretion over the multipliers that they can use for the standard charge. I welcome that announcement. It is unfortunate, however, that local authorities failed to use sensibly the discretion that was granted to them.

I should have preferred local authorities to retain their discretion. However, when property has been left empty—I refer to empty granny flats, to someone moving home or to an elderly person going into sheltered accommodation—that notional second property has been charged twice the standard charge. That is both unreasonable and wrong. However, the local authorities have been inflexible. I do not welcome the removal of local authority discretion but local government has brought it upon itself.

When flats over business premises, which are difficult to let, are left empty, the multiplier has been limited. Many companies have not tried hard enough, however, to let them. We are talking about thousands and thousands of empty properties, many of which are to be found in areas of great housing need. They could and should be brought into use but they are not, for two reasons. First, businesses find it a nuisance to let them. Secondly, they did not have to pay very much for those properties. Until the introduction of the uniform business rate, they were not rated separately.

Whatever may be right or wrong about the uniform business rate, the fact that businesses now realise that an asset that they have had for some time is valuable and needs to be rented out is important to those of us who care about housing. Unfortunately, the Government say that they intend to impose a maximum multiplier of one. I should impose a maximum multiplier of three, four or even five in order to concentrate people's minds on the fact that such properties represent a community asset that ought to be brought back into use. Only in that one narrow instance would I wish the multiplier to be increased so that those valuable properties can be brought back into use.

A problem relating to the uniform business rate was aired at question time today by the hon. Member for Bolsover (Mr. Skinner). He referred to the slightly embarrassing saga of York Conservative club, which has gone bankrupt—according to the hon. Member, because of the uniform business rate. The revaluation of sports clubs has created a problem. Some local authorities will make no reduction for sports clubs. They have to pay the full uniform business rate. Many of those clubs will have to close, thereby depriving the community of the many valuable services that they provide. I refer to cricket clubs and football clubs and to a particular bowls club in Harrow.

They have not asked the Government or their local authority for money. Nevertheless, they want their contribution to the community to be recognised in the form of a reduction in the uniform business rate. If local authorities will not reduce it willingly, the Government ought to ensure that they do. If the uniform business rate is not reduced, it may lead to serious problems for communities.

It is important that people should understand what the Labour party's plans are for the Audit Commission. Each month it has announced different plans. In October, the hon. Member for Sheffield, Brightside (Mr. Blunkett) said that he would sweep the Audit Commission away. In November, he told the Financial Times that its days were numbered. Today, his hon. Friend the Member for Dagenham told the House that he would keep the Audit Commission—although, when pressed, he said that he would emasculate it.

Mr. Blunkett

I reiterate what I said to the Statutory Instruments Committee that considered the Audit Commission's code of practice: that the Labour party would subsume the Audit Commission into the Quality Commission. Its audit powers would continue. I do not intend to go over ground that has not been ploughed by us but that has been vigorously ploughed by the Government, who have used it as a smoke screen. They never talk about quality.

Mr. Hughes

I am grateful to the hon. Gentleman for having confirmed that he wishes to subsume, as he puts it, the Audit Commission and to emasculate its powers. He does not mind it auditing the books of local authorities, but heaven forbid that it should make comparisons about value for money as between one local authority and another.

Mr. Andrew Mitchell

This is a most important matter, and, if I am fortunate enough to catch your eye, Mr. Deputy Speaker, I shall seek to dwell upon it. The fact that we have had an effective Audit Commission for the last eight years has led to enormous gains. If the proposals enshrined in the Opposition's consultative document were to be implemented, they would emasculate and remove all the benefits of having an Audit Commission. As it is a consultative document, will my hon. Friend join me in urging the hon. Gentleman, who is to wind up for the Opposition, not to proceed with it?

Mr. Hughes

My hon. Friend is right. Anyone who doubts the value of the Audit Commission's work should read the Adjournment debate initiated last week by my hon. Friend the Member for Gedling (Mr. Mitchell). My hon. Friend set out clearly much of the enormously valuable work that has been done by the Audit Commission. I can understand why the Labour party may not welcome its work. It does not go along with its political prejudices, and it has criticised many Labour councils. The reality is that it has done extremely important work and councils would be poorer without its advice.

The Labour party says that it would get rid of capping, which it says is an infringement of local democracy. In this financial year, 4 million people have saved between £26 and £99 each as a result of capping. I do not think that they would thank the Labour party for getting rid of it. The Labour party knows that it cannot control the excesses of some of the councils. It knows that some councils will milk as much as possible from every charge payer or ratepayer or whatever the system may be. By getting rid of capping, the Labour party would be removing protection for ordinary people.

Mr. Illsley

The hon. Gentleman talks of the benefits of capping being between £26 and £99. Can he tell us why the Government will not allow the electorate to vote for a particular authority that sets a certain poll tax level? Where is the accountability that was supposedly built into the poll tax when the Government are prescribing standard spending assessments, budget levels and poll tax levels?

Mr. Hughes

That is an interesting suggestion, and I look forward to seeing it in the next Labour party manifesto. I suspect that it will not be there, and I am not sure whether the hon. Member for Barnsley, Central (Mr. Illsley) is making an entirely serious suggestion. It might be his view, and I will be interested to hear more later.

Competitive tendering has saved local authorities about £3 billion a year. It is clear from what is said that the Labour party would do everything possible to disrupt or get rid of competitive tendering. About a year ago, the hon. Member for Dagenham (Mr. Gould) said: A future Labour Government will relieve local authorities of going out to compulsory competitive tender across a whole range of services. That is no surprise to those of us who served on the Committee considering the Local Government Bill. It was clear that the Labour party did not care about value for money. It wanted local councils to keep control of everything, whether they were providing a good service or not, and that is typical of the Labour party's policy.

The Labour party needs to answer two questions, and I hope that the hon. Member for Brightside will be able to answer them tonight. When my right hon. Friend the Member for Bath (Mr. Patten) announced the £3 billion increase in external finance for local authorities next year, the hon. Member for Brightside called it peanuts. In December, he called for a 50 per cent. increase.

If the hon. Gentleman is being honest, he should tell us the answer to one precise question: what level of extra funding would a Labour Government make available to local authorities? That is a simple question. I also want the hon. Gentleman to assure the House that the promise of more money, at whatever level, will not mean an increase in the standard rate of income tax or the overall tax burden. I do not know whether the hon. Gentleman wants to answer that point now.

Mr. Blunkett

I should be delighted to give as my answer a simple riposte. Perhaps the hon. Gentleman will tell me how much the £1.2 billion announced by the Secretary of State last week will add to income tax, VAT or cuts in other expenditure.

Mr. Hughes

We recognise that that is part of the taxation pattern. The £1.2 billion is getting on for 1 p on income tax. We know that. However, the hon. Member for Brightside called £3 billion, in excess of 2p on income tax, peanuts. If he thinks that that is not enough spending, how much does he want to spend? I shall ask him once again whether he can give an assurance that it will not add to the general level of taxation or the level of income tax. Is the answer yes or no? If he cannot answer it now, perhaps he will do so in his reply.

The reality is that the Labour party is shy of linking one with the other, whereas we recognise that any spending commitment has a taxation commitment as well— [Interruption.] If the hon. Member for Brightside wants to intervene, I am happy to give way. If he mumbles from a sedentary position, it is difficult to respond.

The Labour party has an appalling record in local government and that can be illustrated by two things. First, if one looks at the level of non-collection of rent and rates in London boroughs, one will see that the Labour party leads the field. How can one of the Lambeth Members of Parliament complain in the debate about the level of funding to his borough when, in that borough in the year to 31 March 1989, there was £17.49 million of uncollected rents and £33.2 million of uncollected rates? Every penny of that could be spent on services in that borough, but the authority cannot be bothered to collect it. That is the case not only across London but in many Labour authorities up and down the country.

As has already been said, if Labour councils kept fewer properties empty, they could solve the homelessness and economic problems in their areas. Manchester has over 6,000 vacant dwellings, Liverpool has nearly 6,000, Sheffield has 3,400, Salford has 2,500, Birmingham has 2,400, Sandwell has 2,300 and Hackney has 2,100. The one thing that binds those authorities is that they are all controlled by the Labour party—a party that would rather whinge about the level of funding than collect its rents or rates or fill the property it owns.

It is important for the future of local government that local authorities, irrespective of who controls them, should be looking constantly at value for money. It is not enough to come along to the debate or to say to local people, "We run efficient services," merely on the basis that they think they do.

It is my experience that local councillors, irrespective of party, have insufficient information about the central bureaucracy of the council in which they serve and the way in which large sums of money are spent or about the most up-to-date practices of management that could often save a great deal of money for local authorities that could and should be used on other services. Almost all local authorities need to look carefully at the management services, the way they manage contracts or direct services and how those services are delivered to see whether they can achieve better value for money.

I want to talk about the long horizon that has been mentioned by my right hon. Friend the Secretary of State, the hon. Member for Dagenham and others. There have been a number of local government reorganisations, most of which, in my judgment, have not been very successful. It is no secret that I was not keen on the reorganisation that led to the abolition of the Greater London council. I do not want us once again to bring forward a reorganisation package that is ill thought out because we have not considered what services we want local authorities to provide.

We must seriously consider, and if possible on a cross-party basis, the services that are provided by local councils. What do we want them to do? At what level should they operate? What services are better operated by them and what can best be done by Government? If we do that, perhaps we shall find genuine solutions to the fundamental questions that we all air in these debates. I will not be happy with the reorganisation package unless I feel that those fundamental questions have been answered.

8.20 pm

Mr. Harry Cohen (Leyton)

I noted the words that the hon. Member for Harrow, West (Mr. Hughes) used earlier. He said: "Labour will not change the system." I have news for him: Labour is committed to changing the system by abolishing the poll tax. He will find that in the next Labour manifesto. The Conservative party and the Secretary of State made noises about changing the system, but they are hedging, delaying and back-tracking on abolishing the poll tax, which, as everyone knows, is iniquitous and massively unpopular.

Sometimes I think that the Alan B'Stard tendency in the Tory party have set its policies on local government. Those Tory Members have glorified the callous effects of the cuts that they have imposed on local authorities. We have today heard Conservative Member after Conservative Member from that Alan B'Stard tendency.

Poll tax capping is enforcing a renewed rundown of local authority services, despite higher bills for poll tax payers. In the London borough of Waltham Forest, the fear of poll tax capping has forced cuts next year of 5 per cent., which will affect social services, housing repairs, rents and education. The number of secondary school teachers will be reduced, despite many teacher vacancies. The Government are responsible for that. Traditionally, the borough has offered better public services than its neighbours, especially for the needy, in education and in provision for the elderly, but it is being punished for doing so.

The system is still unfair. Poll tax payers in Waltham Forest had to give £42 as a direct handout to Wandsworth and other boroughs. Wandsworth is getting that money and much more under the extra grant system, whereas Waltham Forest gets nothing. If it did, the poll tax would be less than £200.

The leader of Basildon council, Peter Ballard, has contacted me out of desperation because he cannot get Basildon's voice heard in the House. The two Conservative Members of Parliament for the area have repeatedly ignored Basildon's local government needs. Basildon and Southend are similar boroughs in Essex. One is a new town and one is an old-established area, but they are similar in many ways.

Mr. Andrew Mitchell

Will the hon. Gentleman give way?

Mr. Cohen

Is it on Basildon?

Mr. Mitchell

Yes, and I am grateful to the hon. Gentleman for giving way. I hope that he observed the normal courtesies of the House and advised my hon. Friend the Member for Basildon (Mr. Amess) that he would be raising this matter. Conservative Members know that my hon. Friend is an outstanding advocate for Basildon and an extemely good Member of Parliament.

Mr. Cohen

The hon. Gentleman has not heard my case yet, but I have given notice to both hon. Members who represent the area, and they have chosen not to be here.

Basildon's standard spending assessment is £12.1 million, whereas Southend's is £17.8 million. Basildon receives Government grant of £18.4 million whereas Southend receives £24.3 million—almost £6 million more. The populations of both towns is almost the same: Basildon's is 120,000 and Southend's is 123,000. The Government cut Basildon's grant by 5 per cent. this year but increased Southend's by 1 per cent. The SSA per person in Basildon is £100, but in Southend it is £144—44 per cent. more. The revenue support grant is £153 per person in Basildon, but £179 in Southend, almost 29 per cent. more.

Local Members of Parliament have let those facts go unchallenged. There has been not a word about that, and no fight for Basildon in the House. If Basildon received the same grant as Southend, Basildon's poll tax payers would be £50 better off.

Mr. Illsley

My hon. Friend may recall debates last year on poll tax capping, when hon. Members representing the Basildon area lamented the fact that Basildon had not been capped.

Mr. Cohen

That is right. Certainly one of those hon. Members has been eager for capping and has virtually urged the Government to cap the council.

The council has written twice to the Secretary of State asking for a meeting to discuss those issues and the unfair way in which Basildon is treated, but it has twice been refused a meeting. It wrote to the local Members of Parliament, but they ignored its call for help.

Basildon council has been capped at £23.7 million, a poll tax of £443, when it budgeted for £27.9 million, a poll tax of £478—a difference of £35. To reach the capped level, it has had to make £4.6 million of cuts. It has minimised the damage to services by capitalising £3.1 million of interest payments, but it has still had to make 1.5 million of service cuts to get to the capped level. It has had to make a further £2.4 million of cuts to avoid capping for the forthcoming year. That has led to 150 jobs going west.

Basildon needs £18 million just to deliver the statutory duties imposed on it to collect the poll tax and to pay debt charges. New legislation that the Government are imposing will cost another £500,000, and it has redundancy costs to pay which the Government have imposed.

Mr. Michael Brown (Brigg and Cleethorpes)

I have been listening carefully to the comparison that the hon. Gentleman has been drawing between Basildon and Southend. Should he not extend the comparison? I wonder whether part of Basildon's problem is that it has failed, whereas Southend has succeeded, in privatising and contracting out many of its services. Is not that the reason why Southend is able to deliver services such as refuse collection so much more efficiently and therefore at a much lower cost than Basildon? The hon. Gentleman should listen to my hon. Friend the Member for Basildon (Mr. Amess) when he urges the same disciplines on Basildon as have been applied to Southend council, because that might solve many of Basildon's problems.

Mr. Cohen

Basildon's services are of a very high quality, whereas Southend is in many ways quite seedy and rundown. The hon. Gentleman cannot deny that. Certainly he did not address the differences in grant levels. Nor did the hon. Members for Basildon (Mr. Amess) and for Billericay (Mrs. Gorman), who should be here to take the figures apart. Anyway, Basildon council has to find £18 million to provide basic statutory services.

The fact that the Government's policies have resulted in homelessness has created an extra burden. The number of people in bed-and-breakfast accommodation in Basildon has gone up by 3,500 per cent. since 1987, at a cost of over £1 million to poll tax payers—over £8 for every payer. Then we have the investment swaps. Basildon has been successful at that. The decision of the House of Lords could result in Basildon's losing £2 million from its balances, and that amount could go on to the poll tax, which would be unfair. I hope that the Minister will assure us that poll tax payers will not lose as a result of that arrangement and that losses will be accounted for where they should be—at the banks. We need an assurance that, if that is not to happen, the council will be properly compensated.

There have been cuts this year already. All holiday schemes for the elderly and disabled have been stopped; welfare transport and shopping trips for those who are virtually housebound have been reduced; summer holiday play schemes have been cut; green way and verge cutting have been reduced; the cost of the spring clean-up campaign cannot now be met. The hon. Member for Basildon was one of those who boasted about how clean Basildon is.

Then there are environmental health cuts, cuts in welfare rights advice, the closure of six sports centres and swimming pools for an extra day, and an increase in fees at swimming pools and recreation centres. Bus passes have been affected, and the value of food vouchers has had to be reduced from £66 to £52. There have been cuts in the repair and maintenance of buildings.

The councillors themselves cannot be blamed for all this. Indeed, they have even demonstrated responsibility by reducing their own allowances in an effort to stay within the figures. It really is down to the Government, yet they boast about poll tax capping. They set the figures, so they are to blame for the cuts that have taken place and the ones that are to follow.

The leader of the Basildon council, Councillor Ballard, tells me that, if it is again capped at £23.7 million, the effects will be disastrous for the people of the district. Major facilities will have to close. Most of the welfare package and the services for elderly people will be lost and the council will have to make hundreds of staff redundant. Basildon has not been fairly represented in the House on that issue.

We are spending about £30 million a day on the war in the Gulf. The cost of the war for one day is greater than Basildon's annual budget. The Government have said that there is not a bottomless pit. For the war,there is indeed a bottomless pit, but the public services to which war victims will come home, and on which they will rely, have been decimated. That applies to Basildon and to other places throughout the country. The Government should be giving Basildon a much fairer deal.

8.35 pm

Mr. Andrew Mitchell (Gedling)

I start by referring to a point that was raised by the hon. Member for Norwood (Mr. Fraser), who seemed to chide my hon. Friends and myself for what he referred to as central office propaganda. I do not know whether he imagines that at the bottom of central office there is a machine that churns out untruths about local government, but I can assure him that these matters are based on fact.

My reason, and that of my hon. Friends, for following so closely what goes on in Lambeth, although that borough is more than 100 miles from where I live, is that it is close to Westminster. It gives us and the electorate some indication of what a Labour Government would be like.

I understand the sensitivity that is displayed when my hon. Friends and I quote what is happening in Lambeth. The facts are truly horrific. When I tell the House that the Labour leader of Lambeth council, Joan Twelves, has refused to pay the community charge, saying that she will put her charge bill "in the bin", my hon. Friends will be truly astonished. Then I can tell them that it is extremely unlikely that the contents of that bin will be collected. In August 1990, Lambeth council received 877 complaints about dustbin collections and 1,138 complaints about street cleaning.

These are very serious matters. They go to the heart of people's perception of the quality of local government and the way in which it is run. The point about Lambeth is very important indeed. It is that Lambeth is an example of places where one finds appalling services, dreadful value for money and completely ineffective management. We raise the subject of Lambeth not only to embarrass the Labour party but because we feel that many of the problems of Lambeth simply must be addressed as soon as possible.

Mr. Battle

Does the hon. Gentleman agree that it is more expensive to live in Harrogate, which has a council that is SLD and Tory hung, than in Leeds, just down the road, which has a very prudent and wise council? We have heard lots of anecdotes about individual boroughs. Would not it be better to address the structural fault, which is the means of assessing the SSA? Some Conservative Members have come to realise that that is the problem we face.

Mr. Mitchell

The hon. Gentleman has missed the point. Many of my hon. Friends, in their comparisons with Wandsworth—an excellently managed borough right next door to Lambeth—have addressed exactly that point. We are not looking at these facts in isolation; we are making exactly the comparison that the hon. Gentleman says we should be making. I am very pleased to be able to correct him on that point.

At the beginning of the debate much play was made of the wide consultation that is taking place about the steps that are needed to reform the community charge. I welcome that wide consultation. The Secretary of State made it clear that it was continuing at local level, at national level and across the political divide, and he once again invited Opposition Front-Bench Members to come and talk to him about the reforms that are necessary.

I urge hon. Members to think carefully before again turning down that suggestion. There is a critical need for wide consensus on any reform of local government and I hope very much that Opposition Members will welcome the proposal that in the spring there should be an interim report making clear what is ruled in and what is ruled out of the community charge review. I hope that, as a result, it will be possible to achieve wide consensus in respect of any reform of local government" which will have to be attached to reform of the community charge. Many of us feel that a further upheaval for local government will be almost too much for councils to contemplate, but if there is to be more change, let us have the widest possible consensus about it.

I welcome very much the recent announcement about the community charge reduction scheme. I believe that it will direct help towards couples and single people who lost out badly when the community charge was introduced. I think particularly of many of my constituents in Netherfield, who will benefit from the scheme. I am very grateful to the Government for heeding the words of those of us who asked that that particular problem should be addressed.

In any debate on the level of the revenue support grant, it must be said that much extra money has been provided. There has been an increase of 19 per cent., which is way above the level of inflation over the past year. There is £1.7 billion on top, through the community charge reduction scheme, and there is another £4.5 billion in extra money. Those are large sums, and it is greatly to the Government's credit that they have managed to find these sums at this time. However, any scheme that leads to 18 million people receiving some form of benefit must be susceptible to improvement; that is why I welcome what my right hon. Friend the Secretary of State said this afternoon.

Mr. Illsley

The hon. Gentleman mentioned that funding had increased by 19 per cent. He will find that the Government have increased the standard spending assessments by 19 per cent.; they have not increased the level of Government funding by that amount. Those are two different figures.

Mr. Mitchell

The hon. Gentleman is right, but that point was dealt with clearly by my right hon. Friend in his opening speech. I am sure that the hon. Gentleman will agree that, whatever the basis, there has been a steep increase in funding.

This afternoon, we have dealt with civilising the community charge for the next year and with the major reforms thereafter. Any major reform of local government will now have to take on board the importance of unitary local government. I am a supporter of unitary local government which, if the units are the right size, will ensure that local government is nearer to the people it seeks to represent and will also make accountability, which is so important, that much easier.

When discussing accountability, I want to emphasise the position of my constituents in Gedling, who are fortunate enough to have a prudent and successful local council, which spends below its SSA. However, it is saddled with high expenditure by Nottinghamshire's socialist county council, which spends no less than £80 per head above its SSA. It is extremely important that my constituents should understand why their charge is so high and where the blame for that lies. It lies with Nottinghamshire's socialist county council and not with Gedling's prudent, successful and well-respected borough council.

Mr. Andy Stewart (Sherwood)

For the benefit of Nottinghamshire people, my hon. Friend should reiterate what he has just said. He should also comment on the scandalous suggestion by the profligate Nottinghamshire county council which last year creamed off £65 million of money meant for schools. It now tells everyone in the county that it may be community charge capped and may have to cut the education budget. That is scandalous.

Mr. Mitchell

My hon. Friend is absolutely right on that point and I hope that he will be heard by Nottinghamshire county council, which still has, at this late stage, a chance to introduce some of the remedies that my hon. Friend thinks are so important.

The issue of capping has been raised today. My right hon. Friend the Secretary of State has set out clearly what the criteria are, so anyone who is capped is very much a volunteer. My hon. Friend the Member for Harrow, West (Mr. Hughes) made the point that capping has led to 4 million people saving up to £99 this year. I hardly think that they will wish to thank the Labour party when it says that capping should not take place. It is also interesting to note that, in spite of the dire warnings from the hon. Member for Dagenham (Mr. Gould) about what happens when capping takes place and how meals-on-wheels and other vulnerable and important services are dealt a death blow, that tends not to be the case.

My right hon. Friend the Secretary of State mentioned the magazine of the National and Local Government Officers Association called Public Service. It has recently carried out a survey of capped authorities. My right hon. Friend referred to the survey and I believe that it is worth further study. It says: Brent: No cuts were required as a result of capping … Bristol: No redundancies, no cuts in services, no charge increases … Calderdale: Holding growth, increasing some charges and cutting some non-essential services … Camden: No cuts necessary. Cap was £4.4 million … Council said 'Our income was sufficient for us not to need to make cuts'… Greenwich: Some redundancies expected, but no large scale job-cuts.… Lambeth: Managed to avoid closure of front line services and no redundancies … Rochdale"— a Liberal authority— No compulsory redundancies. Those are not central office or Government quotations and they have not been manufactured by my hon. Friends. They are quotations from the house magazine of NALGO. I am sure that we shall give them the weight that they deserve.

I draw the attention of the House to the Audit Commission, which has been mentioned several times in our debate. We concentrate very much on input and there has been much bandying of statistics across the Chamber on the level of funding for services. Nevertheless, although we spend on enormous amount of time examining input, we should also spend far more time examining output and value for money. The Audit Commission is not a stick with which to beat local government. It has criticised central Government when, from time to time, they made the job of local authorities that much more difficult. To characterise the commission as having outlived its usefulness, especially in the unlikely event of there being a Labour Government, is a tremendous misunderstanding of what it tries to do. It is easy for the House to undersell the work of the Audit Commission.

I argue that the commission is the single greatest force for good in achieving best value for money in local government expenditure that the Government have introduced. Just under £1.5 billion of savings have been identified by the Audit Commission. Much of its work may seem dry and analytical, but it is of enourmous importance.

I want to cite a couple of the commission's reports. There was the report of "Improving the Performance of the Finger Print Service". The report showed that some finger print bureaux spent six times as much community charge payers' money as others. There are wide variations in effectiveness in terms of the convictions secured through finger print evidence. The figures vary from 75 convictions per officer down to just four convictions per officer. It is a significant report, which has not had enormously wide publicity, but which has shown the Audit Commission at its very best. There are many pointers to the fact that we do not get the best value for money from the police, and the detailed work of the Audit Commission is extremely important.

Another report, which I have plucked at random, Is entitled "The Cost of Absence Through Sickness to Local Authorities". It showed that, on average, London boroughs have twice the CBI national average of days lost through sickness. Before the Audit Commission started its investigation, some local authorities did not know what their own levels of absence through sickness were. Lambeth was, rightly, so appalled to learn of its level of sickness that it introduced immediate management changes—which promptly led to a strike. However, at least it was able to make the necessary changes. Brent is losing £8 million a year through sickness.

If local authority sickness in London was at the level of the CBI national average, the community charge per head in London would decline by £25. That clearly shows the merit and value of the survey. We should not lightly dismiss the importance of the work of the Audit Commission. I argue that we should significantly increase its work.

I want to draw the attention of Opposition Members to other important studies. The Audit Commission produced a study on "Building: Direct Labour Organisations". It produced a purchasing study on how local authorities buy goods and services, which has been widely welcomed, and it has also done work on the maintaining and buying of vehicle fleets. Its work on community care has national as well as local importance. It has done work on "The Competitive Council", which is much used by many councils and which identifies eight key factors for assessing success. I urge the House and especially the Opposition to reflect carefully on what the Audit Commission has already achieved and what more it could achieve not only in local government, but in other areas.

The hon. Member for Sheffield, Brightside (M r. Blunkett) mentioned earlier a document entitled, "Quality Commission:—A Consultation Paper" which was published this month by the Labour party. I note with relief that it is a consultation paper. I very much hope that the Labour party will think carefully before hardening those proposals. There are two positive points in that paper, the first of which is in paragraph 3.4. The paper admits that the Audit Commission brings a certain rigour to the way in which local authorities conduct themselves. Labour Members are to be congratulated on that conclusion. Then why remove the rigour, which is the effect of many proposals in that paper?

The consultation paper also states that a management advisory team can be put into authorities such as Liverpool which are completely out of control. I welcome that sensible measure. Elsewhere, the document is a disaster because it gets rid of value-for-money studies and competitive tendering and invites councils effectively to volunteer for quality audits. That is an absurd proposition. Labour Members have sold out to NALGO, the National Union of Public Employees, and the various local government unions. It would be a terrible mistake if the Opposition adopted that proposition. I hope that the hon. Member for Brightside, who is in many respects a reasonable person, will think carefully about whether he wishes to pursue it.

The Audit Commission is an independent, external, intrusive, fearless watchdog, not the toothless puppy that the Labour proposals would render it. I urge the hon. Gentleman to consider whether he wishes to proceed with that document.

I hope that the Audit Commission's powers will be extended into public housing, the police, magistrates courts, university finance, and in particular, schools. An article in today's issue of The Guardian mentions the report entitled "Management within primary schools" and now looks at tools and ideas to help schools use their new budgetary responsibility. It is an important article, and it deserves to be widely read.

8.50 pm

Mr. John Cartwright (Woolwich)

Since 1979, we have had as many systems of revenue support for local government as we have had Secretaries of State. One thing that they all have in common is that they are almost incomprehensible to anyone but a few academics and specialist local government officers. We were promised that with the poll tax would come a simpler, more acceptable system. Hon. Members have shown that SSAs are no more acceptable than the GREs before them. Like other hon. Members who have spent much time in local government, I remain unconvinced that the mandarins of Marsham street can work out what is right for every individual local authority to spend, however sophisticated their computer programmes may be.

The only justification that was put forward for the poll tax was that it increased accountability. It could not be defended on the grounds of fairness, justice or efficiency, but it was argued that it would increase the accountability of local authorities to the electorate. It was to do that by reducing the pain threshold and increasing, therefore, the taxpayer's interest in what went on in his local council. It was argued that, in that way, the amount of local council spending could be driven down.

Then there was the rather strange concept of what one might call reverse accountability. The poll tax was to make electors accountable for the spending decisions they took when they cast their votes in local elections. That was to be done by making everybody pay something towards their poll tax, so that no one was insulated or protected from the effects of the spending choices that they made at election times.

The past year has seen the collapse of both approaches. As we know, the poll tax did not result in accountable local government spending—just the reverse. Many local authorities seized the opportunity that was presented by the changeover to jack up their spending and to blame the Government for high poll tax bills. Accountability failed because it was impossible for most poll tax payers to know whether the charges were reasonable. They had no basis on which to compare poll tax bills with previous rate bills. They saw high levels of poll tax all over the country, and it was perfectly natural that they should blame the Government rather than the local authority.

As other hon. Members have pointed out, in any case, capping local authorities totally undermines the concept of local accountability. Maximum spending levels are set by central Government. That must encourage a capped local council to cut high-visibility and essential services and then to put the blame on central Government.

At the other extreme of the accountability argument, I welcome hon. Members' comments about the urgent need to scrap the 20 per cent. poll tax minimum charge. There was never justice in the concept of universal taxation—the idea that everyone, however poor, must pay something towards their poll tax bill. The Government pride themselves on their belief that benefits must be targeted at those most in need. Why should they advance the curious concept that everyone should pay taxes? If benefits should go to those most in need, surely taxes should be paid by those who are best able to pay them. That is what we do with national taxation: because the poor might vote for a high-spending national Government, they must be forced to pay national income tax in some way to deter them from making that decision at an election.

The policy of making even those on income support pay one fifth of the poll tax makes the poorest even poorer. That policy may not create many problems in Bath or Henley, but in constituencies such as Woolwich these are single-parent families on income support and elderly people on state pensions who are already struggling to make ends meet. Making them pay one fifth of their poll tax is simply adding a substantial extra burden and much unnecessary worry. It cannot be right to make such people worse off.

It is a simple fact that the cost of trying to collect large numbers of very small sums is uneconomic. We have heard great praise for the Audit Commission. It is worth remembering that the Audit Commission supported the proposal that the 20 per cent. minimum payment be abolished. It recognised that that would make the task of collection a little less difficult and would reduce the huge administration costs associated with the poll tax. It would also make the system just a little fairer.

We have heard much about the results of capping, so I shall say a word about those results in Greenwich. Greenwich has the doubtful distinction of having been capped ever since capping began. But, as has been said, thus far we have not seen in Greenwich or elsewhere the dramatic cuts that we thought might flow from capping. It is true that a borough such as Greenwich has evaded the worst effects so far by a variety of one-off schemes, creative accounting, the use of balances, and all the rest of the financial juggling to which we have become used in local government. But the chickens, at last, are coming home to roost.

We know that the likely maximum total spending in Greenwich for the next financial year will be £212.95 million. The council's projected spending for that year was £248.2 million, which leaves a spending gap of £35.275 million for the authority—a cut of more than 14 per cent. in the spending programme. Action has already been taken to make cuts of about £20 million, but a further £15 million in cuts must still come.

It is interesting to see where the cuts have fallen. There have been increased charges for home helps, lunch clubs, meals on wheels and other services to the elderly. Perhaps the meanest cut of all is the scrapping of the home bathing service for elderly people who cannot bathe themselves, saving only £36,000 in a full year. The elderly and the disabled are now limited to one journey a week on the taxi card service. Services for the mentally handicapped have been cut and old people's homes are to be shut.

In contrast, and oddly, the budget for social services central administration is planned to increase by £1.6 million. Oddly, a £90,000 grant to a theatre which is not even in the borough is to continue. The council's newspaper is to continue, at a cost of £120,000 a year plus delivery charges. Now the council is producing a series of coloured leaflets, one for each service area, detailing the cuts that it is making and, of course, blaming the Government for them.

That, it seems to me, demonstrates the weakness of the concept of central control of local council spending. Faced by a crude cap, many councils do not react by asking how they can improve the efficiency of their operations and deliver the same quality of service at lower cost. They take the easy way out, cut spending and blame the Government. That may reduce the total level of spending, but it is no way to provide value for money.

All of us who have had experience of local government and local government finance over the past 20 years or so know that reform of local government finance is a minefield. I suspect that Ministers now bitterly regret the fact that they ever wandered into that minefield. I have lost count over the past 20 years of the number of Government inquiries, unofficial and official studies and reports, Green Papers and White Papers all directed to the problem of how to produce a reasonably fair system of paying for local council services.

It should be obvious by now that if there had been a simple, straightforward solution to this problem, someone would have stumbled on it long ago. It is absolutely clear that the search for an easy solution is like the search for the philosopher's stone or the holy grail. It is an illusion, and, is doomed to failure.

We have to accept, if we are looking for the least bad solution, that any system of local government finance that any of us dreams up will have a number of serious drawbacks and defects. What we are looking for, in my view, is the scheme with the fewest snags. Since Layfield produced his report in 1976, I have been convinced that the most promising—indeed, the only—way forward is that of local income tax. I have heard nothing to change that view since 1976, and certainly the experience of the poll tax over the past 12 months has not changed my belief that local income tax is by far the best way of paying for local services. In my view, the sooner we get on with it the better it will be for the health of our local government system.

9 pm

Mr. Allen McKay (Barnsley, West and Penistone)

Many of us have been looking closely at the idea of a local income tax for some time. The problem is the variation of incomes in different areas. In an area such as mine, which has a low income rate and a low income base, the tax would not supply sufficient money to run local government. So there would also have to be equalisation, grants to offset that and all the other things.

I was disappointed by the Secretary of State, for a number of reasons. He smiles, and rightly so. I was talking to members of the Fire Brigades Union before I came into the Chamber for this debate, and I said that at best we would have a Labour Government who would get rid of the poll tax altogether and at worst a Secretary of State who would get rid of the poll tax anyway.

I should have known better. Two years ago, there was no doubt that the right hon. Gentleman wanted to get rid of the poll tax because he realised exactly what it is—a vote loser. He is no idiot. He knows all about its impact both in the House and outside. Government supporters know exactly what it is, because in recent debates not one hon. Member has spoken in favour of the poll tax.

We should remind Government Members that, when the right hon. Member for Circencester and Tewkesbury (Mr. Ridley) brought the poll tax to the Floor of the House, with the clear statement that it would clobber local government, they waved their Order Papers to support him in the Chamber, and they supported him also in the Lobby. However, times changed and people realised that they had got hold of a tiger by its tail. So when the Secretary of State said that he wanted to change it, believed him. I should have known better.

Perhaps there will still be a change of heart and a change in the poll tax. A change is needed; the right hon. Gentleman knows it, the Government know it and Government supporters know it. I see no reason why the Secretary of State should not come right out with the statement that we should get together and find an alternative to the poll tax instead of tinkering about with it, because no tinkering will make any difference and it will be very expensive. Rita Hale of the Corporation of Insurance and Financial Advisers put her finger on this point when she said that the poll tax would become more and more expensive each year.

The Secretary of State quoted Barnsley as having collected 93 per cent. of its poll tax. He should also have examined how much it had cost to collect. it. The chairman and treasurer of Barnsley finance committee said quite openly that it would be cheaper to get rid of the 20 per cent. and not collect it at all, because it is costing more and more to collect. So, if we are talking about efficiency, the first thing that we should do is get rid of the 20 per cent., and we would save money.

People have talked about the poll tax and local government and the facilities provided. Local government is a marvellous, mostly efficient animal which is different in every area. Different areas at different times have different, complex needs which depend on the locality. No one tonight has mentioned the democracy of local government.

The basis of the government of this country is local government. It has evolved in a certain way and we should never forget it. Local government is about local people, the people who elect it and are represented by it, as well as the people elected to carry out the wishes of local people. The poll tax interferes with local democracy, local wishes and local people. Surely it is right that local people decide how much they want to spend and are determined to spend on local services. We have forgotten that in the debate, because we have concentrated on scoring political points. That is wrong. Local government is bigger and worth more than that because it is so important.

The most important aspect of the reports is their effects. The important thing is not how money is raised, but how it is spent on what people need and how money is distributed. Efficiency can be measured in many ways. Let us consider South Yorkshire police authority. The chief constable is extremely worried because the authority has the lowest ratio of policemen to population. So the number of policemen should be increased, not reduced. Yet under the present proposals, 120 officers on the beat will be lost. Not only that, but 200 civilians in the force must go. To make up for the latter, 200 policemen must be taken off the beat, so effectively 320 policemen will disappear from an already depleted force. That is not right at a time when the crime rate is rising.

I have taken up the problems of the fire brigades with the Secretary of State on previous occasions. I wish to deal with the consequences of the reports on South Yorkshire fire service. If we are to believe the fire chief, and we should, in 1986 the service lost 67 fire-fighting posts. In 1988 it lost 28 posts and now, because of the poll tax, it is again likely to lose 150 posts. That is a ridiculous position and it cannot and should not be sustained.

The number of firemen is considerably below Home Office recommended numbers. When a delegation recently visited Earl Ferrers, he said that it would be foolish to allow the number of firemen to fall below the Home Office figures. Not only has there been a loss of fire cover and full-time personnel, a failure to retain personnel and a reduction in the number of fire stations, but call-out time has increased from five minutes to eight or perhaps 10 minutes on first and second calls. That is unacceptable and should have been avoided at all costs.

To return to local government itself, a letter from the Minister for Local Government and Inner Cities said that under the Government's proposals Barnsley's standard spending assessment would increase by 19.3 per cent. That is slightly higher than the average increase for metropolitan districts. In other words the letter says, "At least we are looking after you." But, taken on a year-on-year basis, the increase is only 2.7 per cent. over the last year. With inflation at 9 per cent., teachers' awards already set at 9 per cent. and other wage increases still to work through, that is an effective cut in local government services—on top of a £10 million cut last year.

The Secretary of State and the Minister of State know exactly what that means in our area, with its low rateable values, low wages and low level of facilities. Nevertheless, it is trying to pull itself out of the mud, and it will, irrespective of the effect of central Government on local government. It means that we have not built a nursery school for five years. The chief education officer told me that, on current prospects, we will not build another, at a time when there should be good nursery provision.

For three years we have been rationalising schools, and schools are now being closed at a rate at which we used to close colleries. Children have been transferred from one school to another; now they have to move again. That is wrong in rural areas where the school may be not just the school but the chapel and the community hall for the village. Because of rationalisation and poll tax capping, authorities have to close schools. That is a direct effect on Government policy.

It is time that the Secretary of State and Minister of State got their act together. When they ask my hon. Friends to co-operate on the poll tax, I hope that my hon. Friends will keep saying no. If the Government say that they will get rid of the poll tax and look for an alternative, I am sure that my hon. Friends will say yes to co-operation.

9.10 pm

Mr. Eric Illsley (Barnsley, Central)

The Secretary of State said that capping was necessary for authorities with excessive budgets. That is a fallacy. Capping is available for authorities whose budgets are above their standard spending assessments. Those authorities are not profligate; they are not high spenders. If we look at the list of authorities which were capped last year, it is easy to see that most of them were reasonable. My authority was capped, yet 250 other authorities had higher poll taxes.

The Secretary of State said that standard spending assessments were based on fair and reasonable criteria. It is a pity that he did not attend the Standing Committee on the Community Charges (Substitute Setting) Bill, where he would have heard the arguments against the SSAs and the information put forward which showed that they were based on irrelevancies and data taken from the 1981 census. That information is well out of date and in many respects irrelevant. Many of the indicators within the SSAs did not relate to the services provided.

The Secretary of State referred to road lengths being one aspect that was taken into account in setting SSAs. If he came to Barnsley, where roads have been damaged by mining subsidence, he would realise that it is not the length of the road but the quality of the surface which causes major problems for the local authority. Use of wrong information and data lead to many anomalies.

I have said many times in the House that capping is based on inadequate standard spending assessments and on how much the poll tax is greater than SSA. The local authority does not set the SSA, so how can it be classed as an excessive spender if the amount of money that it can spend is laid down? It is pointless for Conservative Members to continue to describe local authorities as excessive spenders when they are no longer allowed to determine their own budgets. Even now, local authorities cannot set poll taxes more than 7 per cent. over their previous budgets. Central Government prescribe how much more poll tax they can levy, how much grant they receive and what can be spent. SSAs are crucial to capping, but they are totally discredited, being based on unfair information and irrelevancies.

As to aggregate external finance, the revenue support grant has been increased by only 1.9 per cent., whereas the national non-domestic rate has been increased by 19 per cent. When we talk about aggregate external finance, it is not, as the hon. Member for Gedling (Mr. Mitchell) said, that the Government are making a 19 per cent. increase in funding. In fact, they are allowing for extra funding of 1.9 per cent. The rest will have to come from national non-domestic rates.

It is the business community that will have to find the bulk of the increase. In the past three weeks, up to 1,000 job losses have been announced in my constituency. Some of those cuts arise from a factory closure. It is not that the company concerned has gone bankrupt or that it has no orders. It has a number of factories and to save money it has simply decided to close down the one in my constituency. As long as we continue to pass the financial burden on to such businesses, that excuse will continue to be given for factory closures.

Aggregate external finance has been increased by 12.8 per cent., but only 7.7 per cent. of that is to be funded by central Government. We have capping criteria of 9 per cent., 7 per cent. and 5 per cent., depending on the percentage above budget. Revenue support grant and business rates are decided by the Government. Now, budgets are prescribed by the Government. There is no accountability in that. There is no chance for the local elector to go to the polls and vote for or against a local authority that sets a high poll tax. In any case, in many instances last year, the elections came long after local electors had been made aware of what the poll tax levels would be.

Let me echo the comments of my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay). My authority's SSA has been increased by 19.9 per cent. for 1991–92, yet we still come 36th in the list of 36 metropolitan districts. Manchester has an SSA of £1,550 per adult, yet in Barnsley we have £881 to provide the standard level of service. That means that Barnsley receives 55 per cent. of what Manchester receives to provide a standard service. What Barnsley can spend in the forthcoming year is to be restricted as a result of calculations based on the 1981 census and its irrelevancies.

There have been changes in the SSA methodology. I am almost embarrassed to say this, but Barnsley has benefited from a small increase in its standard spending assessment. I was not going to mention that fact in case it was the result of a mistake in the Department and it was taken away from us. We benefited to the tune of £500,000. Revenue support grant in Barnsley has been reduced by £17 per adult since last year, but the business rate poundage has been increased by 10–9 per cent.—bang in line with inflation. Why should not revenue support grant increase in line with inflation? Why cannot SSAs and budgets be increased in line with inflation? Why must the burden be passed on to non-domestic rate payers? In terms of area protection, my authority will lose £4.1 million under the arrangements.

When all those factors are taken together, the increase in central funding to Barnsley is 2.6 per cent., compared with a rate of inflation of more than 10 per cent. That amounts to roughly £50 per adult.

As I said, Barnsley is at the bottom of the list of metropolitan districts. We have been allowed a 7 per cent. increase this year in accordance with the new criteria. At least this year we know the extent to which we will be capped. We will be capped at £141.2 million—an increase of £9.2 million. But assuming pay awards of around 9 per cent., we will not have enough in this year's budget to fund those awards. In fact, £141 million is the budget that the authority set last year, which was then capped at £132 million.

The Secretary of State quoted the NALGO newspaper, which was also referred to by the hon. Member for Gedling, but both the right hon. Gentleman and the hon. Member for Gedling seemed to skim over what that magazine said about Barnsley. The reason is that Barnsley made some cuts: there were some compulsory redundancies, and the authority closed a music school.

The Secretary of State also referred to collection rates, and I was pleased to hear him say that Barnsley had a 93 per cent. collection rate. That shows the careful and accurate planning that some local authorities have been able to achieve.

My local authority allowed for an addition of 6 per cent. to the poll tax to meet the shortfall in collection and it got that figure right to within about 1 per cent. However, my constituents are now saying that they will pay their poll tax but not the 6 per cent. addition to cover the shortfall caused by people who will not pay, so we have created another problem for ourselves.

The SSA for the police has been increased by 10 per cent., compared with 19 per cent. for other service blocks. They have a budget forecast of £56 million, an increase of 12.8 per cent., a standstill budget, but they must cut it by 3.8 per cent., or just under £4 million. They need an increase of 12.8 per cent. to cover inflation, approved developments and 25 additional posts this year, to recover after the Hillsborough disaster and to protect the housing allowance and their capital programme. To lose £4 million will mean a cut of £1.75 million in natural wastage, 170 posts will have to go, the capital programme will have to go and they will have to use every penny of their reserves.

The fire service in South Yorkshire is in the same boat. It has a standstill budget when it needs an increase of about 12 per cent. It must cut about £2.1 million from its budget. It has had to impose a recruitment ban and a stop on capital schemes and use all its reserves.

Those are the cuts that authorities in Barnsley have been forced to make, yet they have a 93 per cent. collection rate and a record of good housekeeping. It is about time that the Secretary of State looked at what is happening to those authorities and got rid of the poll tax once and for all.

9.21 pm

Mr. David Blunkett (Sheffield, Brightside)

I pay tribute to the thoughtful contributions that a number of hon. Members on both sides of the House have made. In particular, I pay tribute to those of my hon. Friends who, by necessity, contributed only briefly at the end. Regrettably, part of today's debate made last week's debates on the Community Charges (Substitute Setting) Bill seem one of the most radical and lively political events of my recent life.

As my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) said, it is a great shame that we have not been able to concentrate more on what the debate is about. It is surely about the Government's role in supporting local government services. Instead, Conservative Members have tried to prove the unprovable or to make statements, as the Secretary of State did at the beginning, to show that—despite the fact that they do not like the more draconian capping rules that are being brought in for the coming year—on average Labour-controlled authorities charge a higher poll tax than Conservative authorities.

Apart from the fact that the SSA has no semblance of common sense, as my hon. Friend the Member for Barnsley, Central, (Mr. Illsley) said, there is the little matter of the make-up of the area. Even despite that, the facts that the Secretary of State gave do not necessarily bear out the conclusions that he drew.

The Chartered Institute of Public Finance and Accountancy early last year analysed poll tax bills in Conservative, Labour and Liberal Democratic authorities and in those where no political party had overall control. Taking the poll tax average in each of those categories, and comparing those with the target or notional average figures that have been determined by the Government in terms of what they expect those authorities to charge in relation to their SSAs, CIPFA came to the conclusion that, on average, Conservative-controlled authorities were 31 per cent. above their targets, Labour-controlled authorities were 35 per cent. above and Liberal Democrat-controlled authorities and those where no political party had control were 36 per cent. above their target. That produced an average difference of only 4 per cent. between all Labour and Conservative authorities, in the extent to which they spent above the target or notional figure set for each of them. Let us hear no more nonsensical claims that Tory councils set low poll taxes.

It is difficult to recall what was said at the start of the debate, but the hon. Member for Spelthorne (Mr. Wilshire) clearly spelled out the twisted rationale of the poll tax, when he described how little Surrey county council spends per head of its population. Those who are in need would no doubt remark on the depressed level of service that it offers. Nevertheless, poll tax levels in all the Surrey districts are among the highest in the country—£200 per head above the figure charged by capped Calderdale. The Surrey authorities make those in the north of England—

Mr. Portillo

What about the safety net?

Mr. Blunkett

What about it? It replaced equalisation, but attempted to take some account of an authority's resource base. In any event, it is being phased out. That apart, I know of no safety net that would account for the disparities in the charges made by authorities such as Wigan, St. Helens, Calderdale, North Tyneside, Doncaster, Rotherham and Barnsley—many of which strive to serve coalfield communities—and those imposed by Berkshire and Surrey. The logic of the poll tax is that it can often result in very large bills but a very poor quality of service.

Mr. Wilshire

I follow the hon. Gentleman's argument up to a point, but he twice dragged into his remarks accusations about poor levels of service. I would not attempt to remark on the level of service provided in Sheffield and, as the hon. Gentleman does not have the slightest notion of the standards observed in Surrey, he should not denigrate its authorities. I made the point that, for much lower expenditure, one could arrive at the same standard of service. The hon. Gentleman ought to get his facts right.

Mr. Blunkett

We do not accept that one can devise a formula that will result in the same standard of service for a standard level of poll tax, given an assessment of need from the centre of the kind in which the Secretary of State believes. In 1980, the present Secretary of State for Defence was the local government Minister and he came out with some political tripe when he asserted that a standard level of service can be provided for a standard charge to ratepayers, as they were known in those days. He said that the Government accepted that their assessment was a way of determining the distribution of grant and did not necessarily lead them to believe that that particular level of service was right for a particular locality.

That Minister moved on, and the right hon. Member for Henley (Mr. Heseltine), having served as Secretary of State for the Environment, has also moved on in his own mysterious way, eventually to return to that office. If he studies those debates from the early 1980s, it will become obvious to him that one cannot make an assessment from the centre.

Tonight's debate should have concentrated on the quality of local authority services. For what purpose does the revenue support grant exist? It was supposed to support local authorities in meeting the needs determined by local political debate and was supplemented by local taxation in order to provide the best services to the community concerned.

However, hardly anyone has mentioned the RSG tonight—least of all Conservative Members. Instead, hon. Members seemed to talk for hours about the Audit Commission. Vacancies in housing seem to be a favourite target—that is now separated from the general fund. Hon. Members have done anything rather than address provision of services. Surely the second leg of the debate should have been about the other function of the Government, which is to provide a safety net or provision through rebates to help those who cannot meet the bills levied on them under whatever system. However, we have heard nothing about rebates either. The third leg should have been about the inequalities that exist between localities and people. Hence the previously accepted need for equalisation and the existence of the safety net.

None of those issues has been considered in the debate because Conservative Members and Ministers do not want to admit that, if we still had the system that appertained before 31 March last year, and a broad base of local taxation, which involved the business community as well as the domestic tax payer, and we did not have a national business rate, and if we took out the Government's contribution towards the safety net process, which is another £500 million, we would be left with the Government providing peanuts for local government service support in the coming financial year. That is my answer to the hon. Member for Harrow, West (Mr. Hughes). The Government are providing a 1.9 per cent. increase in revenue support grant in 1991–92.

Dr. Hampson

Does the hon. Gentleman accept that the reason why, whether under the rating or the community charge system, people felt that their bills were too high is because local authorities spend such a huge proportion of national expenditure? That is why, in our system, the Treasury feels that it has to get a grip upon it. Therefore, does he see the sense of transferring the key national service that causes this huge cost—education? The Leader of the Opposition, when he was an education spokesman—I am sure that the hon. Gentleman remembers this from his Sheffield days—advocated the transfer of education costs to the centre. What does he think now?

Mr. Blunkett

I do not need to duck that question, because the Opposition are against the centralisation of services. Incidentally, the figures are interesting. From 1979 until the last financial year, central Government spending rose by 177 per cent., while local government spending rose by 146 per cent. We need to understand clearly what has happened.

To return to the hon. Gentleman's intervention, his implication is that central Government would spend less on education if it were centralised, because the same amount would have to be found to maintain the same level of pupil-teacher ratio and the same standard of equipment and books, which many Labour authorities have been penalised for attempting to provide in the past 12 years. It is interesting that, when people want to say how good our education system is, they hold up figures showing how much money is being spent on it, but when they want to beat local government—especially Labour local government—they point out how much is being spent which should not be spent. The truth is that centralisation and interference would make matters a great deal worse than they already are.

My hon. Friend the Member for Durham, North-West (Ms. Armstrong), the shadow spokesman for education, mentioned, in an intervention, that Warwickshire county council faces draconian cuts in education, and is wiping out nursery provision to meet Government targets. In fact, the county council has said that it has no intention of trying to meet the Government's poll tax targets, which are predicted on standard spending levels that are totally unacceptable.

I have mentioned before, and I make no apology for mentioning again the index of need, which applies an all-ages index factor in a way that results in Wandsworth, Westminster and councils in the south of England being among the 20 most deprived authorities in Britain, while Barnsley is 172nd and Rotherham is 146th and such councils are penalised because no account was taken of unemployment or car ownership.

The system is farcical: the more deprived an authority appears to be, the less likely it is to receive central Government support. Given the current procedure, it is impossible to make a fair assessment of how grant should be allocated; nor can we assess the way in which authorities should handle their budgets. There is no longer any accountability: the Secretary of State controls not only the relationship between previous rate bills and this year's poll tax bills through the new community charge reduction scheme, but next year's bills themselves, through capping and the standard spending assessments. There is more centralisation than ever before, and accountability has been denied to local authorities.

Yet help might have been provided. The £1.2 billion of extra assistance could have been used to provide services that now face enormous cuts. A number of my hon. Friends have given examples, and I make no apology—I rarely mention Sheffield from the Dispatch Box—for saying that my authority is in a dire state, given the likely funding for services over the coming year. Even after the use of balances, cuts amounting to £20 million must be made and 2,500 people are being offered voluntary redundancy between now and 1 April.

That is a sorry picture and is entirely due to the way in which the Government assess need and determine the provision of grant. It has nothing to do with whether the city provides too high a level of social services, as was implied by the figures given in the Secretary of State's speech, or with whether the police authority—which has a much better record than the Metropolitan police, who are controlled directly by the Government—is putting too many men on the beat. Nor has it anything to do with the level of the fire service or with the extent and quality of education. But it has everything to do with the unfair system in which authorities operate.

We all agree that the finding of money with which to fight Saddam Hussein is justified and right; but we cannot justify circumstances in which we can afford to fight Saddam but cannot afford to fight poverty, ignorance, under-achievement, unfit housing, declining transport standards and a despoiled environment in the most deprived parts of the country. It is a disgrace that we can fight a war abroad, but cannot fight a war against decline at home. It is entirely wrong that, while our manufacturing industry collapses around us, we in the Chamber discuss how the screw can be tightened on local government to make the lives of councillors and managers more miserable and to worsen the plight of the recipients of services. It is a disgrace that a wealthy and proud nation, which wishes to play its part on the world stage, cannot ensure that people have home helps when they need them or are provided with a decent education and a decent start in life.

It is time that we addressed those issues, so that we can equate the decisions made by the Government with the rubbish that we hear from Conservative Members about the need to cut services still further to protect the hard-pressed poll tax payer. What we need is not further cuts in services, but a complete change in the relationship between local and central Government. We need a new system for the funding of local services at local level and a new grant system that takes out of the political arena the gerrymandering and jiggery-pokery that the community charge reduction scheme will involve in the coming year. We should be debating not the saving of Conservative seats, but the saving of services. We should be talking about the need for the revenue support grant to ensure that people are given their entitlement.

The final humiliation for the poll tax is that the community charge reduction scheme has directly to relate the relief given to the so-called "despised" old-fashioned rating system. What we have before us is the view that, if we cannot better the rating system, we should provide an additional £1.2 billion to bribe people into believing that the poll tax was not so bad when it was introduced.

The Secretary of State knows that that is not right. In The Times article that he wrote in May of last year he made it clear that he did not believe in capping or in the poll tax and that he did not believe in the system that he now has to operate. We know that the Prime Minister thinks that it is crazy. Last Thursday—as repeated, in his own words tonight, by the hon. Member for Gedling (Mr. Mitchell)—he told us that, when over half the poll tax payers have to be provided with relief, there is something wrong with the system.

All of us know that there is something wrong with the system. The Labour party has an alternative: action to meet need, the restoration of the public services that so many people were proud of, a determination to restore quality and confidence to local authority services and a commitment to local democracy and diversity. We offer art alternative to the poll tax and to centralisation and bureaucratic interference. We offer an end to this misery. We also offer an end to this shambles that the Government have inflicted on the British people.

The Government will be held to account for all the misery that they have inflicted on the people whom we try to represent. It will come home to roost when people at last realise that they have the chance to vote on the most important political domestic issue that will face us at the next general election—that is, whether Conservative Members will come out and say that they intend to do something substantial about the poll tax or whether people will hear, loud and clear, from the Labour party that only we have promised outright and within the shortest possible time to abolish the tax that is at the root of all our problems.

9.41 pm

The Minister for Local Government and Inner Cities (Mr. Michael Portillo)

Let me begin uncontroversially and quietly by agreeing with the hon. Member for Sheffield, Brightside (Mr. Blunkett) that there have been many good contributions to the debate.

I begin with the community charge reduction scheme. It is a very fine scheme. It was rightly praised by my hon. Friends the Members for Hornchurch (Mr. Squire) and for Gedling (Mr. Mitchell) and others. However, the hon. Member for Dagenham (Mr. Gould) asked a series of questions about it. He wanted to know what the net additional cost this year will be. It is £1.1 billion for Great Britain. The Chancellor of the Exchequer made it perfectly clear that that was the figure that he intended to add to the planning total. However, the total to be spent this year on the scheme is £1.7 billion. That is why it is possible to help 18 million community charge payers by means of the scheme.

The hon. Member for Dagenham wondered whether we had got our arithmetic right. He is worried about the number of people who may no longer be eligible because they move, or for other reasons. In our figures, we have allowed for a 10 per cent. turnover. The hon. Gentleman referred to the changes to the register in London. If a couple move from one place to another in London or anywhere else, that constitutes four changes to the register—two when they leave and two when they arrive somewhere else. That, therefore, is not the indicator. The hon. Gentleman will find that the average mortgage that people take out runs for eight years, which suggests that the turnover is of the order that we have set.

This scheme, in common with its predecessorr, the transitional relief scheme, applies to those non-ratepayers who are disabled or elderly. By "disabled" we mean people who are in receipt of invalidity benefit, attendance allowance, mobility allowance or mobility supplement. The new scheme will also apply to those in sheltered housing.

My hon. Friend the Member for Harrow, West (Mr. Hughes) referred to the uniform business rate, as did the hon. Members for Eastbourne (Mr. Bellotti) and for Barnsley, Central (Mr. Illsley). Under the new system, we are required by statute to have a revaluation after five years, to take effect in 1995. The question is whether transitional help can be given beyond that period. That will depend partly on whether the revaluation throws up new values that require transitional relief to continue. We are certainly willing to consider that matter.

The increase in uniform business rate set on the September retail price index is 10.9 per cent. I remind hon. Members—my hon. Friends know this well—that, under the old rating system, when business was at the mercy of Labour local authorities, to get away with an increase of 10.9 per cent. would have been an exceptional year for business. As a result of the change that we have made, in the first year of the uniform business rate, the amount that we have raised from business in rates is £1 billion less than we would have raised under the old system, because the increase has been limited to inflation.

Fortunately, there was more in the uniform business rate pot than we had anticipated, and that has made it possible for us to pass more from the uniform business rate into aggregate external finance—the total amount that passes from central Government to local government for next year. That is up by 12.8 per cent.

That is the figure that really matters to local authorities. They are not concerned to know how much is rate support grant or how much is non-domestic rates. They want to know how much help they will get from the centre. An increase of 12.8 per cent. next year is a generous settlement, and most local authority leaders have welcomed it as realistic.

I should like to say something to my hon. Friends about how the SSAs are calculated. My hon. Friend the Member for Spelthorne (Mr. Wilshire) was particularly thoughtful on the subject. It is most important to recognise that we calculate SSAs on the same basis for everyone. I make no apology to the hon. Member for Brightside when I say that we are trying to arrive at a position in which we calculate that authorities could provide a standard level of service for a given level of community charge. We recognise that different areas have different needs, and that the Government have to give different amounts of money to help local authorities with those different needs. As soon as one tries to measure different needs in different places, disputes will arise: the hon. Member for Bootle (Mr. Benton) fairly recognised that point.

Since the community charge was introduced, we have had an entirely new system of assessing those needs. The system was thoroughly overhauled. We have had a new analysis and a great deal of work has been done on what makes it more expensive in one place than in another to provide a standard level of service. There was a huge amount of discussion with the local authority associations.

I fully accept what my hon. Friends will expect me to say, which is that there can be no final word about standard spending assessments. Of course they are imperfect, but they are the best guide we have to the different needs of different local authorities, and therefore to the different amounts of money that we should be able to provide. Even my hon. Friends who are dissatisfied with their standard spending assessments will recognise that there is merit in retaining as far as possible, stability between one year and the next if we are ever to see accountability showing through.

I recognise that there were shortcomings in the standard spending assessments. Some are inevitable. For instance, on overnight visitors we have no reliable data more recent than the mid-1970s. We need to collect more. Much of our information relies on the 1981 census. We shall have a 1991 census, and that will make life easier for us.

I must tell my hon. Friends that looking at two neighbouring areas and feeling that the standard spending assessments between the two are not immediately explicable—in other words, that their intuition and our analysis are at variance—does not automatically prove that the standard spending assessments are wrong, because we are trying to measure different levels of need in different areas.

Of course Ministers are constrained. My hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) said that he thought that I would do more if I could. It has always been such a pleasure to meet him and my hon. Friend the Member for Nuneaton (Mr. Stevens) that, if I had £10 million in my pocket for Warwickshire, I would feel inclined to give it to him. However, he knows how constrained we are, because Ministers must behave reasonably and in line with the evidence presented to them.

There has been new evidence and we have brought it into play. For instance, there was new evidence on the buses and coaches within the highway maintenance standard spending assessment, and we made a change. My hon. Friend the Member for Rugby and Kenilworth said that there should be some presiding human presence involved in all this. I try to be a presiding human presence. My right hon. Friend the Secretary of State is more presiding and no less human. My right hon. Friend and I have used our judgment on an issue that concerns many of my hon. Friends and even Opposition Members, and that is the weighting within education given on the basis of additional educational needs. We decided to reduce that weighting on the basis of the analysis that had been carried out. We exercised our judgment when we doubled the weighting given to overnight visitors.

Several points were made about how SSAs operate. I was asked how children in care could cost different amounts in different places. Analysis has shown that, in some places of great social deprivation, a higher proportion of children need to be taken into residential care much more frequently, which is more expensive.

I was asked why we do not use unemployment as an indicator. We are trying to find out what makes local authority services more expensive, and those are more social factors than unemployment factors. I was asked by the hon. Member for Brightside why we do not use the indicator of car ownership. In the country, people have a higher propensity to own cars, even if they are poor. To use that would be to the disadvantage of the cities, which the hon. Gentleman wants to protect.

Mr. Battle

Will the Minister explain why the Department used car ownership, unemployment and other social factors when assessing urban development grant?

Mr. Portillo

We have considered what makes local authority services more expensive. That is a different exercise from urban development grant. It is not car ownership or unemployment but social factors that incur more expense for local authorities. We are focused on the right issue.

The hon. Member for St. Helens, North (Mr. Evans) asked what would happen if his local authority or any other authority incurred special costs because of the Gulf crisis. We hope that that will not arise, but demands could be placed on social services. I give him the assurance that we shall consider that carefully if and when it becomes clear that a local authority is facing significant new burdens as a result of the Gulf crisis. He has my assurance on that point.

We had some debate—the hon. Member for Brightside complained about it—on efficiency in local government. My hon. Friend the Member for Harrow, West spoke lucidly of the advantages of competitive tendering. My hon. Friend the Member for Battersea (Mr. Bowis), in an excellent speech, told us of the work being done in Wandsworth and gave that extraordinarily telling example of how much more rubbish was collected per man in Wandsworth than in Southwark. I was alarmed when I heard that, under Labour's plans, the Audit Commission, which does such good work, would be subsumed. "Subsumed" is a nasty socialist verb which I shall add to my socialist phrase book.

We had much wriggling from the hon. Member for Norwood (Mr. Fraser) in defence of Lambeth. He came up with a marvellous phrase. He said that he would not deny that in Lambeth there were some elements of inefficiency. That may go down in the phrases of the year. He may find himself in the colour magazines at the end of the year because of it.

I say to my hon. Friend the Member for Rugby and Kenilworth and to the hon. Member for Barnsley, West and Penistone (Mr. McKay) that not even the police are immune from making gains in efficiency. The Audit Commission, which under Labour's plans will be subsumed, has drawn attention to the efficiency gains that can—

Mr. Gould

The Minister does not understand the verb.

Mr. Portillo

I hope that I do not understand the verb. What I understand by it is so grisly that I am extremely worried about Labour's plans.

The Audit Commission, which is safe in our hands—let me put it that way—has pointed out that the police authorities are capable of making many gains in efficiency. In West Mercia, for example, a review of administrative procedures saved £5 million for the police, largely by transferring functions from uniformed officers to civilians. Nationally, it has been observed that the police receive twice as many training days per annum as other public sector workers. It has been identified that savings of 15 per cent. are available in police communications and that a 25 per cent. increase—in many cases much more—in income generation is possible within police forces. The point that I am making is that, whatever may have been said to my hon. Friends, the sacking of policemen is not by any means the only option for police authorities.

Dame Jill Knight (Birmingham, Edgbaston)

Many of us understand completely the herculean nature of the task that my hon. Friend and the Secretary of State face. However, we are extremely anxious about the threats to sack policemen, particularly in the west midlands. The very thought of 100 policemen being sacked puts a chill into our hearts. We are told by our chief constable that no more savings can easily be made. In those circumstances, can the Minister tell us that we may be voting for the sacking of 100 policemen?

Mr. Portillo

I do not believe that my hon. Friend will be voting for any such thing. I have told her that I believe that there are efficiency savings to be made and that any police authority, such as the one in her area—I have just listed four examples—should be able to meet its statutory obligations.

In any case, my right hon. Friend the Secretary of State explained how the capping procedure works. He explained that, if a police authority were to find that it had to spend in such a way that it came within our capping criteria, we should very carefully consider its situation on its individual merits. I know that my hon. Friend is concerned that, if a police authority were to spend all its reserves, it might be in a difficult position.

Obviously, if a police authority were to find itself in an emergency, the situation would be dealt with properly at the time, and we should consider the consequences very carefully. However, police authorities should have regard to their statutory duties with respect to our intended criteria, the approved level of police manpower and all other relevant considerations. I think that that ought to reassure my hon. Friend.

Mr. Turner

I want to ask a question about efficiency within the Audit Commission. Has the commission raised with the Government the question of the delay in paying the revenue support grant to local authorities? The council in Wolverhampton will have to add £3 to every poll tax bill in the next year because of the Government's refusal to pay at the proper time.

Mr. Portillo

I am a great believer in central Government playing their part. I am sorry that these reports are being debated so late in the day. However, hon. Members will understand that the Government wanted time to bring in the community charge reduction scheme. That has been very much welcomed on the Government side of the House, even if it has been received grudgingly by the Opposition.

My hon. Friends are worried about fire authorities. In that case, the Government will decide on capping after the budgets have been set, again taking account of all the appropriate considerations, including the scope for achieving greater value for money and the need to maintain the minimum standards of fire cover. The Home Secretary's approval would be required for the closure of any fire station or for any other reduction of operational capacity. I hope that that will assure my hon. Friends.

My hon. Friend the Member for Spelthorne reminded us that this debate is not concerned principally with the community charge. In that respect, the speech of the hon. Member for Dagenham was disappointing, because he dwelt so much on the community charge and so little on the reports. His speech was largely familiar to us. His accusation that my right hon. Friend the Secretary of State had made no progress was shot down by all my hon. Friends who welcomed the community charge reduction scheme.

If the hon. Member for Dagenham said anything that was relevant, it was that there is not enough money. He said that the £3 billion extra that is being provided and the£1.7 billion for the community charge reduction scheme were insufficient. If we offered £30 billion and £17 billion—

Mr. Gould

Will the Minister give way?

Mr. Portillo

No: I am in my last minute.

—the hon. Gentleman would still be saying that that was not enough. The hon. Gentleman's attitude to money is still wholly irresponsible. Independent observers, such as Mr. Tony Travers, have observed that this is the most generous RSG settlement since the mid-1970s. The Government have found another £4.25 billion, yet the hon. Gentleman says that that is not enough even though this year's spending is up by 31 per cent. compared to public spending just two years ago.

The hon. Member for Dagenham says that he favours spending £40.8 billion next year, which would be 47 per cent. up on spending two years ago. His position remains profligate, unbelievable and irresponsible. I urge the House to vote with the Government tonight.

Question put:—

The House divided: Ayes 325, Noes 220.

Division No. 51]	[11.46 pm
AYES
Adley, Robert	Douglas-Hamilton, Lord James
Aitken, Jonathan	Dover, Den
Alexander, Richard	Dunn, Bob
Alison, Rt Hon Michael	Durant, Sir Anthony
Amess, David	Dykes, Hugh
Amos, Alan	Eggar, Tim
Arbuthnot, James	Emery, Sir Peter
Arnold, Jacques (Gravesham)	Evans, David (Welwyn Hatf'd)
Arnold, Sir Thomas	Evennett, David
Ashby, David	Fallon, Michael
Aspinwall, Jack	Favell, Tony
Baker, Rt Hon K. (Mole Valley)	Field, Barry (Isle of Wight)
Baker, Nicholas (Dorset N)	Fishburn, John Dudley
Baldry, Tony	Fookes, Dame Janet
Banks, Robert (Harrogate)	Forsyth, Michael (Stirling)
Batiste, Spencer	Forth, Eric
Beaumont-Dark, Anthony	Fowler, Rt Hon Sir Norman
Bellingham, Henry	Fox, Sir Marcus
Bendall, Vivian	Franks, Cecil
Bennett, Nicholas (Pembroke)	Freeman, Roger
Benyon, W.	French, Douglas
Bevan, David Gilroy	Fry, Peter
Biffen, Rt Hon John	Gale, Roger
Blaker, Rt Hon Sir Peter	Gardiner, Sir George
Bonsor, Sir Nicholas	Garel-Jones, Tristan
Boscawen, Hon Robert	Gill, Christopher
Boswell, Tim	Gilmour, Rt Hon Sir Ian
Bottomley, Peter	Glyn, Dr Sir Alan
Bowden, A (Brighton K'pto'n)	Goodhart, Sir Philip
Bowden, Gerald (Dulwich)	Goodlad, Alastair
Bowis, John	Gorst, John
Boyson, Rt Hon Dr Sir Rhodes	Greenway, Harry (Ealing N)
Brandon-Bravo, Martin	Greenway, John (Ryedale)
Brazier, Julian	Gregory, Conal
Bright, Graham	Griffiths, Peter (Portsmouth N)
Brown, Michael (Brigg & Cl't's)	Grist, Ian
Bruce, Ian (Dorset South)	Ground, Patrick
Budgen, Nicholas	Grylls, Michael
Burns, Simon	Hague, William
Burt, Alistair	Hamilton, Hon Archie (Epsom)
Butler, Chris	Hamilton, Neil (Tatton)
Butterfill, John	Hampson, Dr Keith
Carlisle, John, (Luton N)	Hanley, Jeremy
Carlisle, Kenneth (Lincoln)	Hannam, John
Carrington, Matthew	Hargreaves, Ken (Hyndburn)
Carttiss, Michael	Harris, David
Cash, William	Haselhurst, Alan
Channon, Rt Hon Paul	Hawkins, Christopher
Chapman, Sydney	Hayes, Jerry
Chope, Christopher	Hayward, Robert
Churchill, Mr	Heathcoat-Amory, David
Clark, Dr Michael (Rochford)	Heseltine, Rt Hon Michael
Clark, Rt Hon Sir William	Hicks, Mrs Maureen (Wolv' NE)
Clarke, Rt Hon K. (Rushcliffe)	Higgins, Rt Hon Terence L.
Conway, Derek	Hind, Kenneth
Coombs, Anthony (Wyre F'rest)	Hogg, Hon Douglas (Gr'th'm)
Coombs, Simon (Swindon)	Hordern, Sir Peter
Cope, Rt Hon John	Howard, Rt Hon Michael
Couchman, James	Howarth, G. (Cannock & B'wd)
Cran, James	Howell, Rt Hon David (G'dford)
Critchley, Julian	Hughes, Robert G. (Harrow W)
Currie, Mrs Edwina	Hunt, David (Wirral W)
Curry, David	Hunter, Andrew
Davies, Q. (Stamf'd & Spald'g)	Irvine, Michael
Davis, David (Boothferry)	Jack, Michael
Day, Stephen	Jackson, Robert
Devlin, Tim	Janman, Tim
Dickens, Geoffrey	Jones, Gwilym (Cardiff N)
Dicks, Terry	Jones, Robert B (Herts W)
Dorrell, Stephen	Kellett-Bowman, Dame Elaine

Key, Robert	Rossi, Sir Hugh
King, Roger (B'ham N'thfield)	Rost, Peter
Kirkhope, Timothy	Rumbold, Rt Hon Mrs Angela
Knapman, Roger	Ryder, Rt Hon Richard
Knight, Greg (Derby North)	Sainsbury, Hon Tim
Knowles, Michael	Sayeed, Jonathan
Knox, David	Shaw, David (Dover)
Lamont, Rt Hon Norman	Shaw, Sir Giles (Pudsey)
Lang, Rt Hon Ian	Shaw, Sir Michael (Scarb')
Latham, Michael	Shephard, Mrs G. (Norfolk SW)
Lawrence, Ivan	Shepherd, Colin (Hereford)
Lee, John (Pendle)	Shepherd, Richard (Aldridge)
Lennox-Boyd, Hon Mark	Shersby, Michael
Lester, Jim (Broxtowe)	Sims, Roger
Lloyd, Sir Ian (Havant)	Skeet, Sir Trevor
Lloyd, Peter (Fareham)	Smith, Tim (Beaconsfield)
Luce, Rt Hon Sir Richard	Soames, Hon Nicholas
Lyell, Rt Hon Sir Nicholas	Spicer, Sir Jim (Dorset W)
Macfarlane, Sir Neil	Spicer, Michael (S Worcs)
MacGregor, Rt Hon John	Squire, Robin
MacKay, Andrew (E Berkshire)	Stanbrook, Ivor
Maclean, David	Stanley, Rt Hon Sir John
McNair-Wilson, Sir Patrick	Steen, Anthony
Madel, David	Stern, Michael
Malins, Humfrey	Stevens, Lewis
Mans, Keith	Stewart, Allan (Eastwood)
Maples, John	Stewart, Andy (Sherwood)
Marshall, John (Hendon S)	Stewart, Rt Hon Ian (Herts N)
Martin, David (Portsmouth S)	Sumberg, David
Maude, Hon Francis	Summerson, Hugo
Mawhinney, Dr Brian	Tapsell, Sir Peter
Mayhew, Rt Hon Sir Patrick	Taylor, Ian (Esher)
Mellor, Rt Hon David	Taylor, Teddy (S'end E)
Meyer, Sir Anthony	Temple-Morris, Peter
Miller, Sir Hal	Thompson, Patrick (Norwich N)
Miscampbell, Norman	Thorne, Neil
Mitchell, Andrew (Gedling)	Thornton, Malcolm
Mitchell, Sir David	Thurnham, Peter
Moate, Roger	Townend, John (Bridlington)
Montgomery, Sir Fergus	Tracey, Richard
Morrison, Sir Charles	Tredinnick, David
Morrison, Rt Hon Sir Peter	Trippier, David
Moss, Malcolm	Trotter, Neville
Moynihan, Hon Colin	Twinn, Dr Ian
Nelson, Anthony	Vaughan, Sir Gerard
Neubert, Sir Michael	Viggers, Peter
Newton, Rt Hon Tony	Wakeham, Rt Hon John
Nicholls, Patrick	Waldegrave, Rt Hon William
Nicholson, David (Taunton)	Walden, George
Nicholson, Emma (Devon West)	Walker, Bill (T'side North)
Norris, Steve	Waller, Gary
Onslow, Rt Hon Cranley	Wardle, Charles (Bexhill)
Oppenheim, Phillip	Warren, Kenneth
Paice, James	Watts, John
Parkinson, Rt Hon Cecil	Wells, Bowen
Patnick, Irvine	Wheeler, Sir John
Patten, Rt Hon Chris (Bath)	Whitney, Ray
Patten, Rt Hon John	Widdecombe, Ann
Pattie, Rt Hon Sir Geoffrey	Wiggin, Jerry
Peacock, Mrs Elizabeth	Wilkinson, John
Porter, Barry (Wirral S)	Wilshire, David
Porter, David (Waveney)	Winterton, Mrs Ann
Portillo, Michael	Winterton, Nicholas
Powell, William (Corby)	Wolfson, Mark
Price, Sir David	Wood, Timothy
Raison, Rt Hon Sir Timothy	Woodcock, Dr. Mike
Redwood, John	Yeo, Tim
Renton, Rt Hon Tim	Young, Sir George (Acton)
Rhodes James, Robert	Younger, Rt Hon George
Riddick, Graham
Rifkind, Rt Hon Malcolm	Tellers for the Ayes:
Roberts, Sir Wyn (Conwy)	Mr. John D. Taylor and
Roe, Mrs Marion	Mr. Tom Sackville.
NOES
Abbott, Ms Diane	Barnes, Harry (Derbyshire NE)
Allen, Graham	Barnes, Mrs Rosie (Greenwich)
Archer, Rt Hon Peter	Barron, Kevin
Armstrong, Hilary	Battle, John
Ashton, Joe	Beckett, Margaret

Beith, A. J.	Fyfe, Maria
Bell, Stuart	Garrett, John (Norwich South)
Benn, Rt Hon Tony	George, Bruce
Bennett, A. F. (D'nt'n & R'dish)	Gilbert, Rt Hon Dr John
Benton, Joseph	Godman, Dr Norman A.
Bermingham, Gerald	Golding, Mrs Llin
Bidwell, Sydney	Gordon, Mildred
Blunkett, David	Gould, Bryan
Boateng, Paul	Grant, Bernie (Tottenham)
Boyes, Roland	Griffiths, Win (Bridgend)
Bradley, Keith	Grocott, Bruce
Bray, Dr Jeremy	Hattersley, Rt Hon Roy
Brown, Gordon (D'mline E)	Heal, Mrs Sylvia
Brown, Nicholas (Newcastle E)	Henderson, Doug
Brown, Ron (Edinburgh Leith)	Hinchliffe, David
Buckley, George J.	Hoey, Ms Kate (Vauxhall)
Caborn, Richard	Hogg, N. (C'nauld & Kilsyth)
Campbell, Menzies (Fife NE)	Home Robertson, John
Campbell, Ron (Blyth Valley)	Howarth, George (Knowsley N)
Campbell-Savours, D. N.	Howells, Geraint
Canavan, Dennis	Howells, Dr. Kim (Pontypridd)
Clark, Dr David (S Shields)	Hoyle, Doug
Clarke, Tom (Monklands W)	Hughes, John (Coventry NE)
Clelland, David	Hughes, Robert (Aberdeen N)
Clwyd, Mrs Ann	Hughes, Roy (Newport E)
Cohen, Harry	Hughes, Simon (Southwark)
Cook, Robin (Livingston)	Illsley, Eric
Corbett, Robin	Ingram, Adam
Corbyn, Jeremy	Janner, Greville
Cousins, Jim	Jones, Barry (Alyn & Deeside)
Crowther, Stan	Jones, Ieuan (Ynys Môn)
Cryer, Bob	Jones, Martyn (Clwyd S W)
Cummings, John	Kaufman, Rt Hon Gerald
Cunliffe, Lawrence	Kinnock, Rt Hon Neil
Dalyell, Tam	Kirkwood, Archy
Darling, Alistair	Lamond, James
Davies, Rt Hon Denzil (Llanelli)	Leadbitter, Ted
Davis, Terry (B'ham Hodge H'I)	Leighton, Ron
Dewar, Donald	Lestor, Joan (Eccles)
Dixon, Don	Lewis, Terry
Dobson, Frank	Litherland, Robert
Doran, Frank	Livsey, Richard
Dunwoody, Hon Mrs Gwyneth	Lloyd, Tony (Stratford)
Eadie, Alexander	Lofthouse, Geoffrey
Eastham, Ken	Loyden, Eddie
Evans, John (St Helens N)	McAllion, John
Ewing, Harry (Falkirk E)	McAvoy, Thomas
Fatchett, Derek	McCartney, Ian
Fearn, Ronald	Macdonald, Calum A.
Field, Frank (Birkenhead)	McFall, John
Fields, Terry (L'pool B G'n)	McKay, Allen (Barnsley West)
Fisher, Mark	McKelvey, William
Flynn, Paul	McLeish, Henry
Foot, Rt Hon Michael	McMaster, Gordon
Foster, Derek	McNamara, Kevin
Foulkes, George	McWilliam, John
Fraser, John	Madden, Max

Mahon, Mrs Alice	Rooney, Terence
Marek, Dr John	Ross, Ernie (Dundee W)
Marshall, David (Shettleston)	Rowlands, Ted
Marshall, Jim (Leicester S)	Ruddock, Joan
Martin, Michael J. (Springburn)	Sedgemore, Brian
Martlew, Eric	Sheldon, Rt Hon Robert
Maxton, John	Shore, Rt Hon Peter
Meale, Alan	Short, Clare
Michael, Alun	Skinner, Dennis
Michie, Bill (Sheffield Heeley)	Smith, Andrew (Oxford E)
Michie, Mrs Ray (Arg'l & Bute)	Smith, C. (Isl'ton & F'bury)
Moonie, Dr Lewis	Smith, Rt Hon J. (Monk'ds E)
Morgan, Rhodri	Smith, J. P. (Vale of Glam)
Morley, Elliot	Soley, Clive
Morris, Rt Hon A. (W'shawe)	Spearing, Nigel
Morris, Rt Hon J. (Aberavon)	Steel, Rt Hon Sir David
Mowlam, Marjorie	Steinberg, Gerry
Mullin, Chris	Stott, Roger
Murphy, Paul	Strang, Gavin
Nellist, Dave	Straw, Jack
Oakes, Rt Hon Gordon	Taylor, Mrs Ann (Dewsbury)
O'Brien, William	Taylor, Matthew (Truro)
O'Hara, Edward	Turner, Dennis
O'Neill, Martin	Vaz, Keith
Orme, Rt Hon Stanley	Walley, Joan
Patchett, Terry	Wardell, Gareth (Gower)
Pendry, Tom	Wareing, Robert N.
Pike, Peter L.	Watson, Mike (Glasgow, C)
Powell, Ray (Ogmore)	Welsh, Michael (Doncaster N)
Prescott, John	Wigley, Dafydd
Primarolo, Dawn	Williams, Rt Hon Alan
Quin, Ms Joyce	Williams, Alan W. (Carm'then)
Randall, Stuart	Wilson, Brian
Redmond, Martin	Winnick, David
Rees, Rt Hon Merlyn	Wise, Mrs Audrey
Reid, Dr John	Worthington, Tony
Richardson, Jo	Wray, Jimmy
Robertson, George
Robinson, Geoffrey	Tellers for the Noes:
Rogers, Allan	Mr, Frank Haynes and
Rooker, Jeff	Mr. Jimmy Dunnachie.

Resolved, That the Revenue Support Grant Report (England) 1991–92 (House of Commons Paper No. 93), a copy of which was laid before this House on 21st January, be approved.

It being after Ten o'clock, MR. SPEAKER proceeded, pursuant to the order [25 January], to put the Questions necessary to dispose of proceedings on the other motions relating to local government finance.

Resolved, That the Population Report (England) (No. 2) (House of Commons Paper No. 94), a copy of which was laid before this House on 21st January, be approved.—[Mr. Heseltine.]

Resolved, That the Revenue Support Grant Distribution (Amendment) Report (England) (House of Commons Paper No. 95), a copy of which was laid before this House on 21st January, be approved.—[Mr. Heseltine.]

Resolved, That the Special Grant Report (No. 2) (House of Commons Paper No. 96), a copy of which was laid before this House on 21st January, be approved.—[Mr. Heseltine.]

Resolved, That the Rate Support Grant Supplementary Report (England) 1989–90 (House of Commons Paper No. 12), a copy of which was laid before this House on 15th January, be approved.—[Mr. Heseltine.]

Mr. Speaker

Welsh revenue support grant—Mr. Secretary Hunt.

Mrs. Teresa Gorman (Billericay)

On a point of order, Mr. Speaker.

Mr. Speaker

On the Welsh revenue support grant?

Mrs. Gorman

It is on the previous item. I understand that the hon. Member for Leyton (Mr. Cohen) made a vitriolic speech about me and my hon. Friend the Member for Basildon (Mr. Amess). We were not in the Chamber to discuss Basildon's rates because we were both engaged elsewhere on other business. Neither of us was informed by the hon. Gentleman that he intended to make that speech. We feel that it was a gross discourtesy to the House and to us.

Mr. Speaker

It is always sad when hon. Members are not in the Chamber to hear debates. I cannot help the hon. Lady. She had better take the matter up with the hon. Member for Leyton (Mr. Cohen).