Community Charges

HC Deb 24 June 1992 vol 210 cc312-58 6.59 pm

The Minister for Local Government and Inner Cities (Mr. John Redwood)

I beg to move, That the draft Charge Limitation (England) (Maximum Amounts) Order 1992, which was laid before this House on 22nd June, be approved. The range of local authority responsibilities is enormous—from education and planning to refuse collection; from social services to street lighting. The range will soon be extended to cover care in the community. Local authorities enable local people to have influence over the quality, efficiency and range of local services. That is the stuff of local debate and the substance of local elections. The local delivery of certain services—many of them essential to their communities—is a central feature of a pluralist society.

Because of the range and scale of their responsibilities, local authorities spend very large sums of money. In each county and district area, local authorities spend well over £1,000 for every man, woman and child each year. For example, last year, the total spending per adult was £1,840 —a very large sum of money. Total local government expenditure is now running at around £65 billion. That means that local authorities have a great deal of choice and discretion over how many and what kind of non-statutory services to supply, and discretion over the style, quantity and quality of many statutory services. Of course, everyone in the House believes in local government and wishes it to flourish.

It gives me no pleasure, therefore, to move the motion. I should prefer there to be no need to cap at all. But, unlike Labour Members, we are prepared to face up to the problems that excessive public expenditure can pose. Most now agree that there should be overall limits on both public expenditure and taxation. Some Labour Members are looking a little quizzical, but the Labour party proposed caps for its regional assemblies in its general election programme. The right hon. and learned Member for Monklands, East (Mr. Smith) is always trying to exert some control over the spending proclivities of his hon. Friends, although we know that he is often unsuccessful. As local authority spending is now nearly 9 per cent. of gross domestic product and about a quarter of total public expenditure, that, too, has to be under some control to ensure that total public expenditure is under control.

For the 1991–92 budget cycle, we acted by announcing provisional capping criteria in the preceding autumn as authorities had suggested. When authorities came to set their budgets, they knew our intentions for capping. The result speaks for itself. Local authority budgeted spending was about only 0.5 per cent. more than the amount that we provided in our settlement for that year.

The Local Government Finance and Valuation Act 1991 allowed us, in the 1992–93 budget cycle, to consider authorities budgeting below £15 million for the first time. We again announced provisional capping criteria in advance of authorities setting their budgets.

What has happened this year? More than 400 authorities have budgeted within or very close to the limits implied by the provisional criteria. Overall, the total of local authority budgets is about 1 per cent. more than the amount for which we made provision in our settlement for 1992–93. That result is an achievement of our capping strategy. I should also like to see it as a tribute to the good sense and responsibility of much of local government. All that is a far cry from the alarmist comments of the hon. Member for Dagenham (Mr. Gould) on Second Reading of the Local Government Finance and Valuation Bill, when his remarks went over the top.

This year's capping round began last November when the former Secretary of State for the Environment, my right hon. Friend the Member for Henley (Mr. Heseltine), announced the provisional criteria for designating authorities for capping which he intended to adopt. Local authorities were told, at that time, that they should not assume that small amounts of spending above the criteria would be allowed. My right hon. Friend said that he intended to consider the effect of boundary changes on authorities' budgets for 1991–92 and 1992–93.

My right hon. Friend stated, when he laid before the House the 1992–93 settlement reports on 23 January 1992, that he stood firmly by his intentions for the capping criteria which he had announced on 26 November. On 12 March, the former Minister for Local Government and Inner Cities, my right hon. Friend the Member for Enfield, Southgate (Mr. Portillo), confirmed to the House, in a written answer, the intention to use the same provisional criteria.

Local authorities knew in advance of setting their 1992–93 budgets what to expect. Our aim this year was to act to achieve as much as possible in advance by laying down clear and fair guidelines, with as little as possible having to be done by actual capping.

On 14 May, my right hon. and learned Friend the Secretary of State for the Environment took his capping decisions. He had regard to all appropriate considerations, including the budgets which authorities had set, the effect of boundary changes on authorities' budgets for 1991–92 and 1992–93, and those provisional criteria.

My right hon. and learned Friend made only one modification to the original criteria by including a de minimis proviso—where the reduction from capping would be less than £1.50 per adult, he agreed not to cap. In deciding that, he had regard to a number of considerations applicable to this year. As he told the House, it should not be assumed that in any future year we would include a similar de minimis proviso.

On the basis of those clear principles, 10 authorities were designated for capping. Of the 39 county councils, 37 budgeted below the criteria. All of the 36 metropolitan districts budgeted below the criteria. Of the 33 London boroughs, 30 budgeted below the criteria. Of the 296 non-metropolitan districts, 291 budgeted below the criteria.

I remind the House that no authority is capped if it budgeted at or below its standard spending assessment. To those Labour Members who dismiss SSAs as inadequate, I emphassise that, in total, they increased by almost 7 per cent. this year—well above the expected rate of inflation —which built on a substantial 19.4 per cent. rise in 1991–92. We have listened to local authority representations on those issues and we have acted.

Hon. Members

No, the Government have not.

Mr. John Wilkinson (Ruislip-Northwood)

That is not the case if my hon. Friend considers the London borough of Hillingdon, which has done everything in its power to act responsibly in its financial management. Because of the concerns expressed by the three hon. Members who represent seats within the borough of Hillingdon—my hon. Friends the Members for Hayes and Harlington (Mr. Dicks) and for Uxbridge (Mr. Shersby) and myself—my hon. Friend should be aware of the special circumstances in the borough, namely, the large influx of refugee children who must be accommodated because Heathrow happens to be in the borough. Hillingdon is also affected adversely by the financial formula—because many of its schools—three quarters of them in Ruislip-Northwood—have opted out. Therefore, the Minister should be much more generous in our case.

Mr. Redwood

I am well aware of the worries of my hon. Friends who represent constituencies in Hillingdon. They have been assiduous in putting their case to the Government. In February, there was a meeting with the Prime Minister, and the Government again considered their representations. Unfortunately for my hon. Friends, we concluded that the SSAs were fair and that, therefore, the capping had to apply in the way that I have reaffirmed tonight. I assure my hon. Friends that the representations were considered carefully. No one could have done more than my three hon. Friends in putting the case for Hillingdon very forcibly to the Government.

Mr. Peter Bottomley (Eltham)

Although I accept the decision that the Government have made on the SSAs, of which many will not approve, it would be welcome to both sides of the House if the Government told the Department of the Environment and other Departments—in the case of Greenwich, the Department of Health which is responsible for social service SSAs—that they should be willing to receive deputations and examine the way in which factors work. As other hon. Members will no doubt point out, the fact that Greenwich looks after children at the cost of £39 a year, when the neighbouring borough of Lewisham, with virtually identical characteristics, spends £139, shows that the factor system operates beyond all reason.

Mr. Redwood

Of course I shall look again at any representations for next year's SSAs that my hon. Friends or Opposition Members wish to make. The Department always looks carefully at the data for each year—the base data on which needs are assessed are often revised annually—and at the methodology, when people present new arguments or fresh evidence that needs to be considered.

Sir Dudley Smith (Warwick and Leamington)

Although this is not the time to debate SSAs in detail because the figures are before us, will my hon. Friend undertake to continue the dialogue on SSAs with my hon. Friends and I from the Warwickshire area? We genuinely believe that the SSAs for our county are flawed.

Mr. Redwood

I assure my hon. Friends who represent Warwickshire that I shall look carefully at any points, on the data base or on how the SSAs are calculated, made by any hon. Member who feels that those need investigating. Some councils feel strongly about those matters. My right hon. and learned Friend and I need to be persuaded that there is something wrong with the theory and application of SSAs. They apply to many councils and must be fair across the country.

Mr. James Pawsey (Rugby and Kenilworth)

First, I thank my hon. Friend for giving way. This is the fourth time that he has given way in his speech and I appreciate the impact that that has on his speech.

Although my hon. Friend makes an eloquent and persuasive case, he must admit that there is considerable power in the argument advanced by hon. Members representing Warwickshire. He may agree that Warwickshire has been hard done by. Although I acknowledge the additional £4 million granted to my county on appeal, the strength of Warwickshire's case is outlined, first, in the booklet that my hon. Friend has received and, secondly, in the booklet on the standard spending assessment. I hope that my hon. Friend, our right hon. Friend the Secretary of State and officials at the Department will carefully consider how the SSAs—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. Interventions are getting longer and longer. [Interruption.] They may be of good quality, but they are too long.

Mr. Redwood

I am gratful to you, Mr. Deputy Speaker, and to my hon. Friend. I repeat my reassurance that if there is a problem with the base data for next year or for the method of calculation for next year, we shall consider it. I am sure that my hon. Friends will not be shy in coming forward with suggestions and proposals.

Mr. George Stevenson (Stoke-on-Trent, South)

The Minister will appreciate that my intervention is as crucial as those of Conservative Members. Something is clearly wrong with the SSAs when Stoke-on-Trent receives £657 per head, and Wandsworth and Westminster receive £1,500 or £1,600 per head. Is there a time limit on the Minister's willingness to receive representations from local authorities that believe that their SSAs are inadequate or unfair?

Mr. Redwood

Written submissions on that subject should be sent to the Department as soon as possible, because we need to make decisions for next year in good time. Particularly with the introduction of the council tax, local authorities need to know in good time what the position will be. So the window is not long but I am willing to look at new evidence. The best way to proceed is for the hon. Gentleman to send in a written submission. We can then see whether a meeting would be a good idea or whether the submission covers a new point.

Standard spending assessments have risen by about 7 per cent. this year and they rose by 19.4 per cent. the preceding year, which represents a substantial rise in permitted spending and in the grant based on that calculation. Each SSA is based on a complex formula designed to measure the needs and requirements in different local areas by a common standard. The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) referred to one or two inner London areas with relatively high SSAs, but he could have mentioned others under Labour control that have even higher SSAs. Those are based on formulae according to the number of people in different categories and the type of needs in the area. He is at liberty to obtain from the Department the basis of the calculations and satisfy himself that many other inner London areas get higher SSAs than the two that he mentioned.

Mr. Nick Raynsford (Greenwich)

The Minister says that the SSA formula is complex. Does he agree that mistakes could be made? He will recall his meeting last week with a delegation from the London borough of Greenwich, when we discussed the particular needs of refugees and he stressed that those would be reflected in the SSAs. Having taken advice on that, it is clear to me that the SSA formula does not adequately reflect the position of recently arrived refugees. There is a substantial time lag. The need is not unique to Greenwich; other London boroughs have a similar problem. Does the Minister accept that Greenwich is being penalised by a lack of provision for those needs?

Mr. Redwood

As I have said, the Government are satisfied that the SSAs for the current year on which capping is based are fair and correct. We review from time to time the data and formulae for ensuing years. The hon. Gentleman can see that in the past adjustments have been made to reflect changing circumstances. I remind him that the Greenwich SSA is 8 per cent. more than in 1991–92, so it is above the national average increase, and 32 per cent. more than in 1990–91. So the news is not nearly as bad as he suggests.

For each of the 10 designated authorities, my right hon. and learned Friend proposed caps or maximum amounts for their budgets. He took account of all appropriate considerations in taking those decisions and the proposed caps took account of all the relevant information available to us. As in previous years, we took the view that where, on the basis of the information then available to us, we judged that authorities were able to reduce their budgets by the full amount implied by the criteria, they should be required to do so, particularly as nearly all other local authorities had lived within the criteria—some with considerable ease.

The designated authorities were notified on 14 May of their designation, the general principles on the basis of which they were designated and the amount of our proposed cap. They then had a period of 28 days in which to inform us whether they accepted the proposed cap. If they challenged the cap, they had to suggest an alternative figure together with a supporting case.

In the event, two authorities—Langbaurgh and Middlesbrough—accepted the proposed caps. Langbaurgh's proposed cap represented a small relaxation compared with the amount implied by the principles. The other eight authorities challenged. Basildon and Greenwich proposed caps of £2.96 million and £1.62 million respectively below their original budgets. The others wished to maintain their original budgets.

My hon. Friend the Under-Secretary of State and I have met delegations from each of these authorities to hear their oral representations in support of their written cases for a reduced cap. My right hon. and learned Friend the Secretary of State very carefully considered the points made at those meetings, together with all the other available relevant information before taking his decisions.

In the case of five authorities—Cheltenham, Gloucester, Greenwich, Hillingdon and Lambeth—he decided that caps should be set at the level originally proposed. For the remaining three—Basildon, Gloucestershire and Warwickshire—he has decided that, in the light of their particular circumstances, some relaxation was justified.—[HON. MEMBERS: "Hear, hear".] I am glad that my hon. Friends think that that was a wise judgment. As a result, we have decided to increase the caps for those authorities by £1.95 million, £2.59 million and £4 million respectively.

I must emphasise that our aim during the capping process has been to require a designated authority to reduce its budget to such a level that it would no longer be excessive or represent an excessive increase. Where we judge that an authority can achieve that maximum reduction without the risk of inappropriate reductions in front-line services, we have required that of them, however tough and demanding it might be.

It is only in those cases where the circumstances of an authority are such that we judge that it would not be right within the financial year to demand the full reductions of that authority that we have decided to require a smaller reduction.

I must make it clear that, in those three cases where we have allowed an increase in the cap from the level that we originally proposed, we did so after extremely searching analysis of each of the authority's individual circumstances. My right hon. and learned Friend considers the caps of each of the eight authorities to be reasonable, achievable and appropriate, in the light of all of the individual circumstances of the authorities involved. If the House approves the draft order, it will be for each authority to decide how to live within those caps.

I have little doubt that we shall hear much from Opposition Members about the effects of capping. I can only say that time and again there are dire warnings issued about the consequences of capping which, in the event, are simply not borne out. It is for authorities to order their priorities within their caps and we are satisfied that they will be able to provide an appropriate level of service within the caps if they choose to do so.

More than 97 per cent. of local authorities have budgeted sensibly this year. Just 10 authorities, four fewer than for last year, have been designated for capping. That is the second lowest number of authorities capped in the history of rate and charge capping, despite a great increase in the number of authorities within the scope of capping following the abolition of the £15 million threshold by the Local Government Finance and Valuation Act 1991. That is an achievement in which local government as a whole can take some pleasure. It is certainly a pleasure to me.

I regret that it has proved necessary to designate even 10 authorities. Next year, with the advent of the council tax, I hope that it will not be necessary to designate any. But let there be no doubt about our resolve to ensure that the transition to the council tax is not accompanied by any great surge in spending; we are determined that the substantial Exchequer support that we now provide for local government is used to keep local taxes at affordable levels and is not frittered away on unnecessary additional spending. Local government, for its good future, needs an independent tax, which has to be brought in at sensible levels. Our aim for next year, as for this year, is that local authorities budget in line with what the country and their local taxpayers can afford.

The order, if approved, is the final step to bring the 1992–93 capping process to a conclusion. It reinforces our strategy of expenditure control and about 1.4 million charge payers stand to benefit. I commend it to the House.

Mr. Deputy Speaker

I remind hon. Members that the amendment has not been selected and that Madam Speaker asked for brief speeches.

7.22 pm

Mr. David Blunkett (Sheffield, Brightside)

The first speech that I made from the Front Bench as shadow spokesman for local government four years ago was on capping. Given the exigencies of time, this may be my last speech in that role, so it is fitting that it should also be on capping.

It is suitable to quote back to the devil the devil's own propaganda, which the Minister may care to comment on. The propaganda contains phrases such as: Tax capping is a democratic obscenity. Those words were uttered not by me, but by the editor of The Timesthis morning. He stated: Since discretionary local spending is not included in the Treasury's planning total for public expenditure, this accretion of power is pure meddling, the restless fidgeting of Treasury and environment ministers and officials. Mr. Howard and Mr. Redwood, immured in the corridors of Whitehall, have the same contempt for tiers of government below their own as do Mr. Delors and his colleagues in Brussels. Knowing the warm feeling that the Minister of State has towards Mr. Delors and the Brussels bureaucracy, I am sure that those sentiments will give him pause for thought.

Here we are again with a Government preaching choice and denying it to the local electorate, espousing responsibility and declaring the electorate and the elected irresponsible, preaching opportunity and demanding cuts in the education, social services and leisure facilities that offer that opportunity.

Mr. Redwood

I resent the implication that I do not believe in or respect local government. I believe in it and think that it has an important role to play, as I made clear in my opening speech. Is the hon. Gentleman saying that, if it were in office, the Labour party would take no interest in the total level of local authority expenditure and would not control the amount of grant paid by central Government? Is he saying that the Labour party would give local authorities any money that they asked for, which is what the hon. Gentleman seems to be suggesting?

Mr. Blunkett

The Minister's righteous indignation will have to be aimed at the editor of The Times, not me. No doubt he will take up the matter in other quarters.

We have always made it clear that money raised and spent locally is not the business of the national Exchequer but that of local people. That principle is accepted across the democratic world, including the United States of America, and is one to which we in this country should adhere.

Mr. David Wilshire (Spelthorne)

Does the hon. Gentleman agree that all expenditure, whether public or private, has an effect on a national economy? If he does, will he explain how any central Government could wash their hands of one part of expenditure?

Mr. Blunkett

The expenditure that the Government have to raise by borrowing is something that the Government have to take into account. We disagree with the Government on what should be counted as part of the public spending totals raised through borrowing. We believe that the practices of other countries in the Organisation for Economic Co-operation and Development are more sensible, as they allow subsidiarity so that money can be raised from the markets at democratic levels below that of the national Government. That makes the economies of those countries much more effective and less likely to come under the pressures of the Maastricht treaty arrangements. I am sure that hon. Members from all parties would be interested to examine those policies.

There is no evidence that locally raised and spent revenue has a major impact on inflation or the Government's ability to raise from the markets the money that they need. Hence the Government's own belief that when they increased value added tax the effect on the economy was marginal. However, they seem to believe that £3 on the poll tax of the people of Gloucester will have a dramatic impact on our economy in future and the Government's ability to manage their economic policy—in so far as it exists.

Mr. Wilkinson

I appreciate the hon. Gentleman's generosity in allowing me to intervene yet again -in the debate.

The cap will reduce the community charge in Hillingdon borough by the princely sum of £5 per head. To my knowledge. I have not yet had a single letter from a constituent complaining at the level of community charge this year.

Mr. Blunkett

I can only accord with what the hon. Gentleman says—the staggering £5 reduction has obviously evoked an enormous and grateful reaction from the Hillingdon electorate and will clearly make an enormous difference to the bridging problems of the current account deficit with which the Chancellor is struggling!

Mr. Terry Dicks (Hayes and Harlington)

I wish to take up the remarks of my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), as I have received complaints about the additional charge to poll tax payers that was necessary in order to look after refugee children. If that responsibility had been accepted by central Government, even those letters would not have arrived in my post bag.

Mr. Blunkett

I am sure that the hon. Gentleman would not even have received letters about the refugee children were it not for the fact that his constituents knew that, in order to meet that responsibility, which was perfectly reasonable, given the location of Heathrow airport.. their own services had to be cut. However, that is the prospect they face. It is a moral disgrace to ask the residents of a specific locality to pick up the bill for meeting such responsibilities and thus suffer reduced services. In order to fulfil their duty to the refugee children who come from around the world, Hillingdon residents inevitably have to suffer reduced services. They can do nothing about that, any more than the residents of Cheltenham can do anything about the land taken over from Tewkesbury, which has resulted in the cuts necessitated by the cap placed on them.

If it were not so serious it would be ridiculously funny to debate a £5 reduction in the bills of people in Hillingdon, £3 in Gloucester and £12 in Cheltenham.

The amount in Warwickshire is peanuts, though not in terms of cuts in services. All hon. Members arid all commentators know that it is daft. Eight authorities are being capped to reduce by a tiny fraction the amount raised by local people. Neither electors, chambers of commerce and trade, newspapers, parents, MPs nor councillors in Warwickshire agree with Warwickshire being capped.

Sir Dudley Smith

I do not like to agree with the hon. Gentleman, but he is absolutely right. There is unanimity among all the political parties and everybody in local government.

Mr. Blunkett

The irony is that the only people who are in favour of Warwickshire being capped are those who do not have to live there. Those people are not worried about the day-to-day policing of the streets and do not share the concern of parents of schoolchildren or the anxiety of elderly people who need to be cared for in residential homes or by home helps in their own homes. They are not concerned about the quality of fire cover. The same applies to Gloucestershire, which is hardly the most profligate authority in Britain. Hillingdon, Warwickshire and, of course, Basildon are Conservative authorities. What about Basildon?

Mrs. Teresa Gorman (Billericay)

Will the hon. Gentleman give way?

Mr. Blunkett

I shall give way to the hon. Member for the Billericay tendency.

Mrs. Gorman

In Basildon the cap will mean savings of £41 per charge payer per year. They would have had to pay a very high £361. That saving is welcome. We are spending the money not on such worthy causes as refugee children but on sports and parks facilities on which Basildon spends £32 per head per year. The average for the country is about £10. Those are the sort of facilities on which Basildon wasted money, and the people of Billericay and Basildon are delighted at the cap.

Mr. Blunkett

The voters of Basildon exercised their right to vote and elected a Tory council. That is democracy. The new leader of Basildon council can hardly be described as a wet. His local papers are already calling for his resignation for his incompetence in handling the closure of the local theatre. For the Billericay and Basildon tendencies theatres are persona non grata. The idea of culture has not yet filtered down to Basildon from the Department of National Heritage. Perhaps the new Secretary of State will step in to ensure that the measly £3,000 which would have kept the theatre open for an extra week to allow a children's production to be held is made available. [Interruption.] A Conservative Member says that we should shed tears. The town manager of Basildon said after the election that meeting the cuts would be devastating for Basildon. That could hardly be described as a reflection of socialist fervour. The idea that welfare rights and advice centres, youth services and facilities for the disabled that are not available from the county should not be cut should not be dismissed by sneers about tears. The people who will feel those cuts will not see anything to sneer about. But that is what the people of Basildon voted for, although on 21 May even the leader of Basildon council agreed that if the cuts had to be implemented on the basis of the original cap it would be "Goodbye Basildon".

Mr. James Hill (Southampton, Test)

Nonsense.

Mr. Blunkett

I did not say goodbye Basildon: it was said by the hon. Gentleman's colleague, the leader of the Conservative council. I was not surprised that the hon. Member for Basildon (Mr. Amess) welcomed the £7 million cut that his friends in the Conservative council have vigorously tried to resist now that they are in power. The hon. Member for Basildon welcomed the announcement that Basildon would have to contribute to the poll tax safety net, not understanding that locally raised money would be given away.

Conservatives are so well versed in local government finance that they are engaged in flights of fancy, such as commending to the Prime Minister the new airline agreement for Europe. Many of them are up in the air and flying away rather than having their feet on the ground and being concerned about policing, safe, clean and acceptable streets, and comfortable and safe neighbourhoods in which to live. We have not spoken enough about protecting people from an increasingly brutish and unacceptable society in which self-interest rather than self-reliance has been the order of the day. There is litter and filth and graffiti and people fear to walk on our streets at night.

In addition to education and care for our children and those in social service care and a desire for decent leisure and cultural facilities, we are interested in a civilised and decent society in which people can walk safely on the streets. Cutting policing in Warwickshire or Gloucestershire does not help one iota towards that aim. As my hon. Friend the Member for Greenwich (Mr. Raynsford) has said, such aims are not helped by penalising an authority and making it impose more cuts because, compared with neighbouring boroughs, it got a poor standard spending assessment for the provision of children's services. Conservative Members spoke about provision in Lewisham. Wandsworth receives almost double the amount per person for children's services that is allocated to Greenwich.

At the Adam Smith Institute the Prime Minister spoke about expectations in schools. They were wise words and would have been commendable and taken seriously if, at the same time as the Prime Minister spoke about parachuting teachers to inner-city schools and increasing expenditure on them, his capping regime and his formula funding mechanisms were not cutting the spending on such schools and preventing increased expectation by parents and improved education for children. Greenwich spends £7 million more than its standard spending assessment on education. The same amount above the Government's SSA has been spent on social services in Lambeth, but the borough is expected to cut that amount in order to meet some centrally determined preconception of what should be spent on local people.

It is time for a return to a bit of basic democracy, the kind of thing that is commonplace on the continent where nobody holds councillors in the contempt in which they are held by the Government and Conservative Members. People on the continent respect local democracy and accept the right of local people and their representatives to decide what is right for them. It is short-sighted and centralist and Delorsian in its corporatism and in its harking back to the past to continue the capping regime and the diktats of central Government. That is why we are opposing the order. That is why we believe that capping is fatally flawed. That is why we believe that at some stage in the future, despite the best efforts of the continuing regime in Westminster and Whitehall, we shall return to a position where decentralised and devolved local government, with real subsidiarity, will be able to take decisions on behalf of local people—local people will have voted for it—and there will be respect for that local democracy, which is the life blood of any civilised society.

7.40 pm

Mr. Michael Shersby (Uxbridge)

The decision of my right hon. and learned Friend the Secretary of State for the Environment to cap Hillingdon, in which my constituency is situated, is both unnecessary and unjustified. Hillingdon's original budget was £167,140,000 and the cap proposed by my right hon. and learned Friend is £166,270,000. In other words, it is proposed that Hillingdon should spend £870,000 less than that it had planned, despite the fact that my right hon. and learned Friend knows that the borough faces extraordinary items of expenditure which are not of its own making but are the direct consequences of national policies. Those items include the costs of caring for 31 unaccompanied refugee children from Ethiopia, Uganda, Angola and the territory of Eritrea. I heard today that there are now another five children from Zaire and Afghanistan. The cost to Hillingdon of caring for these children last year was £936,000, a substantial sum and one that is in excess of the amount by which Hillingdon is being requested to reduce its expenditure.

My hon. Friend the Minister for Local Government and Inner Cities knows that, because of the outstanding and unique success of Hillingdon in 15 per cent. of its schools applying for and achieving grant maintained status—more than any other local authority in the United Kingdom—the allocation of funds through the schools formula will mean that Hillingdon will lose another £1 million. That is because the allocation of funds is based on central costs of 16 per cent. of the aggregated schools budget. In effect, this means that GM schools will receive the same cash amount for 1992–93 as they would have been eligible to receive under the old rules when they were local education authority schools.

As the LEA has fewer funds with which to do its job, it has to cut its staff costs. By the end of 1991–92, Hillingdon's education department had shrunk by 78 posts, from 216 to 138. The savings achieved for 1992–93 as a result are £6.17 million. There are now only 120 staff in post in the education department. But still Hillingdon loses £1 million as a result of the formula, which has been rigidly applied.

My hon. Friend the Minister for Local Government and Inner Cities knows all about this. As he has told the House, together with my hon. Friends the Members for Hayes and Harlington (Mr. Dicks) and for Ruislip—Northwood (Mr. Wilkinson), I went to see my right hon. Friend the Prime Minister on 18 February to acquaint him with the situation which we foresaw. We wished especially to emphasise the problem that Hillingdon faces in caring for unaccompanied children who are literally dumped at Heathrow and who have to be looked after. We wanted my right hon. Friend to know also of the difficulties that result from the financial formula that affects grant-maintained schools.

My right hon. Friend the Prime Minister was extremely sympathetic and understanding. He understood the problem immediately. As a result, he arranged for a delegation from Hillingdon to see my right hon. Friend the Member for Henley (Mr. Heseltine), who was then the Secretary of State for the Environment. Hillingdon was obliged, due to the extraordinary items of expenditure to which I have referred, to reduce its expenditure by the amount referred to by my hon. Friend the Minister for Local Government and Inner Cities. It had to do so as a result of policies that the Government had implemented.

My hon. Friends the Members for Hayes and Harlington and for Ruislip—Northwood have made it clear in interventions—I am about to emphasise the point —that Hillingdon has an outstanding record. Since the Conservative group came to office in May 1990, with a majority of only one, it has reduced expenditure by £30 million. It has also reduced staff posts by about 1,400. I suggest that that is a truly remarkable record. It has put the borough council's finances on a sound footing. The community charge, which is £295, is by no means excessive.

Why is it that my right hon. and learned Friend the Secretary of State seems to think that Hillingdon is spending so much? I suppose it must be because of the shining example that is set by his Department in keeping down its running costs. We can only assume that it is under firm control and observing strict disciplines and that my right hon. and learned Friend is anxious to pass on the example to Hillingdon. It seems that my hon. Friend the Minister for Local Government and Inner Cities has this message for Hillingdon: "At all costs you must cut your expenditure by £870,000 and adhere to the same strict disciplines that I am imposing on my Department in Marsham street."

As the House will know, for the past nine years I have been a member of the Public Accounts Committee. That has caused me, like you, Mr. Deputy Speaker, to develop an inquiring mind about the cost of running central Government. Economy, efficiency and effectiveness are the watchwords of the denizens of Committee Room 16, who meet twice a week to take evidence from witnesses from the Department of the Environment and elsewhere.

I have been doing some work on my own account. I have examined the central running costs of the Department of the Environment to see how it is setting the magnificent example that it wants Hillingdon to follow. What do I find? I find that at constant prices expenditure increased from £172 million in 1990–91 to £193 million in 1991–92. It is planned to increase expenditure still further to £202 million in 1992–93. My right hon. and learned Friend's Department increased its expenditure by no less than 12.3 per cent. in 1990–91. If we take the total running costs of the Department, including those of the Property Services Agency and the Office of Water Services, at 1992–93 prices, the cost to taxpayers, including those in Hillingdon, increased from £212 million in 1990–91 to a massive £256 million in 1991–92, an increase of 20.5 per cent.

Then there are staff costs. Hillingdon is being told, like other local authorities, that it must keep down its staff costs, despite the fact that it has already shed 1,400 staff. The Department says that that reduction is not enough. What is the Department doing? What example is it setting for us? I find that the Department's staff has increased from 5,930 in 1987–88 to 6,425 in 1991–92. I wonder what has happened to the envelope that my right hon. Friend the Member for Henley, who is now the President of the Board of Trade, gave to his permanent secretary when he took office. It seems that it has been lost. It does not appear that my right hon. and learned Friend the Secretary of State is doing very much to set an example for local authorities by curbing expenditure on excessive staff costs.

Mr. Wilshire

This is riveting stuff. Does my hon. Friend agree that he is making a case for capping the Government as well as local government? If that is so, I am happy to support him.

Mr. Shersby

I am grateful to my hon. Friend for his intervention.

Unfortunately, worse is to come. One of the central problems facing Hillingdon is the schools formula and the way that it is working for GM schools. I have examined the expenditure of the Department for Education and its staffing. I find that its staff has increased by 288 since 1987 to this year.

I invite the House to consider the costs that Hillingdon will incur in setting a new budget. I was told today by the director of finance that the cost of rebilling will be £165,000. That, too, has to be found out of the capped budget. What will the community charge payers of Hillingdon gain from being capped? The answer is £4.86, which is 1.3p a day—hardly worth the effort, I suggest.

The Minister is gravely in error in capping Hillingdon. Nothing much will be gained as a result of his decision and a great deal will be lost. I invite him to consider the effect of his decision on the morale of my colleagues on Hillingdon borough council who, for the past two years, have had to take the most difficult decisions in order to achieve very considerable improvements in the public service and in the financing of the borough. Something else will be lost—my vote in the Division Lobby tonight.

7.50 pm

Mr. John Fraser (Norwood)

I begin with a few words about the annual argument that we have about local government. The distribution of democratic power in this country is between central Government and local government. In other nations there are different balances —in the United States between the federal Government and individual states and in Germany between the federal Government and the lander. The division of democratic power here between central Government and local government ought to be a matter of constitutional agreement that rises above disputes between the parties. Since this Government came to power in 1979, there have been about 50 statutes regulating local government. There ought to be a constitutional separation of powers upon which we can all agree. There ought not to be continual arguments in the House about interference with another tier of government. If I judge rightly the mood of the House, there is consensus about the degree of independence of local government in these matters. The odd person out is the person representing central Government.

Mrs. Gorman

Not a bit of it.

Mr. Fraser

We have just listened to the speech of the hon. Member for Uxbridge (Mr. Shersby), who gave the impression that neither he nor some of his colleagues intend to support the Minister 100 per cent. Matters relating to the constitutional division of power ought to be ones on which the House and the parties can agree. We should not continually be resurrecting the body of local government and digging up the tree by the roots, if that is not too much of a mixed metaphor.

My borough of Lambeth set a budget of £333 million. The Government believe that its budget should be reduced to £328 million, a reduction of £4.4 million, or a reduction in poll tax of about 50p a week for the people living in the borough. The saving would be less than 50p a week because of poll tax reduction schemes and rebates. One is not, therefore, talking about a great deal of money.

The Department of the Environment increased Lambeth's standard spending assessment by £20 million, but the capping exercise has restricted the increase in its expenditure to £17 million. If the order is approved, Lambeth's poll tax will be reduced from £448 to £422 per person. In absolute terms, a poll tax of £448 is too high. It impoverishes the area by taking money out of the local economy. It is particularly harsh on relatively poor, elderly, single people living on their own who, as a result of the Government's machinations, pay substantially more than is paid by their affluent neighbours.

That level of poll tax leads to anti-social habits, such as evasion. When people get into the habit of evading their public duty of paying the poll tax, the habit tends to spread into other areas. My biggest argument against the poll tax is that it begins to undermine people's relationship with local government and with the state. Eventually it could lead to criminal activity. The Government had to accept that it was so destructive that they had to abolish it.

I do not believe that at this time of the year, coming up to July, it is worth while to cut the poll tax. At the very most, the effect on poll tax payers would be marginal—a reduction of 50p at the most. My experience—and I believe it to be the experience of most other hon. Members —is that there has been little lobbying against the current level of poll tax, as against the level that the Government propose. Since the effect on poll tax payers will be marginal, it seems to me to be plain crazy to alter the level of local taxation when we are at least a quarter of the way through the financial year.

The effect, however, on those who consume services —this is particularly true of education—will not be marginal. It will be both deep and severe. The effect of the capping order on the revenue that is collected by way of the poll tax will be huge. There will be irreparable losses as revised bills are sent out and as frustration over the continuously revised poll tax translates itself into non-payment. Bad debt—irrecoverable poll tax—will be the consequence of asking Lambeth to rebill and recap its rebates. It will throw the present collection system—which is beginning to work reasonably well in my borough—into confusion.

Two alternatives could have been proposed. The first is to allow councils such as Lambeth to write off their bad, irrecoverable debt without treating it as expenditure.

Mr. Redwood

Whew!

Mr. Fraser

The Minister says "Whew!". When the Government wanted to sell British Airways—when the private investor was to get his sticky hands on British Airways—what did the Government do? They wrote off bad and irrecoverable debt. If the Minister says "Whew!" like that, can he tell us whether the Government intend to write off bad and irrecoverable debt when they sell off British Coal in order to allow the private investor to get his sticky fingers on British Coal?

Mr. Roy Thomason (Bromsgrove)

Will the hon. Gentleman give way?

Mr. Fraser

No, because a lot of hon. Members want to speak in the debate. It would be better, therefore, if I did not give way.

When it came to selling off British Steel, did not the Government write off bad and irrecoverable debt? The same applies to Rolls-Royce. I do not know, therefore, why the Minister said "Whew!"

The right thing to do is to allow boroughs to get rid of their bad and irrecoverable debt, which is largely the result of rate penalties. When we had the rate penalty system, if a tenant moonlighted owing £1 in rent and it was written off, it counted as expenditure and the local authority lost £1.60 in grant. That was the result of central Government's interference with local government finance. Consequently, local authorities throughout the country kept the bad debt on their books. The consequence of writing it off was that it would count as expenditure and would lead to even greater penalties than the level of debt that was being written off.

The second alternative is that the Government should recognise and accept the truth about the population of the borough of Lambeth and the realities of collecting poll tax. I accuse the Government of ignoring the truth about the population of Lambeth and of ignoring the borough's ability to collect in order to stigmatise the borough. I know that not everything is perfect in Lambeth. I do not represent the borough; I represent the people of Lambeth.

Let me give an illustration of how the Government have ignored the realities. The Office of Population Censuses and Surveys states that the adult population of my borough is 180,000. The first results of the 1991 census showed that Lambeth had an adult population of 179,000, or thereabouts. That is almost exactly the same as Lambeth's estimate of its own population but, without any figures to back them up, the Government say that the adult population of Lambeth liable to pay the poll tax is 189,630. They calculate that there are 10,000 more people than the Office of Population Censuses and Surveys estimates and 10,000 more than appeared on the 1991 census. With a poll tax of about £422 to £448 a year, the missing 9,000 people represent £4 million of imputed income, which is almost exactly the amount of the Government cap in the order. If the Government were to believe their own statistics, their own census and their own OPCS, we should not need to discuss the order. The Government are denying us the money because their population figures are wrong, but ours are right.

We could reduce the poll tax substantially if the Government would recognise the problems of collecting the poll tax in a borough where 40 per cent. of all public sector tenants live on the poverty line, and in which 25 per cent. of the total population live on the poverty line. The 20 per cent. rule also makes it especially difficult to collect the poll tax. If the Government recognised the difficulty of collecting the poll tax, which was the underlying reason for abolishing that tax, they would accept our figure of about 82 per cent. collection rates. If the Government were to accept our figures for the population and for the collection rates, we could cut our poll tax by £74 per person, which is much greater than the 50p a week which will result from the order.

I conclude by giving three more reasons to oppose the order. First, as many hon. Members have said, it is undemocratic. If people are not content with the level of the poll tax or with their local services, they will have a simple solution in two years' time: they can get rid of councils with which they are not satisfied. There is growing evidence that the choices that people are making in local government elections are independent of those that they make in national elections.

I admit that the Minister spent five minutes talking to me behind the Speaker's Chair and listened to my views, but he refused to meet local government officers, a delegation from the local community, voluntary groups or churches. The police also wanted to talk to him, but he refused to meet any of those people and has overridden any local views except those of the leadership of the local council. That is wrong and it ignores the local democratic view and public opinion. After all, the results of the level of poll tax and of the conduct of our local authority led not to a backlash against Labour but to the loss of the Tory seat in Streatham only a few months ago.

Secondly, the order means a waste and a loss of revenue. It will cost about a quarter of a million pounds to rebill and to recalculate rebates in a borough which has such a high level of poverty and where there are so many rebates to be recalculated. That alone will cost about a quarter of a million pounds, but a bigger loss of revenue will come from the confusion that will result from rebilling. That will mean that millions of pounds will be lost, so the cap implies not only an explicit cut in expenditure of £4 million in the current year but serious cuts in the future as irrecoverable poll tax has to be written off as a result of the order.

The order devalues and dilutes the council's revenue for future years. That means that in the future a child or some children somewhere in my borough will not go to medical school or law school or become an artist or a creator because the amount spent on their education in my borough will have been cut as a result of the loss of revenue arising from this order. That is already happening in every London borough. The amount spent on children's education is reduced because of bad debts which were incurred before they were even born—

Mrs. Gorman

It is because people do not pay their rent.

Mr. Fraser

No, it has nothing to do with that. The hon. Lady should tell us why the amount spent on the education of a child of five in my borough should be reduced because of rent which a tenant did not pay eight years ago. Why should a child who is now four or five years old be penalised because of a debt which is now irrecoverable and which was incurred more than five years ago? That is the result of the way in which education is financed. It is also a result of the abolition of the Inner London education authority and the consequence of lumping the problems of London boroughs and their old debts together with other provisions.

The third reason to oppose the order is the cuts themselves. Lambeth had not planned to increase its spending greatly. It plans to spend an extra £4.4 million on education and an extra £1.6 million on social services. We read in the Evening Standard tonight that children in London are at greater risk of drug and child abuse than in any other part of the country. Lambeth also plans to spend about £50,000 extra on the disabled.

As a result of the cuts, the passport out of poverty provided by education will be curtailed to some extent because, in a borough such as Lambeth, education is the value-added element which can be added to a child's basic assets. The lives and opportunities of young people, children and the disabled will be adversely affected. I do not think that playing with people's lives is worth 50p or less a week.

8.6 pm

Mr. Alan Howarth (Stratford-on-Avon)

I have sought to catch your eye, Mr. Deputy Speaker, out of sad necessity. I regret very much that Warwickshire has been capped. It is not an authority which has sought to confront the Government; it is not loony or extravagant but is a well-run Conservative-controlled authority, committed to providing a proper level of services on a cost-effective basis. The quality of its management has been praised by the Audit Commission whose opinion, I believe, the Government hold in some regard.

In Warwickshire we certainly understand the need for economy in the public finances, and Warwickshire county council has not sought to impose excessive burdens on its charge payers. Indeed, the increase in its precept since the introduction of the community charge has been the ninth lowest of any county council. But Warwickshire is being capped. That is because the Government's standard spending assessment understates Warwickshire's needs.

Warwickshire's needs are certainly no less than the average. Sadly, mortgage repossessions and infant mortality are above the county council average. Household disposable income and gross domestic product per household are below the county council average. That is recognised by the Minister's colleagues in the Department of Trade and Industry and by the European Community in no fewer than three different programmes. Nearly half the population of Warwickshire lives in priority areas as defined by the DTI or the European Community. In the case of the European Community, Warwickshire is eighth out of the thirty-nine English county councils with regard to the proportion of the population in objective 2 areas. However, according to the Department of the Environment's assessment of need, Warwickshire is thirty-fifth out of 39 authorities.

Why is the Department of the Environment's assessment of Warwickshire's needs so peculiar? I cannot believe that my hon. Friend the Minister of State, of all people, is lagging behind the European Commissioners in common sense and realism. The explanation is that he has inherited responsibility for a system that places excessive weight on a restricted range of indicators of need. I shall outline briefly two distortions and one confusion in this massive system.

The area cost adjustment is intended to compensate local authorities for the costs of employment in the south-east of England. We in Warwickshire submit that the new earnings survey is an inappropriate guide. A high proportion of local authority labour costs are centrally determined, and there is little real flexibility for local authorities in respect of pay—for example, in the cases of the police, of fire fighters and of teachers.

I am glad that my former colleagues in the Department of Education and Science managed to achieve a pay review body for teachers and that its recommendations have been accepted. However, if the Government will the ends, they must also will the means. It is not reasonable to require Warwickshire's education budget, already desperately stretched, to be cut in other aspects to enable the authority to honour that commitment.

There is an arbitrarily drawn frontier between the charmed area of the south-east, which benefits from the area cost adjustment, and the rest of the country. Unfortunately for us in Warwickshire, the boundary is drawn along the Oxfordshire-Warwickshire border. If we were in Oxfordshire, we should receive an extra £15.2 million, and then we would have no problems with our budget.

In different capacities I have had the opportunity to study the additional educational needs element in the formula at close quarters, and in my judgment it has two faults. The first is that the three indices of social deprivation on which it is based are too narrowly selected. In truth, additional educational needs, as defined by people of common sense, are diverse and pervade the whole school population. The weighting attached to additional educational needs in the standard spending assessment is excessive—22.5 per cent.—so that too high a proportion of resources is allocated according to socio-economic factors rather than according to pupil numbers. The result is underfunding of basic provision across the country. The cost to Warwickshire of the introduction of the additional educational needs element was £6.7 million in 1990–91.

As my hon. Friend the Minister knows, I have been a member of the ministerial team for "Action for Cities", and I fully share the Government's commitment to finding effective ways to bring better services to people in inner cities and to improve the quality of life there. But I question—as, I suspect, does my hon. Friend—whether massive transfers of resources from the shire counties are really the right way to achieve that. In Warwickshire the effect has certainly been to take from a county which is efficiently managed but austerely financed. I have no ill will towards Birmingham—although I admire Warwickshire's concept of education service delivery rather more than that of Birmingham—but we find it galling that Birmingham city council does not even spend up to its education SSA.

Sir Dudley Smith

My hon. Friend is making a powerful case, as is clear when he talks about the inner cities problem, but will he ally with that case what he said earlier —that less deserving shire counties, too, are getting more than Warwickshire?

Mr. Howarth

My hon. Friend is taking us back to the area cost adjustment consideration, and I certainly do not disagree with him about that.

The weighting of the additional educational needs element has been somewhat reduced within the overall system. I understand the political difficulties in taking the process further, but I believe that my right hon. and hon. Friends in the Department of the Environment and the Department for Education should consider it further, because injustices and impracticalities are built into the formula.

The confusion which I mentioned earlier consists in the contradictory requirements of different Whitehall Departments. I mentioned teachers' pay, and I shall cite one other instance. The Home Office requires Warwickshire to spend more than it does on the fire and rescue service, whereas the DOE insists that it should spend less. The budget is £2.4 million, or 32 per cent., above its fire SSA, yet Warwickshire's expenditure remains below the minimum on which the Home Office insists. We have received stern admonition from Her Majesty's inspector and from Home Office Ministers, yet when Warwickshire attempts to meet the Home Office requirements we find ourselves capped.

I ask the Minister of State, as I have already asked my right hon. and hon. Friends in the Home Office, to deal with this flat contradiction which places Warwickshire councillors in an impossible position and causes my constituents to suffer. I hope that the Minister will not simply accept that there is an impasse between those two massive Departments of State.

I could say more about the technical features of the system which operates so powerfully to the detriment of Warwickshire, but the case has been strongly set out and powerfully substantiated in a two-volume submission by the county which I commend to a wider readership. The issues raised in Warwickshire's case are issues of principle, and of national concern.

If the system of SSAs is to command respect, the anomalies within it and the damage that they cause must be eradicated. It will not do to plead, as the Government did last year, the overriding need for stability—because such stability means a perpetuation of injustice.

In the meantime, I am grateful to my hon. Friend the Minister and to my right hon. and learned Friend the Secretary of State for listening to and responding to Warwickshire's case. I believe that my hon. Friend recognises that the present position is not intellectually acceptable nor politically presentable, and I know him well enough to know that he cannot be satisfied with such a state of affairs.

The £4 million increase in Warwickshire's budget permitted under the order is a significant improvement for the county. But I remind my hon. Friend that it still leaves the county £3 million short of the expenditure that a responsible Conservative-controlled county council believed was the minimum appropriate budget. Already our education and youth services have suffered severely, and the police are experiencing the greatest difficulty in providing the service which the Home Office requires, which they wish to provide and which my constituents want from them.

The charge that the council has to make for home helps has risen by 25 per cent. above the rate of inflation, and something similar has happened with meals on wheels. Charges for lunches in old people's luncheon clubs are rising by even more than that. I recently visited the Earlswood senior citizens luncheon club, where people were incensed, but also bewildered and hurt, by the 50 per cent. increase in the cost of their luncheons.

The Government have implicitly conceded the inadequacies of the SSA for Warwickshire. The cap was lifted by £2.8 million last year, and between last year and this year formula adjustments have given us another £1.3 million. Now the Government have enabled us to spend an additional £4 million. They must now follow through the implications of that analysis and those decisions.

I shall vote for the order, because I shall not vote against an increase of £4 million for my county, but I ask my hon. Friend the Minister to recognise the disruption, damage and distress suffered in Warwickshire last year and again this year. It would be intolerable to have to repeat that experience for yet another year. The waste of time, energy, money and emotion involved in such proceedings is deplorable, and the sheer unfairness is unacceptable. I urge the Government to embark upon a thorough review of the standard spending assessment now, in the interests of justice and of good government.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. I inform the House that no fewer than 14 hon. Members hope to catch my eye. It would appear that some of them will be disappointed, but it would be helpful if hon. Members were to bear that in mind and to make their speeches as brief as possible.

8.19 pm

Mr. Bill Olner (Nuneaton)

I shall try to be brief, Mr. Deputy Speaker.

When the Minister began to speak, there were so many Conservative interventions that I thought for a moment that I was watching a re-run of "Yes, Minister". I am sorry to see him sitting all alone on the Front Bench.

The issue that we are discussing is fundamental to the welfare of my constituents and the people of Warwickshire in general. The hon. Member for Stratford-on-Avon (Mr. Howarth) spoke of the £4 million that the Government are contributing, but one could be forgiven for saying that they are contributing nothing at all. The elected members of Conservative-controlled Warwickshire county council have determined the level of service that is needed, and, although I consider their estimate far too low, they decided that £299 million was the amount required to provide that service.

That money is being collected. It began to be collected in April or May. I have received no letters from constituents saying that they are paying too much—although I have received plenty of letters from elderly people whose meals-on-wheels charges have risen by 50 per cent., and in some rural areas the service has been disbanded. Home-help charges have risen by some 25 per cent. It does the Government no good to become involved in horse trading. There is no rhyme or reason for their failure to accept the excellent document presented to them by Warwickshire county councillors, who made some good points when they arrived in a deputation attended by all Warwickshire Members.

I do not understand why the Government have relaxed their restrictions by only £4 million. I hope that all my hon. Friends representing Warwickshire will support the amendment that I have tabled with my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) because it goes back to the original principle that local democracy means elected members determining the level of service that is required, along with the people whom they represent. That is patently not happening now.

The main problem is the standard spending assessment. As others have pointed out, Warwickshire county council was poll tax capped not only this year but last year. The formula has been wrong from the beginning, and I fear that nothing will be done to correct it in future years. The Government's £4 million is no more than a relaxation.

In the past few years, Warwickshire has cut more than £13 million from its budgets. That has meant an enormous reduction in education and youth service facilities, and there is still a shortfall. Warwickshire councillors will have to exercise the wisdom of Solomon if the motion is passed; in determining that shortfall I hope that my amendment will be accepted, so that the council can set the budget that it agreed.

There is a £4.2 million shortfall in the education budget, a £1.5 million shortfall in the social services budget and a £1.4 million shortfall in the budget for transport and fire and rescue services. Those are only figures, of course, but there is more to it than that. Last week, I hoped to question the Minister for Health about the implications of the Children Act 1989; I understand that she is to receive a delegation from Warwickshire's social services department, and I trust that Warwickshire Members in particular will bear this in mind. Even with the increased funds mentioned by the Minister, the council will not have enough money to ensure that more than scant regard is paid to the implementation of the Children Act. It will be unable to move to the next stage of that implementation.

People in my area deserve better than this. Warwickshire is made up of five districts, many of which suffer from social deprivation. As has been mentioned, RECHAR money is payable in some of those districts. The county does not consist only of leafy Stratford-on-Avon, Kenilworth and Warwick; it has another side—the industrial side.

Warwickshire used to boast a thriving mining industry and a heavy engineering industry. Sadly, both those industries have been in decline for some time. It is now recognized—not only in the House but in Europe and the relevant agencies—that they need more money. The stranglehold of the standard spending assessment and all that it implies prevents my local authority from putting into practice policies that would create an additional economic stimulus.

I urge every hon. Member to vote against the motion —not because I do not welcome the £4 million, but because, if Warwickshire is to fulfil its obligations to its people, it needs the budget set by its Conservative county council. It needs £299 million.

8.26 pm

Mr. Douglas French (Gloucester)

The House gave my right hon. and learned Friend the Secretary of State for the Environment power to charge cap authorities on one of two grounds: that their budgets are excessive, or that the increase in those budgets in relation to the previous year is excessive. In his capping notice to the city of Gloucester —which I have the honour to represent—my right hon. and learned Friend said that his ground for capping was the fact that the increase in its budget between 1991–92 and 1992–93 was excessive.

How did my right hon. and learned Friend arrive at that view? He took the proposed budget figure of £10.343 million, compared it with the revenue support grant of £9.2 million for 1991–92 and then announced that that produced an increase of 12.4 per cent., which—by his standards—is excessive.

I would argue that the base line figure with which my right hon. and learned Friend should compare the proposed budget is £9.7 million rather than £9.2 million. I believe that he has wrongly applied the rules that he himself set. In 1991, the boundaries of the city of Gloucester were extended, and the city took in an extra 6,000 people who had previously been in Stroud and Tewkesbury. It became Gloucester's responsibility to look after those 6,000 people, and its charge-paying population was effectively increased by 9 per cent.

I entirely accept that my right hon. and learned Friend calculated Gloucester's SSA for 1992–93 to reflect the boundary change. I do not dispute that the calculation reflects the increased population's spending needs. The SSA, however, is not the issue; the issue is the way in which the base line is calculated. The question is, where did the money come from to provide services for those 6,000 people in 1991–92, the year in which the transfer took place?

It would have been possible for the Department to increase the council's revenue support grant. There was time for it to do that, but it did not. Had that been done, the present argument would not have arisen: the base line expenditure figure would have been unambiguously £9.7 million. Instead, the districts agreed on an inter-district transfer of £510,000 to Gloucester, which was designed to cover the spending requirements of those 6,000 people.

That transfer was made with the full approval of the Secretary of State and in accordance with the guidelines set down by him. For all practical purposes, therefore, this was revenue support grant, but it was received indirectly, via another council. If it had been retained by the council from which it came, it would have been treated as revenue support grant. So it was not extra expenditure in any sense. It was money spent by Gloucester that would otherwise have been spent by Stroud and Tewkesbury, and would, of course, have been included in those authorities' base-line calculations.

To Gloucester's original budget of £9.2 million was added £510,000, making £9.7 million in all—but with one difference: under the rules, the amount was paid into the council's general fund and had to be treated as -other income". The result was that the section 95(4) calculation, which is used by the Secretary of State in his year-on-year comparisons, was artificially reduced by £510,000. If the money representing the rate support grant had been treated as rate support grant, the council's section 95(4) calculation base line would have been £9.7 million.

So the question is "What was the amount of money spent by Gloucester in 1991–92?" because that is the yardstick for judging whether the 1992–93 expenditure is or is not excessive. Was it the original figure of £9.2 million, before any population transfer took place? My right hon. and learned Friend thinks that it was. He takes £9.2 million as the base line and argues that a proposed budget of £10.343 million represents an increase of 12.4 per cent. That breaches his guidelines and therefore triggers the cap.

My right hon. and learned Friend and I agree on one thing: the figure of £9.2 million is the one that would have been correct if no population had been transferred; there is no doubt about that. My right hon. and learned Friend believes, however, that the same figure was correct as a base line even after population change funds had been transferred and spent. In my opinion, that is illogical, unfair and absurd. It is absurd to take the same base-line figure for two different sets of circumstances.

I shall not invite my hon. Friend the Minister to consider where my right hon. and learned Friend's methodology would lead if, instead of the population increase being 9 per cent., it had been 99 per cent. Would he then stick to his unadjusted base-line system? That simple illustration shows that there is a flaw in my right hon. and learned Friend's approach.

Is it not common sense that, because the £510,000 was transferred in respect of the 6,000 people, it should be deemed to be a legitimate addition to Gloucester council's 1991–92 budget? Gloucester did not spend £9.2 million in that year; it spent £9.7 million, with the Secretary of State's approval. It seems reasonable, therefore, that it should be able to apply a 6.5 per cent. increase to the £9.7 million and propose a budget of £10.343 million.

That seems reasonable now and it seemed reasonable when the council did it. But the city of Gloucester took no chances. It took vigorous steps to discover the Secretary of State's views in respect of the effect of boundary changes on budgets. The council wrote to the Department several times seeking clarification. In a letter about charge capping dated 17 December, the Department replied: As far as the Secretary of State's intentions for charge capping for 1992/93 are concerned you will be aware that the paper circulated to all local authorities on 26 November …stated that 'the Secretary of State … intends to consider the effects of boundary changes on authorities' budgets for 1991/92 and 1992/93.' That remains the position. The letter continued, with respect to capping: As the Secretary of State made clear in his statement to the House of Commons on 26 November, his intentions are at present firm but necessarily provisional. That is not exactly a model of clarity, but one accepts that obfuscation is sometimes a necessary instrument of Government.

Admittedly, that letter does not say that the Secretary of State intends to make full allowances for the boundary changes, but it emphatically does not say that he intends to make no allowances for them whatever.

In the event, the letter of 17 December was not sent to Gloucester city council until 11 March. With it came a covering letter, which said: This letter"— meaning the letter of 17 December— actually from this office"— one wonders where else it might come from— appears never to have been sent. I therefore enclose a copy, with apologies for this oversight. By 11 March, the Department must have known that the budget-making process was not only well advanced but probably already accomplished. Whatever grounds for lack of clarity there may have been in November and December, the time for a clear decision had surely arrived by the middle of March. If it was the intention to treat the budget as if no population change had ever been made, it was time to say so, but the opportunity was not taken. I submit that the covering letter could and should have said that the Secretary of State had decided that no account would be taken of the money spent in respect of the additional population. It did not do so, even though the writer of the letter must have known that that was the information that Gloucester city council would need to know. Nor did the author of the letter show any sign of appreciating that there would come a point—in fact, that, there had come a point at that stage—at which further failure to set a budget would become an offence.

I submit that, if a clear and unequivocal statement had been made, at that time or earlier, to the effect that the £510,000 that had been spent must be treated as if it had not been spent, we would not be discussing this subject tonight, because Gloucester would have followed the instructions that it had been given. Members and officers of Gloucester city council from all parties believed that they were acting in accordance with the rules set down by the Secretary of State. One of the things on which we have cross-party agreement on Gloucester city council is that there was no intention to breach the capping guidelines. Indeed, there is abundant evidence in council correspondence and council minutes that the council had no intention whatever of breaching the rules. It was the council's wish and intention to keep within them. Why else would the council have had lengthy debates to that end? The council was debating not by how much it should seek to breach the guidelines but how to trim its budget to ensure that it was within the guidelines and did not run the risk of being capped. That is in keeping with the tradition of a prudent authority, which is what Gloucester has been. It has not been profligate or irresponsible. One may sometimes argue about the particular headings of expenditure priorities that it chooses, but, overall, it is a prudent authority.

It was not until the council received the notice of designation on 14 May 1992 that it became aware that the Secretary of State had not taken account at all of the boundary changes. What became evident then was that, on the Secretary of State's offbeat and eccentric method of calculation, Gloucester had breached the capping guidelines. It is not simply my view or that of Gloucester city council that the method is offbeat and eccentric. Section 55 of the Local Government Finance Act 1992 refers to the designation of authorities from 1993 onwards making specific provision for including in budget comparisons an amount to recognise boundary changes. Parliament has clearly recognised that year-on-year comparisons of budgets which do not take into account boundary changes may well be unfair.

I thank my hon. Friend the Minister for Local Government and Inner Cities for listening to representations from Gloucester city council. However, I repeat to my right hon. and learned Friend the Secretary of State and to my hon. Friend the Minister that the city council has not been profligate. It is committed to economy and efficiency. The amount by which its proposed budget exceeds the SSA is less than 117 other district councils, many of which are spending considerably above their SSAs. However, they remain within the year-on-year yardstick and are therefore not caught by the provision.

Furthermore, the amount in question is £190,000 or £3 per head of population. Subject to the precise re-billing arrangements, the reduction in budget is likely to approach £300,000. To insist on a cap of £10.15 million in those circumstances is not a sound illustration of how to treat charge payers' money responsibly. It will disrupt the city's financial management and confer a stigma on the council marking it as irresponsible. It is also likely to prejudice the council's case for unitary status. I regard the cap as entirely unacceptable.

While I thank Ministers for listening courteously to my representations, and those of councillors, I record my profound dissatisfaction with the fact that Ministers have not been persuaded by our arguments. Therefore, I regret that I cannot support the Government in the Lobbies tonight.

8.41 pm

Mr. Nigel Jones (Cheltenham)

Snap: we in Cheltenham have exactly the same problem as that in the constituency of the hon. Member for Gloucester (Mr. French). I thank him for setting out his case so clearly and I will not bore the House by describing the experiences of Cheltenham borough council.

Cheltenham council has also kept to the SSA, but we have suffered a larger boundary change than that in Gloucester. An extra 20 per cent. has been added to our boundary. The good people of Leckhampton, Up Hatherley, The Reddings, Prestbury and Swindon village have been added to the responsibilities of the borough council. There was a similar transfer of funds from Tewkesbury to deal with that change last year. We have no quarrel with the Minister over the SSA. We are being capped on the year-on-year comparison of spending in exactly the same way as Gloucester.

By setting a budget to stay within the cap, much of the routine maintenance will be capitalised, thus removing it from the revenue budget. As a result, the town centre toilets will close. It will therefore be a very inconvenient place to be when the pubs close. Senior citizens' bus passes will be means-tested. I know of no one who fought for a place on Cheltenham borough council who placed such changes in their manifestos. However, the council must adopt such measures to save small amounts of money to get down to the capping limit.

I join the hon. Member for Gloucester in appealing to the Minister to reconsider the position in Gloucester and Cheltenham. If we consider all the councils that were brought under the capping threshold with budgets of less than £15 million, only Cheltenham and Gloucester have had boundary change problems. That bodes ill for the local government review. Those examples may make councils anxious that boundary changes might lead to their being capped in future.

I would like to pay the Minister a small tribute. I have been double-capped: Cheltenham borough council and Gloucestershire county council have both been capped. I took a delegation from Gloucestershire to meet the Minister. Hon. Members may recall that when the original capping legislation was announced by the Secretary of State on 14 May I asked him whether he would be genuinely open to persuasion by the councils affected and he said that he would be. I thank the Minister for being open with us. We believe that we had a fair hearing when we met him.

Gloucestershire had a powerful case which was made clearly by senior council members Frank Thompson and John Sewell, the chief executive Michael Honey and the county treasurer Richard Cockcroft. I thank the Minister for being genuinely open to the Gloucestershire appeal. I also thank him for the relaxation of the cap by £2.59 million.

I met senior officers and members of the council in Gloucester yesterday. Although there was no sense of euphoria, there was a feeling that the Minister had listened and they were grateful for that. It must have had some effect on them, because I am pleased to report that when I attended the annual cricket match between Gloucester county council and Somerset county council, we won by 26 runs.

The question centres on the formula for calculating the SSA. Many of the calculations in the formula are based on the 1981 census. However, there have been great changes since then. There has been an increase in Gloucestershire in post-16 stay-on rates in our schools. That is remarkable and I am sure that the Government, like me, welcome that. We have also been very successful in statementing special educational needs. We have made great progress in that respect and some of our less fortunate children can now make more progress than they would otherwise.

Gloucestershire also now has a higher unemployment rate because of the rundown of defence needs following the end of the cold war. Although we all welcome the end of the cold war, we must find a new role for those people in the county who have been made unemployed as a result of that welcome move. There has been a 43 per cent. increase in free school meals in Gloucestershire and that costs money. The population in Gloucestershire has also been growing since 1981. Indeed, Gloucestershire was one of the boom counties of the 1980s.

The cuts which the county council had considered before the £2.59 million adjustment to the cap involved compulsory redundancies for teachers. We are reconsidering that to discover whether compulsory redundancies are now necessary. However, when I spoke to senior officers yesterday, they said that there would still have to be some compulsory redundancies. At one stage, it seemed that up to 200 jobs would be lost, although not all compulsorily and certainly not all full-time jobs. However, I know of no county councillor who was elected on the basis of a programme of making teachers redundant. I know of no school governor—and I am a governor of three schools in Cheltenham—who believes that making teachers redundant is a good idea.

The chief constable has also warned that 15 police posts would have to be held vacant despite the fact that since 1979 we have had a 237 per cent. increase in crime. Indeed, there was a 32 per cent. Increase—the third highest in the country—in 1991 alone.

Gloucestershire is a low spending authority. We spend less per head than the neighbouring counties of Warwickshire, Avon and Wiltshire and slightly more than Hereford and Worcester. We are way down the shire county average in respect of education spending.

During the formation of the budget and, indeed, during the general election, no one contacted me to complain about the level of the poll tax, but I was bombarded with letters from parents, elderly people and people who have no direct interest in education except they knew we should not make cuts. They all wanted us to maintain spending on education in Gloucestershire. They understood the argument because Gloucestershire has been forthcoming in passing the education budget to schools so that school governors have had to cope with their own budgets. They would have an informed debate not only among themselves but among parents and other people in the community.

At every public meeting that I held during the general election, I asked people whether they wanted us to cut spending on education, and they said no. I gave them the other side of the argument, that if they wanted to maintain spending on education and on the police they must be prepared to pay for it. When I asked, "Are you prepared to pay for it?" without exception they said yes.

The difference between the new cap and the budget which the county council would like to spend is 5p a day for the standard poll tax payer or 1p a day for those on the 20 per cent. rate. The cost of rebilling throughout Cheltenham, Gloucester and the county council area might be up to £1 million. That is a waste of money. I should be grateful if the Minister would clarify whether the relaxation that has been announced for the three councils will raise their SSAs or allow higher spending this year. If it does not raise their SSAs, there will be significant problems next year.

I am not alone in questioning the principle of capping. Last week, I asked whether the Minister thought capping increased local accountability. It takes from elected councillors the right to carry out the programmes on which they were elected and it denies the people who elected them the high quality services for which they voted.

8.51 pm

Mr. Terry Dicks (Hayes and Harlington)

I shall be brief, because my hon. Friend the Member for Uxbridge (Mr. Shersby) made an effective speech outlining the situation regarding Hillingdon. Some would say that this charade is a dog's breakfast, but no dog in Hillingdon would eat such a mess as that which is provided by the Minister and his colleagues in the Department. For year after year, the nonsense coming out of the Department of the Environment with regard to local authorities has got worse. It is as bad as it could ever be.

The poll tax—the community charge—was to give local democracy a chance to work; if local authorities taxed highly, they would be turned out of office by the electorate. That is an excellent principle, and I voted for it. When we saw charge capping, which is contrary to that principle, it was said that it would give people the freedom to elect high-spending authorities or low-spending authorities. The minute some high-spending authorities came in, and we could have seen a change, what happened? The Government said, "We cannot have that. We will go against the principle on which we introduced the community charge, and introduce capping." That is the issue that we are discussing. The principle was right, but the implementation was worse than a dog's breakfast, and capping just makes nonsense of the situation.

Labour and Conservative Governments have continued to put statutory obligations on local authorities and then deny them the resources to meet those obligations. In Hillingdon, which is a port authority, we have homeless families coming in. We now have refugee kids. Although the Government have told us that we have to let them in, it is their responsibility. They say, "Hang on, Jack. We are telling you that you have to house them, but we are not allowing you to find the money to do it properly. We are not accepting our national responsibility."

One thing that I recommend to my authority, and I did so 14 years ago, is that the next refugee kids who come in should be dumped in Folkestone and Wokingham. Let the local authorities in the areas in which the Minister and the Secretary of State reside see how they cope when they have to put their hands into their pockets to feed, clothe and house those refugee kids. I am serious about this matter. If the Government will not listen to reason and recognise the justice of our case, we will, unfortunately, have to take some action to make them aware. If we dump them in Wokingham in a couple of weeks and leave them outside the town hall, the Minister responsible will say, "This is a local responsibility, not a national responsibility. Although the Government control who comes into the country, you will understand why you should have them and bear your share." It is reasonable for the Minister to consider that point. If we do not do something drastic, the Government will go on only listening. I respect my hon. Friend the Minister for listening, but what is the point of listening and accepting the argument and then doing damn all about it afterwards? There is no point whatsoever.

My authority, Hillingdon, budgeted to cope with that national problem locally. It did as it was told. It raised money through local resources and then set it aside. That was not good enough for the Government. They said, "You have to find it locally; it is a local responsibility," although we thought that it was a national one. The minute we found the money and put it aside they said, "Oh no, no; we are going to cap you." We lose at both ends. It is like being stuck in the middle of the channel tunnel with a cork in each end. We cannot win.

As my hon. Friend the Member for Uxbridge has said, my local authority has done everything that the Government have wanted from it from day one in May 1990. It has made savings of £30 million and reduced staff by 1,400. It has acted faster than any other local authority in respect of grant-maintained status for schools. What do we get? We get one big kick up the backside from the Government for doing so. is it any wonder that my Tory colleagues on Hillingdon council say, "Why the hell do we bother"?

As my hon. Friend said, the public sector borrowing requirement is £28 billion. The Government have the audacity to say to Hillingdon, "You are £800,000 over the top." It is the Government's concern, but we are blamed for it. What sort of example is that? How can I say to my council colleagues, "Listen to the Government; theirs is the right advice on local issues; you must do as they say because they know best"? Know best? Like hell.

I have always said that perhaps we should get rid of the Foreign Office, because the Foreign Office acts in British interests only if they coincide with those of the Foreign Office. I have also said that, because the Treasury does not understand the difference between capital and revenue spending and abuses local authorities because of that, we should get rid of it. I have now arrived at the point at which I think that the Department of the Environment should join them. We should get rid of the three to start with—there will not be much left by the time I have finished. There is no logic in what the Government are doing with regard to local authorities.

My hon. Friend the Minister has said that he is a friend of local government and that he wants to continue as such. I have my doubts whether the Government really want local authorities to continue effectively and acceptably. I speak as somebody who has had nearly 14 years' experience as a local authority member. If we do not want to give local authorities the resources to do their job, and if local government legislation costs them money to meet their responsibilities, we should do away with local government altogether. Let us be honest about it. Do not let people become elected and work their whatsits off locally to make the right decisions and then slap a cap on them and say, "It is for the benefit of this country." That is the biggest load of rubbish that any hon. Member could have to listen to. I say to my hon. Friend the Minister that he will not get me in the Lobby with him tonight.

8.57 pm

Mr. John Austin-Walker (Woolwich)

In the previous debate the Under-Secretary of State for Wales stressed the importance of decisions being based on up-to-date information. The evidence that was presented by the hon. Member for Norwood (Mr. Fraser) shows that decisions on standard spending assessments and capping have not been based on the most up-to-date information available.

Other hon. Members praised the Minister for having listened to the representations made by the various local authorities. He certainly gave the impression of listening when the London borough of Greenwich met him. But what has come out since has shown that he heard and understood nothing that was said about the way in which the SSAs were essentially flawed.

When the Government considered the implementation of SSAs they had a series of options. One would have given Hackney, for example, a poll tax of £48. An alternative option would have given it a poll tax of £606. I give that as an illustration of the arbitrary nature of SSAs. They are crucial to the decisions that are made. If the SSA for a particular service overestimates the required spending, the council is effectively overpaid. But if the SSA underestimates the required spending, as in the case of the London borough of Greenwich, the inevitable result is that services are cut or the poll tax is considerably increased. In the case of Greenwich, both have occurred.

Let me compare what has happened in Greenwich with what has happened in Westminster. The Government say that SSAs are a fair assessment of what a local authority needs to spend to provide a reasonable level of service. The "other services" block of the SSA for Westminster assumes that the cost of those services will be six times the cost of the same services in Havering, and three and a half times the cost in Croydon.

The Chartered Institute of Public Finance and Accountancy statistics show that Westminster's actual expenditure on "other services" was twice, not six times, that of Havering and twice, not three and a half times, that of Croydon. I put it to the House that the difference between Westminster's SSA for "other services" and its actual expenditure represents a gift to the poll tax payers of Westminster of £301.17 each. If such a gift were given to the poll tax payers of the London borough of Greenwich we might have a negative poll tax. Or if the safety nets were removed we would have a poll tax of no more than half the current amount.

Ministers have argued consistently that Greenwich is not an inner-London borough with inner-London characteristics but an outer-London borough with outer-London characteristics. I say again to the House that that is based on misleading, outdated information. All the current information contradicts that argument. Ministers also suggest that the council is extravagant and top heavy. Yet in his recent management letter the district auditor said that only four London authorities had a lower ratio of central support staff to total staff.

Greenwich's problem is the basic inadequacy and unfairness of the SSAs. Will the Minister explain one thing to the House? There are various principles on which the capping regime may be brought into play. I understand that if the SSA of the London borough of Greenwich was only £1.87 million higher—far less than many of us believe that it should be—the expenditure limit would be £4.1 million higher. I ask the Minister to explain that and, if he can do so, to justify it to the House and the poll tax payers of Greenwich.

The social factors on which the SSA for Greenwich is based assume that Greenwich is a borough which is not in particular need and has outer-London characteristics. The Woolwich Arsenal ward of my constituency has the highest level of unemployment in London. I represent a constituency and borough in which the three wards around the town centre are among the 10 most deprived wards in London. Yet we have a significantly lower SSA than that of boroughs such as Wandsworth.

Let us compare the social needs in Wandsworth and Greenwich. The homelessness figures for 1990 show that in Greenwich 16.4 people per thousand population are homeless. In Wandsworth the figure is 13.9. The level of residence-based unemployment is higher in Greenwich than in Wandsworth. The number of long-term claimants in Greenwich is higher than that in Wandsworth. The number of 18 to 24-year-old claimants is higher in Greenwich than in Wandsworth.

The average earnings survey was mentioned. It is relevant when determining the social needs of the boroughs and areas that we represent. According to the new earnings survey, average earnings in Greenwich are £78 per week lower than the Greater London average. The percentage of employees earning less than £200 a week is higher in Greenwich than in Wandsworth, as is the percentage of employees earning less than £270 per week. Yet the difference between the standard spending assessments of Greenwich and Wandsworth is enormous. I shall focus on children's services, where we find the greatest disparity between the Government's assessment of the amount that Greenwich needs to spend and its expenditure. Greenwich spends £22 million on children's social services, which is 50 per cent. above its SSA. I believe that that is the largest gap between SSA and actual spend of any authority.

I shall again compare Greenwich and Wandsworth. The Government's SSA for children at risk in Greenwich is £253, and it is £332 for Wandsworth. The social index figure for children in Greenwich is £39 and is £209 for Wandsworth. The Government work on the basis that Greenwich has the lowest assessment for children at risk of any inner-London borough. The reality of the figures shows that Greenwich has the highest infant mortality rate in inner London; it has the second highest figure for placement of safety orders; it has the third highest number of children on the child protection register and, it has the fourth highest number of under-fives in care.

I know that Ministers have sometimes said that Greenwich could set a lower poll tax if it spent at the same level as its neighbouring authorities. That may be true if we consider such neighbouring authorities as Bexley. If one asked the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) How many day nurseries are provided for the under-fives in his constituency by the London borough of Bexley, the answer would be, "None." if one asked the hon. Member for Bexleyheath (Mr. Townsend) how many were provided in his constituency, the answer would be, "None." If one asked the hon. Member for Erith and Crayford (Mr. Evennett) the same question, the answer would be, "One." One day nursery for the entire borough of Bexley.

In Greenwich we do not believe that that is an adequate level of provision for our under-fives. I was struck by the statement yesterday by the Under-Secretary of State for Education. He claimed credit for provision for under-fives and said that that was important in terms not only of nursery education but of the Government's record in providing day care for the under-fives. That day care is provided by Labour local authorities in areas of acute social need, such as Greenwich—[HON. MEMBERS: "Come on.''] It is all very well for Conservative Members to say that.

When the Minister sums up, will he explain the disparity between the SSA for Greenwich and its expenditure? Will he tell the House how Greenwich can bridge that gap? It could not be done without decimating social services, where the largest gap occurs.

There is also a disparity between the treatment of Greenwich and Wandsworth as regards education. When the Government produced figures for relative grants to local authorities they said that Greenwich received £690 per adult for education, whereas Wandsworth received £536, as if we were being treated better in Greenwich than those in Wandsworth. Those were the cash figures per adult, but Greenwich has the highest school-age population of any inner London borough. For the record, I shall give the figures if we take the children into account: for primary schools, £2,377 in Greenwich and £2,562 in Wandsworth; and in secondary education, £3,480 in Greenwich and £3,756 in Wandsworth. Those are the real figures, which have an impact upon the service level which the local authority is able to provide.

On 14 May, on the BBC "Nine O'Clock News", the Secretary of State for the Environment said: It's very difficult to get a formula that pleases everyone". I agree with him, and I also agree with the leader of the Conservative group on Greenwich borough council, Councillor Peter King. Of the SSA formula, he said: It treats some authorities badly, it treats Greenwich very badly. To some extent the SSA formula is mathematical modelling gone mad. The SSA formula is inadequate for the distribution of grants, and it is ludicrous for determining the expenditure of local authorities.

9.10 pm

Mr. Roy Thomason (Bromsgrove)

I shall be brief as I know that many other hon. Members wish to speak.

As the former chairman of the Association of District Councils, it is natural that I should believe in the independence of local government. Within the functions delegated to it, it should be free to settle policies and to execute them. As I understand it, that is the principle of subsidiarity on which we talk so much in other debates. It means the delegation of decisions to the levels closest to those affected by those decisions, so far as that is practicable..

A second and more important principle determines that local government must act within the parameters set by the Government acting through Parliament. Sovereignty rests here as the democratic institution of the nation as a whole, including its Executive. We allow treaties to be made on our behalf relating to European institutions. In that way, we pass some sovereignty to them. Likewise, we delegate functions to local government.

Local government has no divine right to govern its own communities. Its powers stem entirely from the Government acting through Parliament who must determine the national interest. One such item of national interest that must be determined is the levels of public expenditure. Local government is responsible for the expenditure of £60 billion per annum. The effect of that on inflation, the rates of interest and other levels of economic policy can never be ignored by any Government of any political colour. How can some Opposition Members object to monetary control passing to Europe and, at the same time, support it being passed to town halls? The truth is that sovereignty must always be vested in and controlled by the elected body of the nation as a whole.

Capping is based on SSAs and criticisms of them are bound to be made—hon. Members have advanced such powerful cases today. However, I can remember criticisms being levelled at the grant distribution formula of the past generation—grant-related expenditure. The way in which it passed money to local government was absolutely horrific. We all rightly complained about it. That system depended on 64 different formulae, but the present grant distribution mechanism is based on six principal formulae. It is much simpler and, therefore, much easier to understand.

Hon. Members are right to say that we must be balanced between simplicity and equity.

Dr. Lynne Jones (Birmingham, Selly Oak)

If the system is so simple, can the hon. Gentleman explain why, in Birmingham, the SSA for capital financing is £60 million when actual expenditure, which is based on historical spending, is £165 million? Where is the sense in that?

Mr. Thomason

The answer is that, historically, Birmingham city council has chosen to spend large sums of capital moneys. That decision was made by the democratically elected councillors of Birmingham and I defend their right to do it. Equally, they must accept the constraints imposed upon them by Government, which are in the interests of the nation as a whole.

I have heard the arguments of my hon. Friends who represent constituencies in Warwickshire and Hillingdon —my hon. Friends, the Members for Stratford-on-Avon (Mr. Howarth), for Uxbridge (Mr. Shersby) and for Hayes and Harlington (Mr. Dicks). They were right to raise their concerns, but the expenditure—and this has been accepted by Labour Members—by which those authorities exceed their cap limit is very small. Opposition Members say that, if it is so small, we should not bother about it at all. If it is less than £1 million—a tiny part of Hillingdon's budget of £167 million, or Warwickshire's budget of £299 million —why bother about it at all? We must bother about limits because they must be set at some point. We need them to deal with councils like Lambeth, which was represented in the debate earlier by the hon. Member for Norwood (Mr. Fraser), who is no longer in his place. He was arguing strongly for substantial additional expenditure in Lambeth and saying that we should write off that authority's past inability to collect the community charge. That would invite non-payment and is an extraodinary position to take.

The House must acknowledge that some 6.5 million payers of community charge pay an average of £99 per annum less than they would have done if capping had not been introduced. There is a need to impose national criteria because, unfortunately, some people in local government are prepared to act irresponsibly. It is sad that it is necessary, but we require it.

Although appeals have been successfully made by Basildon, Gloucestershire and Warwickshire, limits still need to be imposed on authorities to retain that control and ensure that some of the wild men and women representing local government—I am glad to say that they are very few—are not given the opportunity of throwing the national economy off course.

I support the proposals.

9.16 pm

Mr. Nick Raynsford (Greenwich)

I enjoy the opportunity of speaking after the hon. Member for Bromsgrove (Mr. Thomason), who has at least given some relief to the Government. His speech was out of keeping with all the previous contributions by hon. Members directly involved in local authorities that have been subject to capping, who have seen the unfairness and unsatisfactory nature of the process. We have heard a litany of complaints from hon. Members far better placed, because of their knowledge of local factors, to see how badly that system operates. The complaints span the political spectrum and, sadly, they have met with a stony-faced response from Ministers.

Those of us who represent the London borough of Greenwich have three principal reasons for believing that the Government's approach is wrong. First, the clear evidence of need in the area has been spelt out eloquently by my hon. Friend the Member for Woolwich (Mr. Austin-Walker), so I need not repeat it. Those needs are not being adequately met because the authority's expenditure has been capped repeatedly in recent years, forcing a series of cuts in its budget. The Minister talked glibly about dire warnings of cuts that had not been borne out in reality. Clearly he is far removed from what is actually happening. In Greenwich in recent years there have been forced closures of two day centres for the handicapped and two holiday hotels for the elderly, which were hugely popular and about which I have received many complaints from elderly people who enjoyed their holidays in them and no longer have that facility. Seven lunch clubs, three day clubs for the elderly, two day centres for the handicapped, three day nurseries, three branch libraries and two swimming pools have also been closed. Those are just some of the services that have had to be cut as a consequence of the Government believing that they know best and imposing cuts from the centre against the wishes of local electorates and democratically elected local councils.

The second complaint is over the unfairness of the standard spending assessment formula. Again, my hon. Friend the Member for Woolwich spelt that out, as did the hon. Member for Eltham (Mr. Bottomley) in an earlier intervention. It is significant that, across the political divide, hon. Members representing the borough of Greenwich all believe that the SSA formula is unfair and adversely affects the borough. I shall not go into detail, but I shall give two specific illustrations. In the social services, the children element is grotesquely inappropriate for an authority with a high incidence of need that is reflected in a variety of ways. The standard spending assessment allows just £39 per child on the children needs index, compared with that of Lewisham—the next lowest placed inner London borough—which has £155 per child. The borough of Wandsworth has £208 per child and Westminster has £252.

It is significant that if Greenwich children's social index was raised to the level of the next lowest inner London borough, Lewisham, the SSA in Greenwich would be increased by £6.7 million—an amount close to the effect of the cap in reducing the budget that the council now proposes.

The second illustration is in respect of education. I have had a series of meetings with head teachers and parents who are deeply concerned about the impact of budget cuts on the quality of education and schooling in Greenwich. The formula penalises an authority that has a significantly rising school roll at both primary and secondary levels. The Greenwich school population is rising by about 4 per cent. per annum.

The formula is based on the school rolls in January of the preceding financial year and fails to take account of the impact of recent increases. If the formula were based on current school rolls in Greenwich rather than the previous date, the result would be to increase the SSA in Greenwich by £7.4 million—an amount almost in line with the difference between the capping figure and the authority's own budget.

If only one of those two factors were accepted, Greenwich would no longer be subject to capping and could agree and implement a budget, thus avoiding the devastating consequences of capping.

Our third complaint is specific to the issue of refugees. I raised the subject in an earlier intervention but did not receive an adequate response from the Minister, who I am glad to see has returned to the Chamber. A delegation from Greenwich came to see him last week and forcefully stressed the additional social service and education costs faced by the London borough of Greenwich and other authorities—whose representatives have been vociferous in today's debate—due to recent arrivals of significant numbers of refugees from many parts of the world. I am thinking particularly of refugees coming from Vietnam via Hong Kong, and from Somalia and Eritrea.

The costs that the authority has to incur are not reflected in the SSA. That point was put to the Minister, but he denied it. The Minister strongly assured the delegation that the SSA would reflect those additional costs. We challenged him and I have subsequently taken further advice from the Library. It is clear that the view that the Minister expressed to the delegation last week was wrong.

If the Minister advised the Secretary of State on a capping figure based on the advice that he gave us last week, he will have misled the Secretary of State and the Greenwich capping figure will have been wrongly calculated. Therefore, I invite him to reconsider the matter. The mistake is clear to me from the advice that I received from the Library, and from the advice that the Minister's officials have given to him and placed in the Library. The advice is as follows: There is a time lag between the arrival of asylum seekers and their inclusion in the data on which SSAs are based. I invite the Minister to recognise that he was wrong last week and the unfair formula will adversely affect Greenwich and other authorities with a significant number of recently arrived refugees. If he does not, he will have offered advice on the imposition of a cap based on erroneous information, which will be unjust to the people of Greenwich.

We see a sad and sorry picture of the imposition of centralised diktats by Ministers who cannot possibly understand the intricacies and detailed implications for local communities of what they are doing. They are imposing the diktats out of ideological conviction. However, as the hon. Member for Uxbridge (Mr. Shersby) said in his elegant speech, the Ministers do not apply the same logic to the Department's spending. Their actions are causing much hardship and misfortune in local communities. That is unjust and should be deeply regretted. I shall certainly vote against the order tonight.

9.24 pm

Mrs. Teresa Gorman (Billericay)

The Opposition are a rum lot. The man in the street would characterise their attitude to public spending as, "Give 'em the money", because Labour always behaves as if money grows on trees and will appear on command. If Labour were asked to characterise my party's attitude to public spending it would say that we were like a Scotsman with his pockets sewn up. All that Labour can do is gripe when the Government announce a relaxation for some people in the community charge. That shows Labour's muddled attitude to public spending.

The Opposition have always made a muck of local government spending. I represent people who had the misfortune a short time ago to have their local affairs conducted by a Labour-controlled Basildon council. Year after year, they were subjected to massive increases in the community charge. Ours was one of the worst areas in the country, and last year compared with this we overspent by about 100 per cent. Our SSA was £22 million, but the council chose to spend £27 million and that could not be allowed to continue. Fortunately, the citizens of Billericay and Basildon saw through that and swept Labour from office. There was a 61 per cent. turnout and a massive swing of 15 seats. We wiped the floor with Labour.

The Conservative councillors are perfectly willing to conform to the Government's spending requirements in a full year, but by the time the new budget is in place the council will be six months behind a normal year's spending. When Labour was in control it set the budget for March, but we were not able to put our new budget into effect until July, and it cannot be implemented in time to make the savings that the Government rightly require in a full year. The new Basildon councillors are committed to that target and the Government, rightly and sensibly, have given us a respite to allow us to conduct the affairs of the council properly and to provide the necessary local services within a target that can be met by local people.

We are grateful to the Government for recognising the plight of Basildon's ratepayers. The cap will allow a reduction from the extremely high figure of £361—one of the worst in the country. It can be reduced by £41 and that will be gratefully received by the people in the area.

There have been adverse comments about the behaviour of the councillors who have taken over. Hon. Members have spoken about the notorious Towngate theatre. It could have carried out its commitments and obligations until the end of July, but the committee running it chose to close it and cause some inconvenience. That was quite unnecessary. There was absolutely no need for the remarks by the hon. Member for Sheffield, Brightside (Mr. Blunkett). The hon. Gentleman chose not to say that the Billericay and Whitford parts of the constituency were deprived of such facilities for years because the Labour council running Basildon did not think it worth while to pander to the Conservative majority of voters in that part of my constituency. It deliberately deprived Conservative areas and we raised the necessary money to provide our own theatre and arts facilities. Labour councillors even deprived us of premises, but now they have got their come-uppance—and about time too.

An enormous debt has been inherited. Debt charges are £7 million, a third of the standard spending assessment. It is an enormous sum to have to find. It will take time to reduce the debt charges. The previous Labour council left our financial affairs in a dreadful mess. The Conservative party is now in office and it can examine what went on. It is clear that there is a great deal to do and a massive amount of waste to eradicate. If that is to be done humanely, we shall need more time to get ourselves on our feet.

The previous Labour council left us with seven mini-council area offices. They were completely unnecessary and merely duplicated work. In closing them, we have, unfortunately, to make redundancies, which must be funded. That is another great expense which the Conservative council has had to meet.

The Government have done the right thing by introducing a little relaxation to enable the council to get on its feet. They have done the right and proper thing by the council and, as I have said, it intends to meet the targets. Some extremely gratuitous remarks have been made about the splendid Conservative leader of the new council, Mr. Tony Archer. He is doing an excellent job. He has committed himself and the new Conservative council to maintain a high standard of public services and to provide them economically by applying Conservative standards and contracting out. He will adopt the principle of ensuring that every penny counts so that those who have to pay the community charge receive good services at a price that they can reasonably afford. In other words, there will be value for money.

I commend the Government for what they have done. They have made a splendid effort. My hon. Friend the Member for Basildon (Mr. Amess) and I are extremely grateful.

9.32 pm

Mr. William O'Brien (Normanton)

The hon. Member for Billericay (Mrs. Gorman) must have been fast asleep during the debate. Of the six Conservative Back-Bench Members who have contributed to the debate, four denounced or criticised the Government for bringing forward the order. It seems that the hon. Lady does not recognise that sort of attitude.

It has been demonstrated by the House on more than one occasion that the poll tax is all wrong. It has been demonstrated again this evening that poll tax capping is all wrong. It is unfair and undemocratic and causes local authorities to cut services. When we were discussing the Bill that introduced poll tax capping, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who is now the Secretary of State for the Environment,

said that capping is not a measure to be used as a matter of course … it is important that there should be such a reserve power …to protect the charge payers … against extreme cases of extravagant and irresponsible local authorities."—[Official Report, 25 April, 1988; Vol. 132, c. 51.] We have learnt this evening that if a local authority is spending £5 per head per year more than the Secretary of State feels that it should be spending, he will apply the capping mechanism. In Gloucester, expenditure is only £3 per head per year over the SSA, but the right hon. and learned Gentlemen is applying the capping procedure, notwithstanding that he said in 1988 that it was a "reserve power". That demonstrates the difference between the meaning of those words in 1988 and the application of the power in 1991 and now in 1992.

How misleading and hypocritical the Government are when they talk about accountability and the principle of giving freedom to people and allowing them to decide for themselves. On 5 March 1990 the former Secretary of State for the Environment, Nicholas Ridley, said: Should a Government stop councils from overspending or should people who elect councils stop them? I think it should be the latter. Nicholas Ridley was advocating freedom for individuals through the ballot box. How does freedom for people to decide the outcome of the work and efforts of local authorities feature in the Prime Minister's citizens charter? How can the Minister say that Nicholas Ridley was wrong in March 1990?

Hon. Members with Warwickshire constituencies have said, both in their speeches and in interventions during the debate, that no one in Warwickshire has said that he is in favour of his local authority being capped. Where is the freedom for the people of Warwickshire to decide what the level of expenditure should be in their local authority area?

When the hon. Member for Bromsgrove (Mr. Thomason) was the Conservative leader of the Association of District Councils he expressed shock at the decision to apply the capping procedure to small district councils. He said: I am shocked that the Government should so attack many of its own supporters in local government, particularly district councils which have raided their balances to keep charge levels down this year and maintained services. It is also shocking that the Environment Secretary should completely ignore all the assurances previous Ministers gave when the capping provisions were introduced that low spending authorities would be excluded from the controls. What a somersault the hon. Member for Bromsgrove has done since he became a Member of Parliament. How many people would have thought 12 months ago, when the leader of the ADC, who is now the hon. Member for Bromsgrove, expressed shock at the Secretary of State's decision to introduce capping for district councils that he would now be saying that capping is a good thing for district councils?

Mr. Thomason

Will the hon. Gentleman give way?

Mr. O'Brien

When I have finished, I shall certainly give way.

How can the hon. Gentleman turn his back on the colleagues he left behind at Chapter street? He said then that they had to oppose the capping procedures. Does he not feel that the people in Chapter street are entitled to his support? Are not those who work in local government just as much entitled to his support now as they were when he was the leader of the ADC?

Mr. Thomason

My constituents are entitled to my support and they expect value for money in local government services. I have not changed my position over the independence of local government, but I take the view that it may be necessary to introduce capping for those authorities that are prepared to spend and spend again. Fortunately, there are few district councils that are prepared to do that. Most of them are extremely careful. My position remains the same.

Mr. O'Brien

At the time that the hon. Member for Bromsgrove expressed shock he was representing people who had elected him through the ballot box, just as he is now representing people as a Member of Parliament. The only change is that now that he has left the local authority scene and come to Parliament he has changed his mind. That is a measure of the lead that has been given by the former leader of the ADC.

When we discussed this legislation on Report the hon. Member for Spelthorne (Mr. Wilshire) said: That is why local authorities with small budgets are exempt from these clauses."— the clauses referred to capping.

The real risks to local and national economies come from the huge spending authorities which spend vast sums rather than from the small ones."—[Official Report, 25 April 1988; Vol. 132, c. 41.] When the hon. Gentleman intervened during the speech of my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) we found that he had changed his mind and done a complete somersault. He said that the small spending authorities were also a drain on national expenditure. That is another somersault committed by a Conservative hon. Member who now says something different from what he said when the legislation was introduced. However, I made it clear at the outset that of the six Conservative hon. Members who had spoken, four condemned the Government for capping certain authorities, and I am sure that local government appreciates such a stand.

The order is not targeted at high spending authorities and there is evidence, which has been mentioned several times this evening, which proves that. What is the position of the hon. Member for Spelthorne on the attack on low-spending authorities? Many local authorities have, under protest, accepted Government capping and have reduced their budgets accordingly. The record shows that Langbaurgh reduced its budget by £2 million, Middlesbrough reduced its budget by £1.4 million and my authority of Wakefield has made reductions of more than £4 million.

However, such cuts, which are the result of capping, often mean that the poorest sections of our community lose out disproportionately. Children, the disabled and the elderly are the people who suffer most as there have been increases in the charges for meals on wheels. The hon. Member for Stratford-on-Avon (Mr. Howarth) is not a Labour Member of Parliament but he expressed concern that people would suffer because of the increaseas in charges for meals on wheels as a result of poll tax capping. The home help service and many other services are being cut, and the living standard and quality of life of the people on the lowest incomes have suffered dramatically as a direct result of poll tax capping. That was spelt out clearly by my hon. Friends the Members for Norwood (Mr. Fraser), and for Nuneaton (Mr. Olner) and the hon. Member for Cheltenham (Mr. Jones) who pointed out how cuts had affected the quality of life of people in their constituencies because of a reduction in services.

What hope is there for local authorities which face the 1990s with a reduction in resources, increasing demands for services, reduced flexibility, reactive budgeting and a worsening financial outlook, all brought about by capping? What future is there for local authorities facing such a scenario?

Since the draft capping order was published, three authorities have had their caps adjusted. The hon. Member for Billericay said how much her authority appreciated the reduction in its cap. Basildon's cap has been reduced by £1.95 million, Colchester's by £2.59 million and Warwickshire's by £4 million. We are not against authorities having their SSAs increased or their caps reduced but the question is, why does that apply only to those authorities?

Labour hon. Members asked that question, but it was also asked by the hon. Members for Stratford-on-Avon and for Gloucester (Mr. French). Labour hon. Members said that expenditure per adult, per schoolchild and per elderly person in their areas was identical to that of other authorities and yet their authorities were being capped because the Government had set the level of expenditure for those services at a lower level than was necessary in their communities. What hope is there for local authorities under a Conservative Government who attack them?

Of a total of 650 Members of Parliament, 266—or 40 per cent.—are former members of local authorities. One hundred and fifty one members of the Opposition and 111 Conservative hon. Members have all had experience of local government. All those 266 Members know the evil and devastation brought about by poll tax capping orders. [HON. MEMBERS: "No."] Conservative Members are afraid as, because of their experience in local government, they know that if they spoke honestly and fairly about poll tax capping they would say that it is a devastating way of reducing services to local people.

Former Labour councillors, many of whom have described the unfair and undemocratic way in which poll tax affects the provision of services by local authorities, will vote against the order. There is no doubt that those 151 Members who have served in local government will vote against the order, as will their right hon. and hon. Friends. But what I would like to see, and what people outside the House would like to see, is the 111 Tory MPs who have served in local government joining the Opposition and voting against the order. What the people of the Association of District Councils and the Association of County Councils would like to see is some solidarity from their Conservative colleagues in the Lobby tonight, and a vote against the order. Conservative hon. Members' experience, like ours, must weigh in favour of our colleagues—those councillors on whom Conservative Members appear to be turning their backs tonight. That must weigh on their consciences, as it would on ours.

We are trying to save local government; we are trying to make it work. The Minister says that he is in favour of local government, but he should demonstrate that from time to time by supporting it. I appeal to all hon. Members who have served in local government to take the opportunity to defend it, and to give the people who work and serve in it a chance to continue what we fought to do —to improve services. If hon. Members want to protect local government services, the only way to do so is o vote with the Labour party against the capping order.

9.47 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Robin Squire)

This has been an interesting debate, which has rightly commanded interest on both sides of the House. As usual on such annual occasions, most hon. Members who have spoken are from authorities which have been capped, whether the caps have been reduced or not. I especially welcomed the contribution of my hon. Friend the Member for Bromsgrove (Mr. Thomason), who drew on his wide experience in local government.

Many points have been raised by individual Members, and before I deal with as many of them as time allows I shall reiterate some key points about this year's capping. I may not be able to deal with all the matters raised, but, if I do not, I undertake to write to hon. Members in response to their points.

This year, as for 1991–92, we announced our intentions for the capping criteria well in advance. The capping principles that we adopted in May gave effect to those provisional criteria, with the addition of a de minimis proviso.

The success of our capping strategy has been clearly demonstrated; only 10 authorities exceeded the capping principles, and local authority budgets overall came within about 1 per cent. of the amount provided for in the revenue support grant settlement.

Of course, as my hon. Friend the Minister of State said at the beginning of the debate, we should prefer not to have capped any authority, but not to have designated the authorities in question would have been to fail to face up to our responsibilities for the economy as a whole, and for protecting local charge payers from the effects of excessive budgeting—

Mr. Mike O'Brien (Warwickshire, North)

rose—

Mr. Squire

Time is very tight, so I shall see how I go before giving way. I had less than 15 minutes to speak. As the House knows, I usually give way, but I am under great pressure of time.

I shall deal briefly with the contributions from both Opposition Front-Bench spokesmen—the hon. Members for Sheffield, Brightside (Mr. Blunkett) and for Normanton (Mr. O'Brien). We heard the same record; they still refuse to recognise any responsibility for controlling local authority expenditure under any circumstances—although during the general election campagin they said that they would cap regional assemblies. It does not add up—but then we know that things do not add up when we are talking about the Labour party.

Again we have heard the great ode to Wandsworth and Westminister. Let me list the standard spending assessments for some other councils in inner London. I shall not give many examples; I shall give just enough to provide the flavour. In Hackney, the standard spending assessment is £2,117 per adult; in Tower Hamlets, it is £2,048; in Islington, it is £1,722; and in Lambeth, it is £1,667. It is necessary to continue for some time before we reach Wandsworth's SSA, which is £1,388 per adult. Opposition Members imply that, if they were in government, they would not seek to measure need in their distribution of grant. I will pay them the tribute of saying that I do not believe them, but that is the logic of their position.

The hon. Member for Brightside said that the amounts involved were small—£3 or £5. Let me stress that capping does not exist solely to protect charge payers, although that is certainly its key aim. It exists to safeguard our national economic strategy. The sums with which we are dealing amount to £33.5 million: that may be nothing to Labour, but we consider it a significant figure.

My hon. Friend the Member for Gloucester (Mr. French) and the hon. Member for Cheltenham (Mr. Jones) made what they concede were similar points about boundary changes. I hope that the House will forgive me if I deal with the matter very carefully, for it is rather complex. In their challenges to the proposed caps, both Gloucester and Cheltenham argued that they should not have been capped in the first place, and that they had been caught by the capping criteria only because of a technicality

The increased population costs did not show up as part of Gloucester's or Cheltenham's demand on charge payers for 1991–92. Both councils have argued that we should have taken that into account in measuring the difference between their 1991–92 and 1992–93 budgets for capping purposes. In other words, they argued that the true increase in their budgeted spending was less than the simple difference between this year's and last year's overall budget figures, and that they should therefore have escaped capping.

Both councils received a large increase in their standard spending assessments in 1992.93 to reflect the boundary changes. Neither my hon. Friend the Member for Gloucester nor the hon. Member for Cheltenham disputes that; it is common ground between us. If the councils had budgeted in 1991.92 at or below their SSAs, they could have increased their budgets this year by the full amount of the increase in SSAs; but both councils budgeted above SSA in 1991.92, and that was before the boundary change. They are now saying, in effect, that they should be able to continue to spend above SSA, notwithstanding the large increases that they have received. Cheltenham has increased its budget by 16.6 per cent., leaving it 9 per cent. above SSA; Gloucester's budget has increased by 12 per cent., to 2.4 per cent. above SSA.

Only yesterday, my hon. Friend the Member for Gloucester wrote to me asking me to think again about the treatment of Gloucester city council. I am sure that he will forgive me if I briefly summarise the terms of the reply that he received. The Government carefully considered all the points made by both Gloucester and Cheltenham councils in support of their challenges, and all other relevant matters, in reaching a decision. We fully understand the councils' arguments about the effect of their boundary change on their base budgets for capping purposes. The councils say that they misunderstood our intentions. I am sorry if that is so, but I do not believe that they had grounds for assuming that their base budget for capping purposes would be adjusted in the way that they were advocating.

The then Secretary of State for the Environment, my right hon. Friend the President of the Board of Trade, announced his provisional capping criteria to the House on 26 November 1991. Subsequently, Ministers told the House on two separate occasions—my right hon. Friend the President of the Board of Trade on 23 January and my right hon. Friend the Chief Secretary to the Treasury, then the Minister for Local Government and Inner Cities, on 12 March—that it remained the Government's intention that the provisional criteria should be the criteria that they would adopt to select authorities for capping in 1992–93.

The Government considered that, in all circumstances, a specific additional allowance in the capping criteria for the effect of the boundary changes—over and above the full reflection of the changes in the 1992–93 SSAs—was not appropriate.

Let me deal now with the question of asylum seekers, which was raised by the hon. Member for Greenwich (Mr. Raynsford) and my hon. Friends the Members for Uxbridge (Mr. Shersby) and for Hayes and Harlington (Mr. Dicks). My colleagues from Hillingdon have raised the matter before. Hillingdon argues that we should make a special allowance for that cost, which is estimated at around £1 million.

We considered the council's arguments on that point —and, indeed, all its other arguments—very carefully, and decided that, in all Hillingdon's circumstances, a relaxation in the proposed cap was not appropriate.

An authority's standard spending assessment is an objective measure, based on a large number of indicators, of what it is appropriate for that authority to spend in the light of its own particular circumstances. Within the SSA, there is an allowance for the cost of services, such as education and social services, that authorities have to provide to children in their area. I cannot, of course, say that the cost of looking after every child arriving in Hillingdon is taken individually into account in calculating the authority's SSA. That would be impossible in a formula-based assessment. But the SSA does, I believe, give a fair overall assessment of an appropriate level of spending in Hillingdon given the characteristics of the area. Moreover, my hon. Friends will have heard my hon. Friend the Minister of State give an undertaking, which I now repeat, to look again at any representations made by hon. Members and at their suggestions for improving or changing the standard spending assessment.

I shall give Warwickshire Members a detailed answer at a later date, as I am afraid I do not have time to do so now. Instead, let me summarise the position. I understand from my long-term hon. Friend the Member for Stratford-onAvon (Mr. Howarth) and from the hon. Member for Nuneaton (Mr. Olner) that they remain unhappy about the SSA in Warwickshire. I must point out that, compared with similar neighbouring authorities, Warwickshire does not do as badly as hon. Members may think. At £782, its standard spending assessment per head is of the same order of magnitude as those of Hereford and Worcester, at £785, and Avon, at £798.

To the hon. Members for Greenwich (Mr. Raynsford) and for Woolwich (Mr. Austin-Walker), I would simply say that Greenwich has a history of overspending. It has been capped in every year since capping started in 1985. That is a record. For yet another year, the Government are obliged to step in to protect charge payers in Greenwich from the financial consequences of their council's actions. In the past two years, capping has knocked a total of £74 off the charges set by the council. This year's cap will reduce charges by £56. I am sure that, notwithstanding hon. Members' comments, the vast majority of people in Greenwich are only too grateful for capping.

Mr. Raynsford

Will the Minister give way?

Mr. Squire

I have undertaken to write to hon. Members on points that I cannot cover in the time available.

I turn, with some relief, to Basildon. My hon. Friend the Member for Billericay (Mrs. Gorman) distinguished herself in the debate by welcoming the action taken by the Government. We have listened carefully to everything that Basildon has said in its challenge.

Mr. David Amess (Basildon)

Is my hon. Friend aware that, according to local press reports, the hon. Members for Sheffield, Brightside (Mr. Blunkett) and for Dagenham (Mr. Gould) will be in my constituency at the weekend leading a demonstration which will be supported by Militant Tendency? Does my hon. Friend share my disappointment at my not being able to express the views of my constituents in the debate tonight?

Mr. Squire

rose—

It being three hours after commencement of proceedings on the motion, MADAM SPEAKER put the Question, pursuant to Order [19 June]:|

The House divided: Ayes 312, Noes 254.

Division No. 41]	[9.59 pm
AYES
Adley, Robert	Bruce, Ian (S Dorset)
Ainsworth, Peter (East Surrey)	Budgen, Nicholas
Aitken, Jonathan	Burns, Simon
Alexander, Richard	Burt, Alistair
Alison, Rt Hon Michael (Selby)	Butler, Peter
Allason, Rupert (Torbay)	Butterfill, John
Amess, David	Carlisle, John (Luton North)
Ancram, Michael	Carlisle, Kenneth (Lincoln)
Arbuthnot, James	Carrington, Matthew
Arnold, Jacques (Gravesham)	Carttiss, Michael
Arnold, Sir Thomas (Hazel Grv)	Cash, William
Ashby, David	Channon, Rt Hon Paul
Aspinwall, Jack	Chaplin, Mrs Judith
Atkins, Robert	Churchill, Mr
Atkinson, David (Bour'mouth E)	Clappison, James
Atkinson, Peter (Hexham)	Clark, Dr Michael (Rochford)
Baker, Rt Hon K. (Mole Valley)	Clarke, Rt Hon Kenneth (Ruclif)
Baker, Nicholas (Dorset North)	Clifton-Brown, Geoffrey
Baldry, Tony	Coe, Sebastian
Banks, Robert (Harrogate)	Colvin, Michael
Bates, Michael	Congdon, David
Batiste, Spencer	Conway, Derek
Bellingham, Henry	Coombs, Anthony (Wyre For'st)
Bendall, Vivian	Coombs, Simon (Swindon)
Beresford, Sir Paul	Cope, Rt Hon Sir John
Biffen, Rt Hon John	Cormack, Patrick
Blackburn, Dr John G.	Couchman, James
Bonsor, Sir Nicholas	Cran, James
Booth, Hartley	Currie, Mrs Edwina (S D'by'ire)
Boswell, Tim	Curry, David (Skipton & Ripon)
Bottomley, Peter (Eltham)	Davies, Quentin (Stamford)
Bottomley, Rt Hon Virginia	Davis, David (Boothferry)
Bowden, Andrew	Day, Stephen
Bowis, John	Deva, Nirj Joseph
Boyson, Rt Hon Sir Rhodes	Devlin, Tim
Brandreth, Gyles	Dickens, Geoffrey
Brazier, Julian	Dorrell, Stephen
Bright, Graham	Douglas-Hamilton, Lord James
Brooke, Rt Hon Peter	Dover, Den
Brown, M. (Brigg & Cl'thorpes)	Duncan, Alan
Browning, Mrs. Angela	Duncan-Smith, Iain

Dunn, Bob	Kirkhope, Timothy
Durant, Sir Anthony	Knapman, Roger
Dykes, Hugh	Knight, Mrs Angela (Erewash)
Eggar, Tim	Knight, Greg (Derby N)
Elletson, Harold	Knight, Dame Jill (Bir'm E'st'n)
Emery, Sir Peter	Knox, David
Evans, David (Welwyn Hatfield)	Kynoch, George (Kincardine)
Evans, Jonathan (Brecon)	Lait, Mrs Jacqui
Evans, Nigel (Ribble Valley)	Lamont, Rt Hon Norman
Evans, Roger (Monmouth)	Lawrence, Sir Ivan
Evennett, David	Legg, Barry
Faber, David	Leigh, Edward
Fabricant, Michael	Lennox-Boyd, Hon Mark
Fairbairn, Sir Nicholas	Lester, Jim (Broxtowe)
Fenner, Dame Peggy	Lidington, David
Field, Barry (Isle of Wight)	Lightbown, David
Fishburn, John Dudley	Lilley, Rt Hon Peter
Forman, Nigel	Lloyd, Peter (Fareham)
Forsyth, Michael (Stirling)	Lord, Michael
Forth, Eric	Luff, Peter
Fowler, Rt Hon Sir Norman	Lyell, Rt Hon Sir Nicholas
Fox, Dr Liam (Woodspring)	MacGregor, Rt Hon John
Fox, Sir Marcus (Shipley)	MacKay, Andrew
Freeman, Roger	Maclean, David
Gale, Roger	McLoughlin, Patrick
Gallie. Phil	McNair-Wilson, Sir Patrick
Gardiner, Sir George	Madel, David
Garel-Jones, Rt Hon Tristan	Maitland, Lady Olga
Garnier, Edward	Major, Rt Hon John
Gill, Christopher	Malone, Gerald
Gillan, Ms Cheryl	Mans, Keith
Goodson-Wickes, Dr Charles	Marland, Paul
Gorman, Mrs Teresa	Marlow, Tony
Gorst, John	Marshall, John (Hendon S)
Grant, Sir Anthony (Cambs SW)	Marshall, Sir Michael (Arundel)
Greenway, Harry (Ealing N)	Martin, David (Portsmouth S)
Greenway, John (Ryedale)	Mates, Michael
Griffiths, Peter (Portsmouth, N)	Mawhinney, Dr Brian
Grylls, Sir Michael	Mayhew, Rt Hon Sir Patrick
Gummer, Rt Hon John Selwyn	Mellor, Rt Hon David
Hague, William	Merchant, Piers
Hamilton, Rt Hon Archie	Milligan, Stephen
Hamilton, Neil (Tatton)	Mills, lain
Hampson, Dr Keith	Mitchell, Andrew (Gedling)
Hannam, Sir John	Mitchell, Sir David (Hants NW)
Hargreaves, Andrew	Moate, Roger
Harris, David	Monro, Sir Hector
Haselhurst, Alan	Montgomery, Sir Fergus
Hawkins, Nicholas	Moss, Malcolm
Hawksley, Warren	Needham, Richard
Heald, Oliver	Nelson, Anthony
Heathcoat-Amory, David	Neubert, Sir Michael
Hendry, Charles	Newton, Rt Hon Tony
Heseltine, Rt Hon Michael	Nicholson, David (Taunton)
Hicks, Robert	Nicholson, Emma (Devon West)
Higgins, Rt Hon Terence L.	Norris, Steve
Hill, James (Southampton Test)	Onslow, Rt Hon Cranley
Hogg, Rt Hon Douglas (G'tham)	Oppenheim, Phillip
Horam, John	Ottaway, Richard
Hordern, Sir Peter	Page, Richard
Howard, Rt Hon Michael	Paice, James
Howarth, Alan (Strat'rd-on-A)	Patten, Rt Hon John
Howell, Rt Hon David (G'dford)	Pattie, Rt Hon Sir Geoffrey
Hughes Robert G. (Harrow W)	Pawsey, James
Hunt, Rt Hon David (Wirral W)	Peacock, Mrs Elizabeth
Hunt, Sir John (Ravensbourne)	Pickles, Eric
Hunter, Andrew	Porter, Barry (Wirral S)
Hurd, Rt Hon Douglas	Porter, David (Waveney)
Jack, Michael	Portillo, Rt Hon Michael
Jackson, Robert (Wantage)	Powell, William (Corby)
Jenkin, Bernard	Rathbone, Tim
Jessel, Toby	Redwood, John
Johnson Smith, Sir Geoffrey	Renton, Rt Hon Tim
Jones, Gwilym (Cardiff N)	Richards, Rod
Jones, Robert B. (W H'f'rdshire)	Rifkind, Rt Hon. Malcolm
Jopling, Rt Hon Michael	Robathan, Andrew
Kellett-Bowman, Dame Elaine	Roberts, Rt Hon Sir Wyn
Key, Robert	Robertson, Raymond (Ab'd'n S)
Kilfedder, Sir James	Robinson, Mark (Somerton)
King, Rt Hon Tom	Roe, Mrs Marion (Broxbourne)

Ross, William (E Londonderry)	Thompson, Patrick (Norwich N)
Rowe, Andrew (Mid Kent)	Thornton, Sir Malcolm
Rumbold, Rt Hon Dame Angela	Thurnham, Peter
Ryder, Rt Hon Richard	Townend, John (Bridlington)
Sackville, Tom	Townsend, Cyril D. (Bexl'yh'th)
Sainsbury, Rt Hon Tim	Tracey, Richard
Shaw, David (Dover)	Tredinnick, David
Shaw, Sir Giles (Pudsey)	Trend, Michael
Shepherd, Colin (Hereford)	Trotter, Neville
Shepherd, Richard (Aldridge)	Twinn, Dr Ian
Sims, Roger	Vaughan, Sir Gerard
Skeet, Sir Trevor	Viggers, Peter
Smith, Sir Dudley (Warwick)	Waldegrave, Rt Hon William
Smith, Tim (Beaconsfield)	Walden, George
Soames, Nicholas	Waller, Gary
Spencer, Sir Derek	Ward, John
Spicer, Sir James (W Dorset)	Wardle, Charles (Bexhill)
Spicer, Michael (S Worcs)	Waterson, Nigel
Spink, Dr Robert	Watts, John
Spring, Richard	Wells, Bowen
Sproat, lain	Wheeler, Sir John
Squire, Robin (Hornchurch)	Whitney, Ray
Stanley, Rt Hon Sir John	Whittingdale, John
Steen, Anthony	Widdecombe, Ann
Stephen, Michael	Wiggin, Jerry
Stern, Michael	Willetts, David
Streeter, Gary	Wilshire, David
Sumberg, David	Winterton, Mrs Ann (Congleton)
Sweeney, Walter	Winterton, Nicholas (Macc'f'ld)
Sykes, John	Wolfson, Mark
Tapsell, Sir Peter	Wood, Timothy
Taylor, Ian (Esher)	Yeo, Tim
Taylor, Rt Hon D. (Strangford)	Young, Sir George (Acton)
Taylor, John M. (Solihull)
Taylor, Sir Teddy (Southend, E)	Tellers for the Ayes:
Temple-Morris, Peter	Mr. Irvine Patrick and Mr. Sydney Chapman.
Thomason, Roy
NOES
Abbott, Ms Diane	Carlile, Alexander (Montgomry)
Adams, Mrs Irene	Chisholm, Malcolm
Ainger, Nick	Clapham, Michael
Ainsworth, Robert (Cov'try NE)	Clark, Dr David (South Shields)
Allen, Graham	Clarke, Eric (Midlothian)
Alton, David	Clarke, Tom (Monklands W)
Anderson, Donald (Swansea E)	Clelland, David
Anderson, Ms Janet (Ros'dale)	Clwyd, Mrs Ann
Armstrong, Hilary	Coffey, Ms Ann
Ashdown, Rt Hon Paddy	Cohen, Harry
Ashton, Joe	Connarty, Michael
Austin-Walker, John	Cook, Frank (Stockton N)
Barnes, Harry	Cook, Robin (Livingston)
Battle, John	Corbyn, Jeremy
Bayley, Hugh	Corston, Ms Jean
Beckett, Margaret	Cousins, Jim
Beith, Rt Hon A. J.	Cox, Tom
Bell, Stuart	Cryer, Bob
Benn, Rt Hon Tony	Cummings, John
Bennett, Andrew F.	Cunliffe, Lawrence
Benton, Joe	Cunningham, Jim (Covy SE)
Bermingham, Gerald	Dafis, Cynog
Berry, Roger	Dalyell, Tam
Betts, Clive	Darling, Alistair
Blunkett, David	Davidson, Ian
Boateng, Paul	Davies, Bryan (Oldham C'tral)
Boyce, Jimmy	Davies, Rt Hon Denzil (Llanelli)
Boyes, Roland	Davies, Ron (Caerphilly)
Bradley, Keith	Davis, Terry (B'ham, H'dge H'I)
Bray, Dr Jeremy	Denham, John
Brown, Gordon (Dunfermline E)	Dewar, Donald
Brown, N. (N'c'tle upon Tyne E)	Dixon, Don
Burden, Richard	Dobson, Frank
Byers, Stephen	Dowd, Jim
Caborn, Richard	Dunnachie, Jimmy
Callaghan, Jim	Dunwoody, Mrs Gwyneth
Campbell, Ms Anne (C'bridge)	Eagle, Ms Angela
Campbell, Menzies (Fife NE)	Enright, Derek
Campbell, Ronald (Blyth V)	Etherington, William
Campbell-Savours, D. N.	Evans, John (St Helens N)
Cann, James	Ewing, Mrs Margaret

Fatchett, Derek	Jones, leuan (Ynys MÔn)
Field, Frank (Birkenhead)	Jones, Jon Owen (Cardiff C)
Fisher, Mark	Jones, Ms Lynne (B'ham S 0)
Flynn, Paul	Jones, Martyn (Clwyd, SW)
Foster, Derek (B'p Auckland)	Jones, Nigel (Cheltenham)
Foster, Donald (Bath)	Jowell, Ms Tessa
Foulkes, George	Kaufman, Rt Hon Gerald
Fraser, John	Kennedy, Charles (Ross, C & S)
Fyfe, Maria	Kennedy, Ms Jane (L'p'I Br'g'n)
Galloway, George	Khabra, Piara
Gapes, Michael	Kilfoyle, Peter
George, Bruce	Kirkwood, Archy
Gerrard, Neil	Leighton, Ron
Gilbert, Rt Hon Dr John	Lewis, Terry
Godman, Dr Norman A.	Litherland, Robert
Godsiff, Roger	Livingstone, Ken
Golding, Mrs Llin	Lloyd, Tony (Stretford)
Graham, Thomas	Loyden, Eddie
Grant, Bernie (Tottenham)	Lynne, Ms Liz
Griffiths, Nigel (Edinburgh S)	McAllion, John
Griffiths, Win (Bridgend)	McAvoy, Thomas
Grocott, Bruce	McCartney, Ian
Gunnell, John	MacDonald, Calum
Hain, Peter	McFall, John
Hall, Mike	Mackinlay, Andrew
Hanson, David	McLeish, Henry
Harman, Ms Harriet	McMaster, Gordon
Henderson, Doug	McNamara, Kevin
Heppell, John	McWilliam, John
Hill, Keith (Streatham)	Madden, Max
Hinchliffe, David	Mahon, Alice
Hoey, Kate	Mandelson, Peter
Hogg, Norman (Cumbernauld)	Marek, Dr John
Home Robertson, John	Marshall, David (Shettleston)
Hood, Jimmy	Marshall, Jim (Leicester, S)
Hoon, Geoff	Martin, Michael J. (Springburn)
Howarth, George (Knowsley N)	Martlew, Eric
Howells, Dr. Kim (Pontypridd)	Maxton, John
Hoyle, Doug	Meacher, Michael
Hughes, Kevin (Doncaster N)	Meale, Alan
Hughes, Robert (Aberdeen N)	Michael, Alun
Hutton, John	Michie, Bill (Sheffield Heeley)
Jackson, Ms Glenda (H'stead)	Michie, Mrs Ray (Argyll Bute)
Jackson, Ms Helen (Shef'ld, H)	Milburn, Alan
Jamieson, David	Miller, Andrew
Janner, Greville	Mitchell, Austin (Gt Grimsby)
Jones, Barry (Alyn and D'side)	Moonie, Dr Lewis

Morgan, Rhodri	Sheldon, Rt Hon Robert
Morley, Elliot	Shore, Rt Hon Peter
Morris, Rt Hon A. (Wy'nshawe)	Short, Clare
Morris, Estelle (B'ham Yardley)	Skinner, Dennis
Morris, Rt Hon J. (Aberavon)	Smith, Andrew (Oxford E)
Mudie, George	Smith, C. (Isl'ton S & F'sbury)
Mullin, Chris	Smith, Rt Hon John (M'kl'ds E)
Murphy, Paul	Smith, Llew (Blaenau Gwent)
Oakes, Rt Hon Gordon	Soley, Clive
O'Brien, Michael (N W'kshire)	Spearing, Nigel
O'Brien, William (Normanton)	Spellar, John
O'Hara, Edward	Squire, Rachel (Dunfermline W)
Olner, William	Steel, Rt Hon Sir David
Orme, Rt Hon Stanley	Steinberg, Gerry
Patchett, Terry	Stevenson, George
Pendry, Tom	Strang, Gavin
Pickthall, Colin	Straw, Jack
Pike, Peter L.	Taylor, Mrs Ann (Dewsbury)
Pope, Greg	Taylor, Matthew (Truro)
Powell, Ray (Ogmore)	Tipping, Paddy
Prentice, Ms Bridget (Lew'm E)	Tyler, Paul
Prentice, Gordon (Pendle)	Vaz, Keith
Prescott, John	Walker, Rt Hon Sir Harold
Primarolo, Dawn	Wallace, James
Purchase, Ken	Walley, Joan
Quin, Ms Joyce	Wardell, Gareth (Gower)
Radice, Giles	Wareing, Robert N
Randall, Stuart	Watson, Mike
Raynsford, Nick	Wicks, Malcolm
Redmond, Martin	Williams, Rt Hon Alan (Sw'n W)
Reid, Dr John	Williams, Alan W (Carmarthen)
Robertson, George (Hamilton)	Wilson, Brian
Roche, Ms Barbara	Winnick, David
Rooker, Jeff	Wise, Audrey
Rooney, Terry	Worthington, Tony
Ross, Ernie (Dundee W)	Wray, Jimmy
Rowlands, Ted	Wright, Tony
Ruddock, Joan
Salmond, Alex	Tellers for the Noes:
Sedgemore, Brian	Mr. Ken Eastham and Mr. Eric Illsley.
Sheerman, Barry

Question accordingly agreed to.

Resolved, That the draft Charge Limitation (England) (Maximum Amounts) Order 1992, which was laid before this House on 22nd June, be approved.