HC Deb 02 December 1993 vol 233 cc1174-90 3.56 pm
Mr. David Clelland (Tyne Bridge)

On a point of order, Madam Speaker.

Madam Speaker

No. I take points of order at the end of statements.

Mr. Clelland

But this point of order is about the statement to be made by the Secretary of State for the Environment.

Madam Speaker

I am sorry; I can take points of order only—

Mr. Clelland

My point of order relates to what the Secretary of State is about to say. Hon. Members do not have the statement. I understand from the Vote Office that the Secretary of State has decided that hon. Members will not be entitled to see the statement until after he has sat down.

Madam Speaker

As I have explained on numerous occasions, it is at the discretion of the Minister whether to issue a copy of the statement before he makes it, when he rises or after he has finished. It is entirely a matter for him.

Mr. Jack Straw (Blackburn)

Further to that point of order, Madam Speaker. It is normal for the documents relating to a statement to be made available by the Minister at the beginning of his statement, not at the end. Will the Secretary of State or the Leader of the House authorise the Vote Office to issue the documents? There is no question about it—they should be made available.

The Secretary of State for the Environment (Mr. John Selwyn Gummer)

Further to that point of order, Madam Speaker. I would not want to be curmudgeonly. I merely did what I understood had been done before, and if the House would like the statement now, I am happy for that to happen.

Madam Speaker

Do I understand that the Secretary of State is releasing the documents in the Vote Office?

Mr. Gummer

I am.

Madam Speaker

Thank you very much.

4 pm

Mr. Gummer

With permission, Madam Speaker, I should like to make a statement about the local authority finance settlement for England for 1994-95—the document that is now in the Vote Office.

In forming my proposals, I have listened carefully to what local authorities and their associations have said to me, and I have considered fully the demands that will be placed on local authorities in the coming year. I have also weighed very carefully the interests of the economy as a whole. We must reduce the public sector deficit. Local government accounts for around a quarter of general Government expenditure and cannot be immune from our rigorous examination of all spending programmes.

I have had regard to levels of price inflation, with the RPI increase to October at 1.4 per cent. and the underlying rate currently the lowest for decades. I have also had in mind the statement of my right hon. and learned Friend the Chancellor of the Exchequer that any increase in public sector pay in 1994–95 must be paid for by greater efficiency and economy. I have considered the scope that many authorities still have to increase their efficiency.

Those are the considerations underpinning the aggregate figures I published on 30 November. The Government's view is that the appropriate level of revenue spending for local authorities in England in 1994–95 will be £42.664 billion. Central Government funding in support of that expenditure will be £34.3129 billion.

Those figures reflect a number of specific changes in local authorities' functions next year. The most significant is the further increase in community care clients needing assessment and support. As my right hon. Friend the Secretary of State for Health announced on 29 October, the Government propose to make available in 1994–95 a special grant of £736 million for that purpose. That amount is included in the figures I have just quoted.

I remind the House that that comparison must be like with like. Therefore, excluding such function changes, my proposal provides for a 2.3 per cent. increase in local authority spending year on year. That reflects our responsible approach, and I believe is a fair outcome in the current circumstances. Provided that local authorities themselves take the same responsible approach to pay and efficiency, and in assessing their spending priorities, front-line local services can be maintained.

I announced on 30 November that the distributable amount of non-domestic rates in 1994–95 should be £10.685 billion, and I am today publishing details of the full calculation. I proposed that the main revenue support grant in 1994–95 should be almost £18.5 billion. In addition, some £5.1 billion of specific and special grants would be available.

That is the total, and we must now see how it is to be divided up. The means of distributing the revenue support grant has at its heart the standard spending assessment for each authority. This year, because of the many cross-party requests, we have undertaken a thorough review of how SSAs are calculated, in consultation with the local authority associations.

The review had two essential purposes: first, to bring the system up to date by incorporating detailed information on social characteristics now available from the 1991 census; and, secondly, to review the elements that make up the SSA calculation by reappraising the factors that determine necessary local authority expenditure.

There is not an hon. Member who will not have heard from his local authority that this or that factor might be done in a different way. We have sought to listen to those requests very carefully, in association with the local authority organisations. We are very grateful for the co-operation and participation of the local authority associations in the process of the review. In addition, 200 individual local authorities made detailed representations. All these points were carefully considered before I formulated my proposals.

The package of proposals is detailed, but I will describe briefly some of the main points as they are of the utmost importance to many hon. Members. Having considered the evidence, I propose to reduce the present weight assigned to the allowance for additional needs within the education element. This is in the light of an updated statistical analysis of the proportion of local education authority spending that is attributable to additional needs. Even after the reduction, the additional needs allowance will still represent more than 20 per cent. of the education component of the SSA.

In the personal social services element, I propose a number of changes to the underlying indicators. In particular, for the assessments associated with elderly persons in need of domiciliary and residential care, I propose to introduce an indicator of long-term illness. That has been pressed upon me widely. For residential care, I also propose to adjust the calculation to reflect authorities' responsibilities under the community care arrangements.

One of the most controversial features of the method of calculating SSAs since they were introduced in 1990–91 has been the measurement of social conditions by means of the all-ages social index. That index aims to provide a broad measure of social conditions that are likely to affect the cost to local authorities of providing services. A large number of authorities have suggested that a wider range of social and economic indicators should be incorporated in SSAs. I have looked carefully at the evidence and I propose to introduce a revised social index and an economic index, which will include indicators of unemployment, ill health and homeless.

I also propose to make allowance for the numbers of day visitors within the assessment of services for districts. Previously, we did not have reliable data on a consistent basis for all authorities, but as a result of research commissioned for the purpose we now have the necessary estimates of numbers of day visitors by authority.

I have thought most carefully about the issue of the adjustment to take account of additional employment costs in London and the south-east. That is an issue on which opinions are sharply divided, and those divisions are almost entirely geographical. Those who fall within the area covered tend to be very enthusiastic about it; those who fall outside the area naturally find reasons why it is not correct. My predecessor acknowledged in the debate on the 1993–94 settlement in February that we would need to consider carefully the evidence for the present cost adjustment, and that is what we have done. I have concluded that there is firm evidence to support the present level of allowance for employment costs, and that there is justification for a further small addition for the costs of business rates. That is what I propose.

My proposals for 1994–95 are firmly based on the available statistical evidence, and I am confident that they will stand up to scrutiny. The system is fair, rational, up to date and comprehensive. Each of the proposed changes has been subject to the most rigorous analysis and has been incorporated only if it was resilient to that analysis.

At individual authority level, the effect of my proposals will vary. Changing a means of distribution to make it fairer produces losers as well as gainers. I recognise that authorities facing a reduction in SSA will need time to adjust their spending. I therefore propose to set aside some £280 million for a special grant to authorities whose SSAs are reduced by more than 2 per cent. as a result of the incorporation of the more detailed information from the 1991 census and of the review. The grant will be paid in support of expenditure by those authorities, cushioning the impact on council tax payers. I will review the situation next year before deciding whether to extend that transitional measure.

Last year my predecessor, my right hon. and learned Friend the Home Secretary, looked ahead to the first year of the council tax. He predicted that the tax would place local government finance on a sure footing and would find general support. I am pleased to report that my right hon. and learned Friend's optimism was well placed, and that the council tax has been successfully established as the means whereby local residents contribute to the cost of local services. In doing so, I gladly echo my right hon. and learned Friend's commendation of the constructive role of local authorities and their associations in preparing for its introduction.

Council taxes can vary widely, depending on the spending decisions of each local authority and its performance in collecting the tax, on the circumstances of each household and on individual entitlement to exemptions or benefits. There is therefore practically no meaning in talking about average taxes. For the sake of grant distribution, however, we have to identify notional taxes for each valuation band, for a standard level of spending—the so-called council tax for standard spending or CTSS. My proposals incorporate a CTSS for band C of £468. I emphasise again, however, that that is merely an element in the grant formula. It is neither a prediction of individual council tax bills nor a national average, and those who have sought to use it as such in the past have found how very far out their calculations are.

One reason why the bills of individual households will vary is the effect of council tax transitional relief, which has reduced the bills of those who faced the largest increases from the move from one taxation system to another. Some 3.7 million households are benefiting from transitional relief this year. In line with our commitment to continue transitional relief for two years at least, I propose to make available, in addition to the central support that I have already announced, some £130 million to provide continued relief in 1994–95. In general, taxpayers will receive last year's relief less an amount ranging from £67 a year for band A to £137 a year for band H.

In the current economic circumstances, we are as determined as ever that local authorities should play their full part in making reasonable spending plans that their local taxpayers and the country can afford. I am today announcing my provisional capping criteria for 1994–95. I am also issuing proposals for the calculation of notional amounts for certain authorities whose boundaries will change from 1 April 1994. They are the base from which I will measure increases in budgets in determining whether those increases are excessive. In addition, my provisional capping criteria themselves make allowance for the expenditure on care in the community that is being met this year by the special transitional grant. That allows a fair year-on-year comparison.

As in previous years, my provisional capping criteria allow larger increases for authorities with budgets close to their SSAs than for those whose budgets are relatively higher. Where budgets are very substantially above SSA, I intend again to seek budget reductions. The effect of my intended criteria is that: any increase of more than 1.75 per cent. over 1993–94 will be considered an excessive increase if it gives rise to a budget requirement above the authority's SSA; any increase of more than 1.25 per cent. over 1993–94 will be considered an excessive increase if it gives rise to a budget requirement over 5 per cent. above the authority's SSA; and any increase of more than 0.75 per cent. over 1993–94 will be considered an excessive increase if it gives rise to a budget requirement over 10 per cent. above the authority's SSA. In addition, I intend that any budget requirement more than 12.5 per cent. above SSA will be considered excessive—save that an authority will not be designated if it fulfils certain conditions equivalent to those that have applied in previous years. Those criteria are necessarily provisional. I cannot make any decisions on capping until authorities have set their budgets for 1994–95. When I come to take those decisions, I shall of course take into account all appropriate considerations.

One issue affecting a small number of authorities in 1994–95 is the start-up cost of local government reorganisation. Our intention is that, in 1994–95, authorities should be able to borrow for any such costs, and I am today issuing a consultation paper on the detailed arrangements.

In conclusion, my Department today is writing to every local authority in England with details of the system. The package includes a consultation paper which sets out how we propose to distribute central Government support between authorities, including my proposals for SSAs and for damping SSA losses.

The package gives details of the proposed council tax transitional relief schemes, sets out provisional capping criteria and includes proposals of notional amounts. It also includes a consultation paper on how costs arising from local government restructuring should be met. Copies of the package have been placed in the Vote Office and in the Library.

The proposals which I have outlined today represent a balanced and reasonable response to the conflict between the pressure to provide ever more resources for local government and the need to reduce the public spending gap. They provide for a 2.3 per cent. increase in local authority spending. They incorporate major improvements in the way in which the available resources are allocated, while protecting people in those authorities which stand to lose most from the results of the incorporation of the 1991 census data and the SSA review. They would allow council taxes next year to be set at reasonable levels, maintaining a substantial measure of transitional relief, and offering protection from excessive bills. They represent a package which the country can afford.

Mr. Jack Straw (Blackburn)

On Tuesday we had the bizarre spectacle of the Chancellor of the Exchequer boasting of cuts in the House while the Secretary of State for Environment boasted of rises in spending outside the House. Since they cannot both be right, has not the Secretary of State surrendered to the Chancellor? Will the Secretary of State explain to the House how he came to issue a press release on Tuesday with the unqualified headline Local Government Spending to Rise by 2.3 per cent"?

Did the Secretary of State know that was plain wrong or did he just not bother to check?

Has the Secretary of State studied the small print of the Red Book? Table 5.4 shows that, during the next two years, the cut which he has accepted and to which he has surrendered is £860 million next year and £1.5 billion the year after that. Is not that cut three times greater than has been conceded by any other Minister? Does the right hon. Gentleman understand that that is the worst record of any service-providing Minister? Is the right hon. Gentleman proud or ashamed of his surrender, and of the damage which will flow from his failure—larger classes, higher home help charges, less help for vulnerable children, fewer day nursery places and lower spending on crime prevention and on youth work?

The Secretary of State claimed in the press notice, and repeated it today, that a 2.3 per cent. increase represented an increase in total spending. How does that fit with the letter which his predecessor, the present Home Secretary, wrote to the Chief Secretary in May saying that an increase of 5.2 per cent. was needed in total standard spending to protect local authority services."? If the then Secretary of State was right to claim that 5.2 per cent. was needed, how can the present Secretary of State be right today? Will the Secretary of State confirm that compared with what authorities are spending this year by lawful budgets, each of which was approved by his predecessor, the settlement will mean a 1.2 per cent. cash cut?

On top of those cuts, all councils will have cuts in their capital programmes, including a £500 million cut from the Housing budget and the re-freezing of capital receipts. Is not it crazy that local authorities should have over £5,000 million of capital receipts in the bank at a time of desperate housing, social and economic needs? They could and should use those capital receipts for the benefit of their residents for housing and for other much-needed capital projects, but instead they have to be locked up by order of the Chancellor.

Is the Secretary of State aware that, last December, the then Secretary of State told me there is no need, as you suggest, for authorities to cut their staff as a result of my proposals for the 1993–94 settlement"?

Will the present Secretary of State repeat such a brazenly incorrect statement today? Does he realise that, contrary to that statement, during the past year thousands of local authority jobs have been lost as a direct result of that settlement? How many more jobs does the right hon. Gentleman estimate will be lost next year as a result of this settlement?

Standard spending assessments have a profound impact on spending and council tax levels, but the Minister will accept that the information which he has presented to the House, and which hon. Members have had just 15 minutes to digest while listening to his captivating statement, include complicated algebraic formulae and factors which run to 16 decimal points, and that in those circumstances councils will need time to comprehend the full impact of what he has announced today?

However, is it not clear, from the information that is already available to hon. Members, that once again the Secretary of State has sought to distort the system so as to stuff grant the way of a few favoured Tory councils? Can it be an accident? Annex A of an unnumbered special grant report shows that, of the 88 councils that are to receive the so-called standard spending assessment reduction grant, it is, surprise, surprise, Conservative-controlled Wandsworth which gets the largest amount—£26.5 million, nearly one tenth of the national total and £3 million more than Birmingham which has more than five times Wandsworth's population. What a surprise from a Government who claim to be fair. That is on top of the £30 million of so-called transitional relief, again one tenth of the total for the country, which his predecessor stuffed to Wandsworth this year.

If, as the Secretary of State claimed in his statement, his decisions today are "fair and rational" and will stand up to "scrutiny", why does he not do what the Audit Commission and the Opposition have proposed and submit his plans to the scrutiny of an independent local government grants commission to make recommendations to Ministers and to the House about the distribution of grant?

Is not it time for hon. Members and Ministers to recognise the futility of all this financial gerrymandering? Last May, despite extra grant to the then Conservative shires, the Tory party suffered its worst ever losses in those shires. On top of those losses, reducing Tory shires to one, in the last six months the Conservative party has lost control to Labour of Hillingdon borough council in outer London, of Gravesham council in Kent and, last Thursday, following an astonishing Labour victory in a safe Conservative ward, of Dover council. Local elections have repeatedly shown that the voters have overwhelming confidence in Labour councils, which provide far better services and have average council tax payments £14 per resident less than in Tory areas.

Despite the Secretary of State's weasel words, will he say by what percentage on this settlement he expects councl tax bills to rise on average? Will he confirm that the obscure figure of £468 for council tax total spending levels at band C means a band D tax, which is the central tax, of £526, and that, on the information that the Secretary of State has given to the House, that involves a 6.8 per cent. increase in council tax—four times the level of inflation?

As for capping, when will the Secretary of State recognise that he now presides over the most centralised system of council control in the western world, which denies local choice and which system was specifically disowned by the Prime Minister when he was Chief Secretary in a 1988 White Paper in which he said that councils spending from their own local revenue should form no part of the Government's control total?

Is not it astonishing that, of all Secretaries of State, the right hon. Gentleman, who is so ready sanctimoniously to lecture others about morality, should in today's statement be so alarmingly lacking in those key moral values of courage and candour? He lacks the courage to admit that he failed in the public spending round, and he lacks the candour to admit that his failure will lead to serious reductions in the services that councils provide and in the number of staff they employ.

Mr. Gummer

In a general statement on ministerial answers, Madam Speaker, you asked for answers to be kept short. However, I must tell the hon. Member for Black burn (Mr. Straw) that he does his cause no good by trying to produce false comparisons in the figures and seeking to avoid—[Interruption.] I am telling the absolute truth. I compare like with like, not like with totally unlike.

As an example, I shall take the hon. Gentleman's comment about the average council tax. If a council has a large number of low-banded houses, overall it will have a lower council tax than a council with a large number of high-banded houses. If there is to be a proper comparison, the hon. Gentleman must not twist the figures or misunderstand them—he must compare band with band. The truth is that, when comparing band with band, Tory authorities have lower taxes than Labour authorities. Of course, we would not expect otherwise because Tory authorities believe in low tax while Labour authorities believe in high tax. The hon. Gentleman knows that and he uses his figures with a lack of candour and a great deal of cowardice. He is not prepared to use the proper figures.

I shall move on to other matters. To compare the Red Book figures with total standard spending is to compare like with unlike. The Red Book figures show an increase in spending for local authorities, as is perfectly proper. The TSS, compared with last year's TSS, has increased by 2.3 per cent. The current Red Book figures, compared with previous figures, suggest a smaller rise. That is not surprising because there is a much lower rate of inflation, many local authorities have learned to make their money go further by taking a more sensible view on contracting out and so on, and interest rates have decreased considerably.

This is the first time that I have heard a rise called a cut, except in the mathematics of the hon. Member for Blackburn. Indeed, his mathematics were pathetic. He referred to job losses, as he did on the previous statement. Indeed, he used the same figure last time as he used this time. He did not use it today in the House, but I heard him use it on the radio. I know the figure that he is using. Last time he said that Birmingham would suffer job losses. We all remember him saying that Birmingham would get rid of almost all its staff, there would not be any jobs and everything would be terrible. In fact, there was a 2.3 per cent. increase in the number of jobs in that council. That does not square with all the doom and gloom that we heard from the hon. Gentleman.

Of course, the hon. Gentleman was right to say that there would be some public sector job losses, because that is the consequence of going out to private tender. When a private firm wins a contract there is an increase in the number of private jobs and a decrease in the number of public jobs. The hon. Gentleman grabs the decrease and fails to mention the increase. He does not want more jobs, only more council jobs. That is what the issue is all about, even though he knows that an increase in private jobs and a decrease in council jobs lowers the cost of services, results in the provision of better services and gives the council more money to spend on other council services, which is what we want.

The hon. Gentleman says, "Do not let the Secretary of State for the Environment do that, or any of the people who used to do it before"—including in a Labour Government —"but let some private quango do it." The scourge of the quango wants a new quango. I think that is a very good idea. It would mean that I could come to the House and say, "I am awfully sorry that your SSA in Blackburn has fallen, or has not increased as much as you would like. But that is nothing to do with me—the independent quango told me what to do."

Happily, I am an elected Member of Parliament. I am responsible to the House for the figures. They are my figures, by which I stand. What is more, they are correct—unlike the false figures of the hon. Member for Blackburn.

Sir Anthony Grant (Cambridgeshire, South-West)

Will my right hon. Friend totally disregard the party political tomfoolery we have heard from the Opposition? If I understood the arcane figures correctly, Cambridgeshire county council will receive an SSA more than twice the rate of inflation. Therefore, there is no excuse for inefficiency by the already incompetent Lib-Lab coalition in command there.

My right hon. Friend is to be commended for tackling the vexed question of the area cost adjustment. Is it not possible to correct the absurdities that result in Cambridgeshire receiving nothing and Oxfordshire and Bedfordshire receiving benefit by moving away from the crude and arbitrary regional area system and returning to a county system in interpreting area cost adjustment?

Mr. Gummer

It is perfectly true that my hon. Friend's authority is subject to an increased SSA, in common with a number of other authorities. I happen to have a list of them. Wigan, Barnsley, Doncaster, Rotherham, Sheffield and Newcastle all do extremely well—although the hon. Member for Blackburn might have thought that they would not—because of the objective measurements. Wandsworth gets the largest amount of damping grant because it has the largest cut. Labour Members are busy trying to make party political propaganda out of an honourable and decent thing—which is to cut where cutting must take place.

I will consider my hon. Friend's suggestion for the next time, but I warn him that everybody feels one way if they benefit and the other if they do not.

Mr. David Rendel (Newbury)

Does the Secretary of State agree that it is a peculiar anomaly that capital spending by local authorities from capital receipts is still frozen when the Government insist that the Ministry of Defence's capital receipts are 100 per cent. spent this year in MOD spending on revenue or capital?

Mr. Gummer

The capital receipts that arise from this year—the parallel that the hon. Gentleman would be making—are available for spending in local authorities, so he cannot object to that. That is one thing that we did this year for a particular reason, and I know that the hon. Gentleman will be pleased about it.

Also, capital receipts are not frozen. They are available to pay off debt. Labour Members do not appear to understand that when one borrows money, one has to pay it back—which is why they have always got the economy in such a mess. That is why they talk about freezing when in fact it is available for the spending for which it ought to be available. Labour and Liberal councils have a great deal of debt to pay off before they start lecturing us.

Mr. Patrick Nicholls (Teignbridge)

I wonder whether I have understood the position correctly in respect of Devon. It seems that my right hon. Friend responded to the case that I and a number of west country Members of Parliament put to him and to his predecessor over a number of years—that SSAs do not necessarily reflect the amount to which Devon should be entitled. If that is correct, and if more money could now be spent on, for instance, education, can my right hon. Friend say anything to ensure that the money really does go on education and is not just frittered away by the Liberals who control the county council?

Mr. Gummer

My hon. Friend and his Devon colleagues have an honourable record in pressing the case for Devon with the Government. When the various items that he raised were looked at properly, it resulted in Devon receiving a better share of the cake. That money can be spent by his county council as it thinks fit. It will be up to him to point out how much is ill spent by the Liberal-controlled local authority. As this is a universal element in Liberal control, he will not have much difficulty in pointing it out.

Mr. David Clelland (Tyne Bridge)

In his examination of the all-ages social index, did the Secretary of State give any consideration to the introduction of an economic deprivation factor into the SSA for other services—parks, recreation and environmental services? Is he aware that that would be a fairer system than the all-ages social index, which has Cambridge and Cheltenham more deprived than Newcastle? Not only would it increase spending in deprived areas by reducing bills, but it would save money for the Treasury—the Chancellor might be interested in this—by reducing benefit levels. Will he look again at the all-ages social index and consider introducing a much fairer system than we have now?

Mr. Gummer

I am happy to look at anything that the hon. Gentleman puts before me. I have already looked carefully at that and I think that he will be pleased with the economic index that we have put in which takes particular care to deal with unemployment and long-term illness—two things which the hon. Gentleman and many of his colleagues thought were important. I am happy to say that the changes in the SSA have improved the SSA in Gateshead and Newcastle upon Tyne, in one case by 4.1 per cent. and in the other by 4.8 per cent.

Sir Rhodes Boyson (Brent, North)

I welcome as reasonable the 2.4 per cent. increase all over the country, but we are obviously concerned for our own areas. Is my right hon. Friend aware that last year the London Boroughs Association considered that we lost £200 million from London to the rest of the country and we would like it back? Is he also aware that, if we are using the figures from the 1991 census, London will be disadvantaged because so many people disappeared down black holes so that they did not have to pay the poll tax that up to 10,000 were missing from any one constituency, and there is no consideration for that?

Mr. Gummer

I understand my right hon. Friend's concern. He will be happy to know that the damping grant of nearly £19 million ensures that the loss in Brent would not be more than 2 per cent. With the damping grant, London as a whole will receive an addition of £200 million.

That is in stark contrast to the statement by Mr. Toby Harris, the leader of the Association of London Authorities, who said on the radio this morning that London would lose more than £800 million. Mr Harris's figures were £1 billion out. The only comparable error in figures was made this afternoon by the hon. Member for Blackburn (Mr. Straw). It seems that innumeracy is a quality shared by most Labour local government spokesmen.

Despite that, there is a particular problem with Brent. [Interruption.] Happily, the new authority in Brent has improved things considerably after Labour-controlled Brent produced one of the worst examples of local government in the country, if not in the world. Part of Brent is moved to the neighbouring borough under the reorganisation. That causes a specific difficulty, but I shall be happy to talk to my right hon. Friend about that. He will be pleased with the increase in money coming to London.

Mr. Peter Shore (Bethnal Green and Stepney)

Is not it the case that, as a result of the review of SSAs and the changes in the additional education needs allowance, most inner London boroughs have suffered serious losses? Is not it absurd that areas of inner London which are extremely deprived in all sorts of ways and which show signs of serious social deprivation should be losers rather than gainers in the review of SSAs? Can the right hon. Gentleman tell us the net loss for the inner London boroughs as a result of his new settlement?

Mr. Gummer

The right hon. Gentleman gives a curious example, because six inner London boroughs gain and six lose. They do so by an objective system. We have sought to make the system as objective as possible. The result is that, for example, Greenwich has a 7.6 per cent. increase, Southwark a 3.8 per cent. increase, Barking an 11.8 per cent. increase, and Hillingdon, an outer London borough, a 7.8 per cent. increase. The right hon. Gentleman's borough has a 4.3 per cent. increase. I will be happy to send him the detailed figures for inner and outer London.

We have devised objective methods, many of which were introduced because of requests by the Labour party, on the long-term ill and unemployment, which were specifically raised with me when I visited the right hon. Gentleman's borough. As we listened to the requests of the Labour party and made changes from which his borough benefited, it is churlish of the right hon. Gentleman to suggest that there is something wrong with a system that is designed to do the best we can. Perhaps he would like to rethink the way in which he put his question.

Sir Cranley Onslow (Woking)

My right hon. Friend will remember a deputation of Surrey Members visiting him and making a strong case about the unfair way in which the system of calculation has worked against the interests of the residents of Surrey. What has he been able to do to put that right?

Mr. Gummer

My right hon. Friend advanced a strong argument in the discussions. It upsets me considerably when the Opposition suggest that we run the system so that certain authorities benefit and others do not. We cannot do that. We apply the same criteria to every authority. The result is as good as it can be—as fair a balance as is possible between the various authorities. It so happens that, when we followed that policy, my right hon. Friend's contention proved to be true. That is why Guildford has an improvement in its SSA of 6 per cent. and Woking of 7.2 per cent. Those who object to our policy are objecting to a system that tries to take into account the objective methods that the Labour party asked for.

Mr. Stephen Byers (Wallsend)

Will the Secretary of State confirm that the 2.3 per cent. increase in the education SSA for next year provides a figure that is about £232 million less than the amount being spent in our schools this year? Does he recognise that £232 million is equivalent in cash to 9,096 teaching jobs? How can cuts of £232 million in the school budget, threatening more than 9,000 teachers' jobs, be reconciled with the Chancellor of the Exchequer's statement on Tuesday that the Budget would increase education opportunities and improve standards?

Mr. Gummer

I understand that the hon. Gentleman has not had much time to look at the figures——

Mr. Straw

He needs more time.

Mr. Gummer

He does need time because he is comparing two different figures. He is comparing the outturn figure at the end of year with the total standard spending figure at the beginning of year. The outturn figure is always higher than the TSS figure. One should take the two figures that are comparable. There is no way around that. It is like comparing the budget of a company with its spending at the end of the year. One should compare budget with budget and outturn with outturn. If one compares the TSS this year with the TSS last year, one finds that there is a 2.3 per cent. increase.

The hon. Gentleman will find that we have spent a good deal of time in ensuring that our priorities, one of which is education, get a disproportionate increase so that we not only safeguard but improve services. The hon. Gentleman should compare like with like. The figures that he gave therefore are not true because he compared two totally different figures when he should have compared the same ones.

Sir Paul Beresford (Croydon, Central)

Does my right hon. Friend agree that comments such as those made by the Labour leader of the ALA are pitiful, given the incompetence of the authorities that he represents, of which the collection of the council tax perhaps is an example? Many of those authorities are now suffering in their budgets the effects of the sale and lease-back nonsense of the 1980s.

Mr. Gummer

My hon. Friend is right. It is perfectly true that some authorities do a very poor job for their council tax payers. I think, for example, of the London borough of Lambeth, where the council tax is significantly higher than it would have been had it not been for its incompetence in collection and its long history, which is now having to be paid for. However much better it may get year by year, its council tax payers are still bearing the burden.

Mr. John Fraser (Norwood)

I thank the Secretary of State for recognising that things are getting better in Lambeth. I recognise that there are swings and roundabouts, but will he confirm that the extraordinarily high SSA reduction grant of £21 million in Hackney, £22 million in Lambeth and, most of all, almost £28 million in Wandsworth underline and show a pretty gigantic shift in resources as a result of changes in the SSA, at least for those three London boroughs? What is the net loss for those three boroughs as a result of the change in the SSA and, since this very high special subsidy is only temporary, at what rate will it be withdrawn, because does not that presage some horrendous problem for Tory and Labour boroughs as a result of the change in the SSA calculation?

Mr. Gummer

I have always tried to encourage wherever possible. That is why I said the nicest things that I could about Lambeth, but it started from an absolutely appalling base and almost anybody could do better. I hope that it will continue to try to do so.

The hon. Gentleman must accept that we have tried to apply precisely the indexes that the Labour party wanted. The result has meant a shift of resources from Lambeth to Greenwich, to Southwark, to Barking and to Hillingdon. That is perfectly understandable and it is disclosed by the figures. It underlines, I fear, the fact that the Lambeth council has been less good than it should have been. Wandsworth, however, has a very low council tax. It has very good services. It is a very good council, and if Lambeth had done as well as Wandsworth the people of Lambeth would be very pleased indeed and would be prepared to accept the change because they would know that their council had properly looked after their resources.

I shall write to the hon. Gentleman with the detailed points that he wants.

Mr. Anthony Coombs (Wyre Forest)

I welcome the change in calculating the SSA for day visitors, which should benefit a constituency such as mine that has many visitors, but have my right hon. Friend and the Home Secretary received representations from West Mercia police authority about the level of civilianisation that it has been able to achieve and whether it has been adequately reflected in the way in which the police block of the SSA is calculated?

Mr. Gummer

I thank my hon. Friend for his question. We have reflected in the police block grant the various changes that have been made in the SSA. I am pleased that Wyre Forest has an improvement in its position of 11.2 per cent., which reflects a real problem that he has so often raised with me and my predecessors.

Mr. Clive Betts (Sheffield, Attercliffe)

I have major reservations about the total size of the cake, but may I give some recognition to the fact that the Secretary of State and especially the Minister for Local Government and Planning have gone some way to recognising the representations that have been made by the Webber Craig authorities and Sheffield, in particular on the economic index, including unemployment, ill-health and homelessness?

I draw the Secretary of State's attention to a problem that is facing those authorities, of which I hope he will take account. It arises where an authority has had its SSA relatively increased, reflecting the fact that in the past it has done relatively badly. In those circumstances, the year-on-year expenditure capping rule bites heavily on those authorities and means that they cannot take full advantage of any increase in the SSA that is available. Will the Secretary of State be willing to take account of that problem and reconsider the capping rules?

Mr. Gummer

I thank the hon. Gentleman for his balanced comment and I hope that other Opposition Members will take seriously what he says.

Sheffield has a 4.9 per cent. increase in its SSA. That is another example to give the lie to the, I think, outrageous comments of the hon. Gentleman about the way in which that is done. I hope that in a quieter time he will wonder to himself whether it is proper to suggest that a system is run in order to benefit one party or another when it manifestly is not. Of course I have thought about the matter. I have made my provisional statement today; and obviously things are provisional until they are confirmed. I have heard what the hon. Gentleman has said and will think about it.

Mr. Patrick Cormack (Staffordshire, South)

Does my right hon. Friend accept that the thought that he has put into this subject and the skill with which he has presented it would have been easier to appreciate if we could have had the papers earlier? Is there not a case, on this statement above all statements, for Members to have the papers an hour or two before the statement is made in the House? So that I can tell my people in Staffordshire their fate, will my right hon. Friend say precisely what has happened as a result of the representations that we made?

Mr. Gummer

It is difficult, I know, for everyone to take in the figures all at once, but my hon. Friend might like to look at page 8 from which he will see that South Staffordshire has an increase in its SSA of 21.7 per cent. I imagine that he will be able to put that over pretty clearly without any warning or advance notice.

Mr. Ron Leighton (Newham, North-East)

As the Secretary of State knows, last year the London borough of Newham, in the east end of London, was short-changed by more than £22 million. That was because of a defective capital SSA and because the borough had to spend more than £11 million on homelessness, for which there was no SSA. Therefore, the council could not spend up to SSA on a range of services, including, for example, education. As a consequence, I went to a school in my constituency this morning where the gym could not be used because of the rain coming through the roof. Has the Secretary of State's statement today rectified the situation or made it worse?

Mr. Gummer

The hon. Gentleman's borough has an SSA per head of £1,143. One ought to remember, when dealing with London, that the per head SSAs are still clearly ahead of those anywhere else in the country. If the hon. Gentleman fears that under-registration of the type that he thinks may have distorted the census will make a difference.he did not say so just now, but I have heard him say it before.I want to ensure that he realises that that has been taken into account by the OPCS and that the figures have been adjusted to take that into account.

The London borough of Newham is one of those which has a reduction in its SSA, and that reduction.which is why, no doubt, the hon. Gentleman mentioned it.will mean that there is a damping grant of £13 million which goes to Newham to ensure that there will not be a reduction of more than 2 per cent.

Mr. Roger Knapman (Stroud)

I congratulate my right hon. Friend on his statement and especially on the increase of 2.3 per cent,. which well exceeds the prevailing rate of inflation, and also on some sensible amendments, especially regarding the ACA.

I ask my right hon. Friend, either now or perhaps later, to turn to annex 4, page 8, where we have the figures for Gloucestershire, with six councils, of which three, including Stroud, have almost identical populations, but unfortunately Stroud seems to have only £8.5 million SSA compared with considerably more than £10 million for the other two. That seems to be because the external funding for Stroud, with 105,000 people, is only a little more than that for the three smaller and rural councils in that county. I should be most grateful if my right hon. Friend would reconsider that aspect of what is otherwise an excellent statement.

Mr. Gummer

I shall be happy to give my hon. Friend a detailed explanation. His SSA increase is up by 7.6 per cent., so he can tell the people of Stroud that his pressure has at least brought about that result.

Mr. Clive Soley (Hammersmith)

Will the Secretary of State explain to me and to the people of Hammersmith and Fulham what has changed in Hammersmith and Fulham that results in the council.which has met the Government-approved target of £169 million and received the accolades of a number of Ministers on its transport policy, its anti-crime policy, some of its housing policy and so on—still having to confront an enormous cut, in effect, bringing it down to about £145 million or £150 million? How on earth is that to be explained to the people of Hammersmith and Fulham, and will the right hon. Gentleman receive a deputation from the council to argue for some cushioning of that enormous impact?

Mr. Gummer

There is considerable cushioning.£18 million of cushioning.in order to meet the requirements exactly. The reason that Hammersmith and Fulham has had a reduction in its SAA is that, if one applies the specific objective tests which the Labour party was among the most vocal in demanding, Hammersmith and Fulham has a smaller SSA and Greenwich, Southwark, Barking and Hillingdon—all Labour-controlled boroughs —have an increase in their SSA.

I am afraid that if one has objective changes there will be some winners and some losers. I am happy to meet a deputation, however, and will provide them with all the figures.

Mr. Bob Dunn (Dartford)

Does the settlement for Dartford reflect the fact that that council is liable to incur extra costs in the next year in developments for and leading to the east Thames corridor? If there is no reflection in those figures of such expenditure, is my right hon. Friend open to suggestion on that subject?

Mr. Gummer

I shall be happy to meet my hon. Friend on that basis. Dartford has an increase in its SSA of 12.2 per cent., but that would not reflect that item.

Mr. Kevin Barron (Rother Valley)

Will the Minister tell us whether an authority such as mine that has had an increase in excess of inflation under the recalculation of the SSA for which my authority has been arguing for years will now be allowed to increase its expenditure to that level so that the proven need in the borough can be met? Or shall we be given the money with one hand but be restricted from spending the money to meet that need because of the right hon. Gentleman's calculations on the cap?

Mr. Gummer

The hon. Gentleman is right in that Rotherham has an increase of 5.3 per cent. and I am pleased about that because it underlines the fact that the fears of Rotherham have proved to be ill founded. The difficulty is that Rotherham is already spending significantly more than its SSA and therefore the permitted increase in budget will only be 1.8 per cent. That in itself is a significant change and I am sure that the Rotherham council will make the best use of it.

Mr. Nigel Waterson (Eastbourne)

Does my right hon. Friend agree that my constituents in Eastbourne will warmly welcome what I calculate to be nearly a 12 per cent. increase in SSAs over last year? May I take this opportunity to congratulate him and his colleagues on their skill and patience in tackling issues such as the day visitors statistics, which have had such a direct bearing on the calculation of SSAs for resort towns such as my own?

Mr. Gummer

My hon. Friend is right that the increase is about 11.7 per cent. for Eastbourne and 12.2 per cent. for Wealden. In both cases there is a high proportion of older people and there are necessary alterations because of the number of day visitors to Eastbourne. That is a fairer representation of the needs of Eastbourne. I am pleased that my hon. Friend has acknowledged it and thank him for his remarks.

Mr. Nigel Spearing (Newham, South)

Does the Secretary of State realise that his statement will be regarded by the people of Newham as one of the most unjust and harsh statements that he has made? He has just admitted that the SSA for Newham will be reduced by up to 2 per cent. and that that of his hon. Friend the Member for Eastbourne (Mr. Waterson) will be increased by 10 per cent. Is he aware that the London boroughs of Hackney, Tower Hamlets and Newham are three of the most deprived in the country? Can he tell us about homelessness? Does he not realise that £11 million of expenditure has to be taken out of the expenditure for the other services? Yet he has not taken much account of that because he did not deny the charges that my hon. Friend the Member for Newham, North-East (Mr. Leighton) made a few minutes ago. Does he realise that his 40-minute lecture to us in West Ham town hall about partnership is just empty claptrap when there is that type of deal?

Mr. Gummer

I would have expected better of the hon. Gentleman. I have heard him debate many times and he has always tried to be assiduous in his comparisons. I do not think that he has mentioned that the SSA per head in Newham is £1,143 and that in Eastbourne it is £120. It seems to me that that represents a fundamental recognition that Newham is to get an enormous extra amount of money.

Mr. Spearing


Mr. Gummer

r: I have to tell the hon. Gentleman that, even if spending on education is taken into account, a considerable amount of extra money goes into Newham, because of its difficulties. But when we compare Newham —[Interruption.] The Labour Front-Bench spokesman is right to say that we should compare like with like, and compare Newham not with Eastbourne but with places similar to itself, such as other London boroughs. The fact is that, applying the same criteria, when the deprivation is measured and all the figures are added up, Barking, which is not a million miles from Newham, has an increase of 11–8 per cent., whereas Newham has a decrease. I did not invent that; it happens as a result of applying the same criteria. Opposition Members have wanted us to use those criteria for many years, and it is not acceptable for the boroughs that are adversely affected by those criteria to complain while Labour Members whose boroughs benefit hardly say thank you.

Mr. Michael Bates (Langbaurgh)

Will my right hon. Friend confirm that the increase in the SSA for Langbaurgh, a Labour-controlled authority, is an unparalleled 20 per cent. this year? My constituents will appreciate that, as they have appreciated the courteous and thorough way in which my right hon. Friend and his colleagues have conducted the negotiations over the SSA this year. Does my right hon. Friend agree that the generous settlement will mean that there is no excuse for Langbaurgh council not to get a grip on its finances, and no excuse for any increase whatever next year for the long-suffering council tax payers of Langbaurgh?

Mr. Gummer

Langbaurgh does not have a reputation as a well-run authority, so I hope that my hon. Friend will continue his pressure, and tell the council that we have recognised its particular difficulties, which he has often graphically described to me, and that the formula now takes account of them. The council is therefore now in a position to complete its half of the bargain—that is, to become a more tightly run authority and to use its money more effectively, thus demanding less from the people who pay its council tax.

Mr. Doug Henderson (Newcastle upon Tyne, North)

I was worried by the Secretary of State's response to the question asked by my hon. Friend the Member for Wallsend (Mr. Byers). The right hon. Gentleman appeared to tell the House that it was inappropriate to compare next year's budget with this year's expenditure. I should have thought that there were enough Members on his side of the House who could have advised him on financial matters and accountancy procedures, and told him that no company in the land would prepare a budget for next year without considering this year's expenditure.

Is it not irresponsible for the Government to say that it is not fair to compare next year's budget with real current expenditure? Does not the current level of spending determine the level of police services, fire services, education services and social services? If there are cuts in the budget, those services will suffer. Will the Secretary of State not own up to the fact that the real impact of the financial settlement that he has announced will be cuts in services and jobs, and that he expects local authority employees to bear the full burden of his surrender to the Treasury?

Mr. Gummer

If the hon. Gentleman wants to make a comparison with business, I might point out that most businesses will be looking for ways to save on overheads this year; they are not looking forward to the 2.3 per cent. increase that local government is being offered. The hon. Gentleman will probably realise that at such a time as this businesses will deal with the problems that arise when we are coming out of recession by seeking to tighten their belts more than the Government have suggested. The figures are not such as to make local authorities throw their hats in the air, but they expected the settlement to be a good deal tougher. They did not expect an increase of 2.3 per cent. I must tell the hon. Gentleman that every year the outturn figure is higher than the total standard spending.

We need to compare like with like. The first rule for reading any kind of balance sheet is to compare this year's figure with last year's figure, but one must ensure that those figures refer to the same things. To compare this year's figure with last year's figure, when wholly different factors were involved, does not lead to sensible accounting. Perhaps that is why all Labour Governments get themselves into a financial mess. Perhaps that is what the Labour party has been doing all along the line, and it still has not learnt.