Commons Sitting of 3 February 1994

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    BOURNEMOUTH-SWANAGE MOTOR ROAD AND FERRY BILL
      SHEFFIELD ASSAY OFFICE BILL
        FEDERATION OF STREET TRADERS UNION (LONDON LOCAL AUTHORITIES ACT 1990) (AMENDMENT) BILL

          UNIVERSITY OF LONDON BILL
          Orders for Second Reading read.
          To be read a Second time upon Thursday 10 February.

Oral Answers to Questions
  NATIONAL FINANCE

    Marginal Tax Rates
    Mr. Hendry: To ask the Chancellor of the Exchequer what assessment he has made of the effect of the changes in marginal tax rates since 1979 on incentives.
    The Chancellor of the Exchequer (Mr. Kenneth Clarke): Cutting tax rates has improved incentives at all levels and has contributed to the improved economic performance of the country since 1979.
    Mr. Hendry: I am grateful to my right hon. and learned Friend for that reply. Is he aware that in 1979 the top 10 per cent. of income tax payers contributed 34 per cent. of the total income tax take, but by 1992 that had risen to 45 per cent? Is not that the most graphic demonstration that the policies of successive Conservative Governments, in cutting direct tax levels, have dramatically improved the incentive to work and at the same time dramatically reduced incentives to avoid paying taxes?
    Mr. Clarke: I wholly agree with my hon. Friend. In 1979, the top rate on so-called unearned income was 98 per cent. and the top rate on earned income was 83 per cent. Those penal rates drove people into tax evasion and drove them abroad. We now ensure, by rates that give greater incentive, that the better-off contribute more to the total tax revenues.
    Mr. Skinner: Why does not the Chancellor of the Exchequer tell the real truth about what has happened since 1979? We have finished up with a £50 billion public sector borrowing requirement, we have a balance of payments deficit of well over £10 billion and likely to rise next year, we have 4 million people on the dole and now the Government have the gall to call upon working-class
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    people to bail them out. Instead of doing that, they should tax the rich, whose percentage share of national income has increased from 35 to 43 per cent. while poor people's share has dropped from 10 to 6 per cent. Get the priorities right or get out of the road.
    Mr. Clarke: My hon. Friend the Member for High Peak (Mr. Hendry) has just shown the total folly of the Labour party in taking the advice of the hon. Gentleman in the 1970s and imposing penal rates on the so-called rich, which had the effect of driving people into tax evasion. Bringing things up to date, in the 1980s we had the strongest run of growth in the British economy that we have had in modern times. We are now the only major economy in Europe that is growing again. Manufacturing production is up, unemployment is coming down and business confidence has never been higher. Their fear of people such as the hon. Gentleman will keep people supporting the Government in their efforts to get British recovery under way again.
    Mr. Nicholls: Will my right hon. and learned Friend also remind the hon. Member for Bolsover (Mr. Skinner) that in 1979, in addition to all the other taxes that Labour had imposed, there was an unearned income surcharge which meant that the small earnings of poor people who had worked hard all their lives were then taxed because the money was regarded as unearned? Is that the tax on the rich that the hon. Gentleman has in mind?
    Mr. Clarke: I am sure that it is, and the Labour party's attitude to taxation in 1970 became disastrous, punitive and counter-productive in terms of revenue. They are now trying to abandon that attitude, but I heard the shadow Health Secretary say on the radio this morning that although he had no spending promises to make at the moment, he would have by the time of the election. No doubt, by the time of election we shall have some fresh tax proposals from the hon. Gentleman.
    Mr. Gordon Brown: Will the Chancellor confirm that, despite everything that he says, after 15 years of Conservative Government, the only people directly benefiting from the Tory tax regime are those earning £64,000 a year or more, while the burden of direct and general taxation on everybody else has increased? Is that not the £64,000 question that the Chancellor must answer? Is not his party not merely the party of broken tax promises, but the party of unfair taxation?
    Mr. Clarke: The actual position, as the hon. Gentleman knows, is that the real income of the average earner in the country is now 40 per cent. higher than it was in 1979. Real earnings went up by 40 per cent. above inflation, whereas during the Labour party's time in office, they had completely stagnated and hardly risen at all. More than 1 million more people would be paying tax now if we still had Labour's tax regime from 1979. We have created more prosperity, we have a better tax system with higher incentives and we are on the way to strong economic growth—something which Labour could never deliver.
    Mr. Ian Bruce: You and I, Madam Speaker, are simple people.—[Interruption.]
    Madam Speaker: Order!
    Mr. Bruce: We have a simple approach to such matters, Madam Speaker. Having given us all those statistics about

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    tax rates, can my right hon. and learned Friend tell the average earner what extra money he will have in his pocket today, as opposed to 1979?
    Mr. Clarke: If he is an average earner, he will be 40 per cent. better off—almost half as well off again, over and above inflation—than he was in 1979. He will also be living in one of the most successful and prosperous economies in Europe, where he can feel more secure about his job and see more jobs being created. That is something which Labour could never achieve consistently; we achieved it in the 1980s and we are achieving it again now.

    Family Tax Burden
    Mr. Hutton: To ask the Chancellor of the Exchequer what was the tax burden for a married couple on average earnings, and with two children, in 1978–79; and what is the most recent figure.
    The Financial Secretary to the Treasury (Mr. Stephen Dorrell): A single-earner couple with two children on average earnings will pay 20·3 per cent. of their gross earnings in income tax and national insurance contributions in the current year, compared with 20·9 per cent. in 1978–79. Over the same period, the real take-home pay of the same couple will have risen by £83 per week in today's values.
    Mr. Hutton: Do not those figures confirm the scale of the deception perpetrated by the Conservatives at the last general election, when they promised the British public year-on-year tax cuts? Instead, they have delivered year-on-year tax rises. Is not it clear that the current record level of taxation is not being used to lay the foundations for future growth and prosperity, but is simply the price that we are all paying for 15 years of Tory failure?
    Mr. Dorrell: I find it utterly impossible to link that question with my previous answer. What we have done is to introduce a tax system that has made growth possible, while delivering £83 a week in extra purchasing power to the average man. That is the result of our policies, and it is not something for which any of us need apologise.
    Mr. Nigel Evans: Has my hon. Friend been able to calculate what would have happened to the taxes of a married couple on average earnings if the Government had decided not to control public spending—if, indeed, they had increased it by £38 billion?
    Mr. Dorrell: The straight answer is that £38 billion represents about 19p on the basic rate of income tax. My hon. Friend has illustrated the dishonesty of the claim of Opposition Front Benchers to be interested in controlling the tax burden: in fact, they lose no opportunity to commit themselves to future spending that must be translated into a future tax burden.
    Mr. Andrew Smith: Will the Financial Secretary now answer the question that the Chancellor evidently lacked the mastery of detail to answer? Is not the hard truth that the only people who have benefited from the Tories' tax policies are those earning more than £64,000 a year? Let us have an answer.
    Mr. Dorrell: The question to which the country wants an answer is this: when will Labour start to take an interest in the creation of wealth? The question that we have just
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    heard demonstrated, yet again, Labour's myopic obsession with redistribution, and their utter lack of interest in the generation of wealth. It is because the British economy became more successful during the 1980s that we have been able to deliver the £83 a week to which I referred, which translates directly into the 40 per cent. mentioned by my right hon. and learned Friend the Chancellor. That is the pay-off from the success of the Government's economic policies.
    Mr. Brazier: Following that answer, does my hon. Friend agree that further improvements in living standards can be delivered only through growth? According to the Organisation for Economic Co-operation and Development, our projected growth level is more than double the EC average, while our inflation rate is approximately half the EC average. That means that living standards will continue to improve.
    Mr. Dorrell: My hon. Friend is absolutely right to point out that the only way to improve living standards is to create circumstances favourable to economic growth. That is why, as a result of our policies throughout the 1980s, this country moved from the bottom to the top of the developed countries' growth league. Our policies delivered improved living standards in the 1980s and they will continue to do that throughout the 1990s.

    Income Tax
    Mr. Byers: To ask the Chancellor of the Exchequer how many people will begin paying income tax in the next financial year as a result of the freezing of personal allowances.
    Ms Coffey: To ask the Chancellor of the Exchequer what his estimate is of how many more people will have to pay income tax by December 1994 as a result of the decision to freeze income tax allowances.
    Mr. Dorrell: None.
    Mr. Byers: Does the Financial Secretary remember the written reply that he gave to one of my hon. Friends in which he said that some 400,000 individuals would be brought into the tax net as a result of the freezing of personal allowances? How will those 400,000 mainly low-paid workers manage to pay that tax without being led into even greater poverty? Does he accept that the freezing of personal allowances will mean that about £1·1 billion will be taken from taxpayers' pockets? Given the Government's broken promises, will the Financial Secretary tell the House why the country should ever again trust the Tories on tax?
    Mr. Dorrell: The hon. Gentleman is wrong about an important point. If someone pays tax next year because his income exceeds the personal allowance whereas it does not do so this year, the reason is not that the Government have cut the allowance—we have not—but that his income has increased.
    Ms Coffey: Does the Financial Secretary accept that the tax increases that he has introduced, which include the extension of VAT to fuel, mean that the tax burden is being borne disproportionately by the least wealthy? Does not he think that that is unjust and unfair and a betrayal of the fundamental principle of taxation, which is that it is based on the ability to pay?
    Mr. Dorrell: The hon. Lady has very wisely moved off the subject of her main question, but the ground on which she has chosen to question me is no better. If she examines the distribution effect of the Budgets introduced by my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) last March and by my right hon. and learned Friend the present Chancellor in November she will find that, broadly speaking, the burden is distributed evenly across the income scale. That is not a coincidence but the result of the deliberate plans of both those people.
    Mr. Dickens: Does my hon. Friend recall the dark days of the previous Labour Government and their tax regime, which drove overseas all our inventors, scientists, engineers, entrepreneurs, risk-takers and job-providers? Was not that the result of socialism and should not we be fighting back? Why should we take lectures from the Opposition? Let us go for them.
    Mr. Dorrell: My hon. Friend asked if I remembered the dark days of the previous. Labour Government. The answer is only just. If one examines that Government's record on the specific subject about which the hon. Member for Wallsend (Mr. Byers) questioned me, one finds that during their five years in office the single person's allowance fell in real terms by 21 per cent. whereas under this Government it has risen by 25 per cent. I do not think that we need to take lectures from the Opposition about the merits or demerits of indexing personal allowances.
    Mr. Congdon: Is not the marginal rate of tax as important as the numbers eligible for taxation? Do not the Government deserve great credit for having a basic rate of 20p in the pound, unlike the Opposition's rate of 33p in the pound? Does not that prove that people are better off under this Government?
    Mr. Dorrell: My hon. Friend is absolutely right. It is as a result of the introduction of the 20p band that 4·8 million people are this year paying income tax at a marginal rate of 20p whereas, as my hon. Friend rightly says, when Labour left office the basic rate of income tax was 33p in the £1.

    Low-income Households
    Mr. Kirkwood: To ask the Chancellor of the Exchequer what proposals he has to provide financial relief for low-income households; and if he will make a statement.
    The Chief Secretary to the Treasury (Mr. Michael Portillo): The Government have recently taken measures by introducing a child care disregard in family credit and making a substantial package of help with fuel bills available to pensioners and those on income-related benefits.
    Mr. Kirkwood: Has the Chief Secretary had a chance yet to study the report that was recently issued by NCH Action for Children? Will he understand that NCH Action for Children believes that its report has been substantially misrepresented in the press? It never said that children were worse off now than they were in Victorian times. It argued that, although the standard of living has increased dramatically all round, the gap between the rich and the poor is as wide now as it was then. What further steps will
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    the Treasury take, together with the Department of Social Security, to meet the urgent needs of low-income households with children?
    Mr. Portillo: Our concern is to increase the prosperity of the country generally by following the economic policies that we have, and to provide protection for people on low incomes. The figures of people on low incomes show how well they have done in recent times. Disposable income increased, on average, by 35 per cent. between 1979–80 and 1990–91, and pensioners' real incomes increased by 54 per cent. during that period. The real take-home pay for a household, even on half average earnings—that affects the children about whom the lion. Gentleman is talking—has increased by 34 per cent. during the period of the Conservative Government.
    If the hon. Gentleman cares to measure not what people earn but what they have, he will find that 69 per cent. of households in the bottom fifth have central heating—it was only 39 per cent. when the Conservatives came to power —and that 50 per cent. of those in the bottom fifth have cars, compared with 39 per cent. in 1979. There has been an enormous change in living standards in the country and the hon. Gentleman should recognise it.
    Mr. Forman: Is my right hon. Friend aware that the attention that he drew to benefits such as family credit was appropriate because they greatly help low-income households, and especially those who are on low incomes in work? Does he also recognise that the greatest benefit of all for low-income households would be to achieve price stability during this Parliament, and will he redouble his efforts to that end?
    Mr. Portillo: My hon. Friend makes a good point—low inflation is extremely good for people on low incomes. It is of special benefit to the elderly. Even while we have low inflation, income-related benefits will rise, at the next increase, by about 3·9 per cent. That is obviously well above the rate of inflation, and it is a great deal better than the increase that will be experienced by most of the people who are in work.
    I am sure that my hon. Friend will also think that the rates of withdrawal for people who are on benefit are an important factor, and I would remind him that now only per cent. of households face a withdrawal rate of more than 90 per cent., whereas before 1988 there were 70,000 households that had a withdrawal rate of more than 100 per cent.
    Ms Harman: Can the Chief Secretary explain a bit further the answer that the Financial Secretary gave to an earlier question—that it is the Government's economic success that has caused them to break their promise to cut taxes? Can he also explain why low-income families will pay more tax after April than they would have done in 1979, whereas families on incomes of more than £64,000 will pay less tax than they would have done in 1979?
    Mr. Portillo: I thought that the point that my hon. Friend made, very effectively, was that if the Labour Government were in power today—if we had continued the allowances that the Labour Government had—there would be 1 million more tax-paying households. That burden would fall on the lowest paid, those who are least able to pay. The hon. Lady needs to consider her party's record closely before she starts to criticise us.
    Mr. John Greenway: Was not it this Government who introduced very low rates of national insurance for low-paid workers? Has not that greatly helped to get many people back into work?
    Mr. Portillo: My hon. Friend is correct. He will also remember that we have taken steps to help the most disadvantaged groups. He will remember that, in October 1992, we increased the income support premiums for pensioners by £3 a week for couples and £2 a week for singles. He will also remember that the £700 million worth of additional assistance given to help people pay 20 per cent. of the community charge was not withdrawn when the community charge was abolished.

    Private Finance Initiative
    Mr. Mudie: To ask the Chancellor of the Exchequer if he will make a statement on the present state of the private finance initiative.
    Mr. Kenneth Clarke: The Government are committed to a substantial increase in the level of private investment in the infrastructure of public services that were previously totally dependent on public funds. A number of major private finance projects, including the channel tunnel rail link and the Heathrow express, are already going ahead. The high-level working group that I set up under the chairmanship of Sir Alastair Morton is examining how private finance can be developed in many sectors of Government activity.
    Mr. Mudie: Is the Chancellor aware that the fear in the country is that there are more announcements than activity? The right hon. and learned Gentleman announced three new schemes in the Budget—the extension of the docklands railway to Lewisham, new air traffic control for Scotland and the refurbishment of the west coast main line. Can he tell the House which of those proudly announced projects has a private sponsor or a construction start date?
    Mr. Clarke: Well, they are all being progressed—[Laughter.] The Labour party has the glorious record of cutting capital investment in the public services of this country by one third at a stroke, when the International Monetary Fund instructed it to do so, and it still betrays a total absence of knowledge about the management of major projects. We are now defining the projects described, and identifying private sector partners. For example, following my announcement, we shall progress to modernise and upgrade the west coast main line in a way that the economic policies of the Labour party would plainly never succeed in doing.
    Mr. Dykes: As my right hon. and learned Friend mentioned the channel tunnel scheme, may I ask him whether he is aware that Customs and Excise and other bodies are planning to have 400 officials at the tunnel entrance on the British side? Will he look into that, to see whether it squares with the single market?
    Mr. Clarke: I certainly think that the Government should ensure that the costs that they incur in necessary controls and security protection on the trains should be kept to the barest minimum. I am sure that the Departments responsible will be kept up to that by my right hon. and hon. Friends and myself. Clearly, we have particular regard to our obligations under the single market, one result of
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    which has been the removal of all routine Customs and Excise frontier checks on imported goods, and a substantial lifting of the bureaucratic burden that previously bore on importers and exporters.
    Mr. Beith: If all those projects are "progressing", will they take as long as the Jubilee line did to progress through the process of working out a private sector initiative? Is not the truth that while other countries get ahead with, for example, the link to the channel tunnel, only in this country do the Government wait for private finance before undertaking essential infrastructure projects?
    Mr. Clarke: The Committee that will consider the Bill on the channel tunnel rail link will have to take into account the hundreds of objections and detailed points that individual members of the public want to make about the route. The Government have just announced the latest batch of decisions about the route, the terminus and the terminals. The Opposition are naive in believing that in this country, or in any other, one can announce a great new project and start construction the following day. The method that we use employs a more rigorous planning system than that enjoyed by any of the populations on the continent. We are using private finance to advance such projects, just as other countries are doing. The attitude of the Labour and Liberal parties towards progressing public infrastructure projects is childish, naive and extremely old fashioned.
    Mr. Evennett: Will my right hon. and learned Friend confirm that, under the Government, public expenditure has increased in the priority sectors of health, education and law and order, and that Conservatives believe in both public and private finance being used to improve our public services?
    Mr. Clarke: Capital investment in the health service has increased enormously under the Government, and capital investment in the railways and roads is roughly double what it was when we took over. We seek to increase both the amount and the quality of investment in the infrastructure of our public services by bringing in the private sector. Our firms and banks are good at enabling countries overseas to do that, and we shall do it here, too. As a result, we shall have the infrastructure that we need, the taxpayer will not have to finance it entirely, and we shall have well-judged, well-managed projects which prove efficient to run thereafter. That is the way in which the world is going—a way which the Labour party is plainly completely incapable of understanding, despite its history of failure on the capital investment front.
    Mr. Darling: The Chancellor will recall that, on a wet night in Glasgow last September, he announced 78 new projects to be financed jointly by the private and the public sectors. Given his mastery of detail, will he tell us how many of those projects have a firm start date? Does he accept that, although tarmacking the car park of Eastbourne hospital is no doubt desirable, it is hardly the stuff of economic regeneration, whereas building the channel tunnel is? Last month, he said that the channel tunnel rail link had not even been designed yet. Will he tell us this month whether it will be completed this century or the next?
    Mr. Clarke: Heathrow express is under construction. It is financed by the public sector, is being built by the private

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    sector and will provide London with a high-speed main line link between the centre of London and Europe's busiest hub airport.
    The next stage in developing the channel tunnel rail link, as I have already described, involves the decisions that my right hon. Friends will announce on the routes, terminals and intermediate stations. Those decisions matter to the people of Kent and east London. The next stage is to have a competition for the private sector—the managers and financiers of the project. A Bill also has to go through the House—[HON. MEMBERS: "When?"] No Minister in any Government who were controlled by a sensible party would announce the construction date on the day that the project was announced. We are progressing it quickly and efficiently and will produce a high-speed channel tunnel rail link of a kind that is well managed and matches anything produced elsewhere in the world.

    EC Growth Rates
    Mr. Peter Ainsworth: To ask the Chancellor of the Exchequer what growth rates the European Commission predicts for each EC country next year, in increasing order.
    Mrs. Gillan: To ask the Chancellor of the Exchequer what growth rates the European Commission predicts for each EC country next year; and if he will list them in reverse order.
    The Paymaster General (Sir John Cope): The European Commission has forecast that the United Kingdom will have the fastest growth of major European Community countries in 1994–95.
    Mr. Ainsworth: Is my right hon. Friend aware that, during my formative years in the 1960s and 1970s, Britain lagged well behind France and Germany in economic growth? Does he not think that the fact that our growth now exceeds that of both those countries has a great deal to do with our competitive tax system, our competitive labour market and our constant war on red tape? Does he not also think that our European partners have much to learn from that example and that Opposition Members have a great deal to learn from their own mistakes?
    Sir John Cope: Yes, all the factors that my hon. Friend has mentioned were important in that matter. The fact is that the 1980s was the first decade since the war in which the British economy grew faster than the economies of Germany and France. We are beating them again now.
    Mrs. Gillan: Does my right hon. Friend agree that, with that excellent news of Britain's prospects, it is hardly surprising that the Germans want to invest in Rover and in Britain? Does he further agree that the Opposition parties are completely irresponsible in their attitudes towards business and jobs in this country, as shown by the downbeat and distorted message about our economy that they send out to inward investors? Will he please put the Opposition right and say that we want inward investors in the United Kingdom? We have low corporation tax rates, a skilled and willing work force and the best prospects of any economy in the European Community.
    Sir John Cope: I entirely agree. We want investment —inward investment and all types of investment. In the latest quarter for which we have figures, manufacturing investment was up by 2 per cent.
    Mr. Hoon: Every other European Government believe that sustainable growth can occur only in the context of a system of managed exchange rates. Does the Minister agree?
    Sir John Cope: The exchange rate is important, but I do not agree with the way in which the hon. Gentleman expressed the point.
    Mr. John D. Taylor: Does the Minister agree that the favourable comparison of the United Kingdom with other European Community countries in terms of economic growth is almost solely due to the low interest rates that have applied in the United Kingdom, which became possible only following our departure from the exchange rate mechanism? Why, then, do the Government give the impression that they want to return to the ERM?
    Sir John Cope: Interest rates were falling before we left the exchange rate mechanism. I agree that interest rates are important. Certainly, our present low interest rates are important in sustaining growth.

    Mortgages
    Mr. Ottaway: To ask the Chancellor of the Exchequer if he will make a statement on the marketing of low-interest mortgages.
    The Economic Secretary to the Treasury (Mr. Anthony Nelson): The form and content of advertisements for credit, including mortgage credit, are governed by regulations made under the Consumer Credit Act 1974. Those regulations are intended to ensure that advertisements convey a fair and reasonably comprehensive indication of the nature and true cost of loans to prospective borrowers.
    Mr. Ottaway: Is my hon. Friend aware that building societies offering low-interest mortgages—I have an example here of one of 3·6 per cent.—are also insisting that it is compulsory to take out captive insurance for the building and contents? Is he aware that the premiums for such captive policies are way above the market rate, which explains how the mortgages can be offered at such a low cost? Does he agree that that is misleading for the financially unaware? Will he please investigate the matter?
    Mr. Nelson: I am aware of the advertisement to which my hon. Friend draws my attention. I assure him that the Government are, and would be, concerned about any instances of unfairness and disadvantage in the selling of tied-in products. The Director General of Fair Trading and the Department of Trade and Industry are looking at the tying-in provisions of the Courts and Legal Services Act 1990. A balance must be struck between increased consumer protection and increased costs to businesses. I assure my hon. Friend that the authorities and I will look carefully at any particular examples that he and others draw to our attention.
    Mr. Betts: The Minister will no doubt argue that mortgage rates have come down since Black Wednesday; the Government can point to that fact. However, many of my constituents are currently paying virtually the same rate for their personal loans as they were paying in September 1992. The banks have simply profiteered from falling interest rates during the period. What action have the Minister and his colleagues taken in the intervening period

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    to raise the issue with the banks and to encourage them to bring personal loan rates down, which would benefit many of my constituents?
    Mr. Nelson: The hon. Gentleman should know that the former Chancellor of the Exchequer raised the matter on a series of occasions with the leaders of the commercial banks. They, in turn, responded with codes of practice about announcing reductions in the rate of interest and sought to explain that they had adjusted downwards their rates of interest. However, it is undoubtedly true to say that they have taken the opportunity somewhat to widen their margins from their previous levels.

    Panel of Independent Forecasters
    Sir Thomas Arnold: To ask the Chancellor of the Exchequer what assessment he has made of the work of the panel of independent forecasters.
    Mr. Kenneth Clarke: I have read the panel's reports with interest, and I look forward to receiving the next one later this month.
    Sir Thomas Arnold: Will my right hon. and learned Friend confirm, yet again, that he has absolutely no intention of disbanding the panel?
    Mr. Clarke: Yes.
    Mr. Radice: Has the Chancellor noted that the majority of the independent panel advised against tax increases in his Budget? Does he agree that the total of the two Budgets' tax increases, which amounts, as he told the Treasury Select Committee, to 7p on the standard rate of tax, is in danger of choking off the recovery?
    Mr. Clarke: Different forecasters have had different views at different times. On this occasion, the members of the panel of forecasters are rather nearer to agreeing with each other than usual. Most of them are very supportive of the Budget. They are all revising their forecasts in the light of the fact that our determined action to ensure that we got control of public borrowing has restored business confidence to an all-time high. They now share our forecast that we can expect gross domestic product to grow by about 2½ per cent. in the coming year. It is realistic to look for about 3 per cent. growth to be sustained thereafter. That growth can be combined with low levels of inflation. Inflation is now at its lowest level for about 20 years.
    I am also glad to see that forecasts for business investment are up. Business investment is forecast to rise by 3¼ per cent. in 1994. Total fixed investment is forecast to grow by 3 per cent. That means that sustained growth, with low inflation, based on investment and exports as well as consumption, lies ahead of us if we continue with the prudent economic policies that we are pursuing at the moment.
    Mr. Garnier: When my right hon. and learned Friend next discusses matters, especially investment, with the panel of independent forecasters, will he seek to persuade its members that it would be a good idea to lower capital gains tax rates and that, eventually, capital gains tax should be abolished altogether?
    Mr. Clarke: If someone could persuade them of that, no doubt they would add their voices to the advice of that kind that comes to me occasionally from various quarters, not least from my hon. Friend.
    Mr. Nicholas Brown: I understand the Chancellor's difficulties in answering questions about tax burden forecasts, so in an effort to be helpful, may I ask him about public expenditure forecasts instead? Will he share his well-known mastery of the details with the House and say what is the size of the civil service and what he intends the size of it to be in three years' time?
    Mr. Clarke: The share of gross domestic product taken by the state is forecast to fall from 45 per cent., its peak during the present recession, to 41 per cent. on the plans that I have announced—that compares with 46 per cent. under Labour. The Budget demonstrated a strong control over spending. Total Government spending is forecast to rise by 1 per cent. in real terms next year—far below the level of growth of the economy. The new control total, thanks to the efforts of my right hon. Friend the Chief Secretary, will rise by an average of only about ¼ per cent. in real terms over the next three years. That is why we are forecasting that spending will be on a downward trend and that the total tax burden on the public and on the economy will also be on a downward trend.

    Insurance Tax
    Sir Peter Fry: To ask the Chancellor of the Exchequer what plans he has to extend exemptions proposed for the new tax on insurance and assurance contracts.
    Sir John Cope: None, beyond those in the Finance Bill.
    Sir Peter Fry: I understand the need for few exemptions, but will my right hon. Friend bear in mind the difficulties that some health care bodies will experience, such as the Hospitals Guild in Northampton, which covers my constituency? That is a non-profit-making body, which passes on most of its surplus to the national health service and to charity. The effect of the tax will be to reduce that help considerably. Most of all, it will cause great difficulties in accounting for the tax on low premiums, some of which are as low as 20p a week. Does my right hon. Friend agree that there is a case for exempting those low premiums?
    Sir John Cope: Of course I have received representations on that matter, but, as I made clear in the debate on Tuesday, we believe that it is best to apply the tax at a low rate over a wide area, rather than to pick and choose between different types of general insurance.
    Ms Eagle: Will the Minister admit that the new tax is incredibly regressive and that it hits those who live in high-crime areas, who have much higher premiums as a result of suffering more crime? What can be more unfair than a tax on premiums, which taxes people's security? The Government are making money from people's fears.
    Sir John Cope: As I explained in some detail on Tuesday, the tax is mildly progressive.
    Mr. Shersby: Will my right hon. Friend give careful consideration to continuing the exemption of tax on premiums for private health insurance for higher rate

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    taxpayers who are pensioners? Is he aware that those pensioners relieve the national health service of a substantial burden of expenditure each year?
    Sir John Cope: What my hon. Friend says is quite right. However, I do not think that it affects the insurance premium tax.

    Family Tax Burden
    Mr. Eastham: To ask the Chancellor of the Exchequer how much he estimates families on 75 per cent. or less of average earnings can expect to pay in income tax and national insurance from this April; and what the figure was for 1978–79.
    Mr. Dorrell: A single earner family on 75 per cent. of average earnings will pay about £68 a week in income tax and national insurance contributions next year. That compares with about £79 a week if the 1978–79 tax regime had still been in force arid indexed for inflation.
    Mr. Eastham: Several times this afternoon the Minister has mentioned the direct purchasing power of the average family. May I remind him that average purchasing power, with VAT at the 1979 level, was £2·49 and that the same purchasing power for the average family with VAT in 1994–95 will be £21·92?
    Mr. Dorrell: I do not think that the hon. Gentleman could have heard the answer that I gave him. He asked me how much the tax burden had gone up, by implication, as a result of the changes that my right hon. and learned Friend announced, compared with what the position would have been in 1978–79. The answer that I gave him, which he very understandably did not follow up, was that our tax burden, the direct tax burden—[HON. MEMBERS: "Ah."] That was the question which I was asked and to which I gave an answer. The direct tax burden next year, on a 1978–79 basis, would have been £79. It will, in fact, be £68.

  PRIME MINISTER

    Engagements
    Sir John Hannam: To ask the Prime Minister if he will list his official engagements for Thursday 3 February.
    The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Sir John Hannam: Does my right hon. Friend agree that the visit by Gerry Adams to America has done nothing to advance peace in Northern Ireland? Will he assure the House that the lies and evasions of Sinn Fein will not be allowed to hold up progress towards a settlement in Northern Ireland?
    The Prime Minister: I agree with my hon. Friend, and that will be the overwhelming view of right hon. and hon. Members. The way to advance peace in Northern Ireland is for the IRA to end violence now. That is in its hands, and it is in Mr. Adams's hands and I believe that he could and should do it. However, progress in Northern Ireland cannot and will not wait for Sinn Fein. The Government propose
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    to carry forward actively the political talks with the constitutional parties and with the Irish Government, In further meetings, my right hon. and learned Friend will be floating ideas to give further focus and direction to all three strands of the talks process. This is a democratic process. If Sinn Fein and the provisionals want to be part of it, they must renounce violence for good. The way is open to them, but it is for them to take it.
    Mr. John Smith: Is it correct that the Government intend to raise prescription charges from £4·25 to £4·75 —an increase of 11·6 per cent., which is more than six times the rate of inflation?
    The Prime Minister: When we are in a position to make an announcement to the House about that, we will make an announcement in the normal fashion.
    Mr. John Smith: Does the Prime Minister not appreciate that his likely increase, and indeed any increase, in prescription charges comes on top of massive tax increases already being imposed by the Government on the ordinary people of this country? Given all that, for once could not the Prime Minister spare the sick?
    The Prime Minister: I think that, as the right hon. and learned Gentleman will recall, only those who can afford to pay prescription charges are asked to pay them. From memory, around 80 per cent. of prescribed items are now free of charge. In 1979, it was, I believe, around 55 to 60 per cent.—a significant change. There is no firm evidence in any information that we have that prescription charges deter patients from obtaining necessary medication. The right hon. and learned Gentleman knows that. He makes no ackowledgement of the fact that most people do not pay prescription charges. He should get his facts right before he pursues these matters in this fashion.
    Mr. John Smith: It is quite clear from that that prescription charges are going to go up. Given that the Public Accounts Committee has identified millions of pounds that have been wasted by the Government's health service quangos, would it not make much more sense to tackle that rather than to seek to tax the sick?
    The Prime Minister: The revenue from prescription charges this year is sufficient to fund around 70,000 hip replacements or 45,000 coronary artery bypass grafts. What I should like to hear from the Opposition, for all their complaints about prescription charges, is whether they would abolish prescription charges. If they would, who woud pick up the bill of over £260 million? Would it be the national health service, with fewer people treated? Would it be the taxpayer? Or would they borrow more? That is another example of the right hon. and learned Gentleman saying that he would control expenditure, yet every opportunity he gets, he asks for more expenditure to make cheap political points.
    Mr. Burns: To ask the Prime Minister if he will list his official engagements for Thursday 3 February.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Burns: Will my right hon. Friend confirm that the Government will close any genuine tax loopholes, but will not close what the CBI has shown are not genuine loopholes, as, by so doing, they would fail to raise revenue and would merely damage the economy in general and the

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    economic recovery in particular? Does my right hon. Friend agree that that blows away the smokescreen of the tax-and-spend policies of the Labour party?
    The Prime Minister: On the last point, my hon. Friend is generous to assume that the Opposition have tax and spending policies. In successive Budgets, we have closed tax loopholes and tackled abuse. My right hon. and learned Friend will continue to do so wherever he finds abuse. The Labour party, with its hare-brained schemes, is not genuinely concerned about closing loopholes. It would close not loopholes but businesses. That would be the result of its policies. As the CBI says today, Labour supports higher taxes on business. That is why Labour will always be the enemy of enterprise, of employment and of British business.
    Mr. Foulkes: Has the Prime Minister had a report of yesterday's debate on the Child Support Agency, during which hon. Members on both sides of the House related tales of heartbreak and hardship caused by the operation of the agency and asked the Prime Minister and the Government to undertake another review of its working? Will the right hon. Gentleman now announce such a review so that people may look forward to an end to the hardship and the heartbreak?
    The Prime Minister: I read with some care yesterday's debate on the Child Support Agency, and I am glad to say that the principles behind it received a warm welcome from every part of the House. The reforms will have a significant effect once the maintenance bills of those who qualify are reduced. When the legislation was being introduced, we stated that it would be kept under review. We are still true to that pledge—it still applies.
    Mr. John Greenway: To ask the Prime Minister if he will list his official engagements for Thursday 3 February.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Greenway: Will my right hon. Friend join me in welcoming the £26 million investment by Nestle Rowntree, at its York factory, in the new production line for Kit Kat, which is one of Europe's leading confectionery brands? Does not that illustrate very clearly the advantage, in terms of new investment, of multinational companies having a significant presence in Britain?
    The Prime Minister: I believe that it most certainly does. I had hoped to visit that factory in Yorkshire last week, but, unfortunately, was unable to do so. I was looking forward to seeing the new investment and to congratulating the management and the work force on their success. What that inward investment shows is that Britain is increasingly competitive and increasingly attractive to overseas investors. That is good news for exports, good news for orders and good news for jobs. Conservative Members welcome inward investment—we do not carp at it whenever it is received.
    Mr. Mallon: The Prime Minister no doubt has noticed that during his visit to the United States Mr. Adams provided some clarification by indicating that he does not accept the principle of self-determination based on consent. Indeed, Mr. Adams said that it would be nonsense to argue for such a thing. Does the Prime Minister agree
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    that that runs counter to article 1A of the Anglo-Irish Agreement, counter to paragraph 4 of the joint declaration and counter to the view of every political party in Ireland, excluding the Democratic Unionist party and Sinn Fein, and that it is not the view of the vast majority of the people of Ireland who support the joint declaration? Can he assure the House that the two Governments will jointly pursue the objectives of the joint declaration and there will be no unilateral deviation from it in the interests of short-term expediency?
    The Prime Minister: We will certainly continue to pursue the objectives of the joint declaration—there should be no doubt about that. In America, Mr. Adams avoided the central issue on every occasion he could. Sinn Fein has been challenged to give up violence—it has not done so. I do not believe that I can put it any better than today's edition of the Irish Independent. I quote:
    "It is a disgrace that he"
    that is, Adams—
    "should go on mouthing platitudes while the Provisional IRA continues its violence."
    Mr. Skinner: The Prime Minister is jealous—Adams was a hit and he was ignored.
    The Prime Minister: I do not believe that people in Britain or in Ireland have been deceived by Adams's performance, with the possible exception of the hon. Member for Bolsover (Mr. Skinner).
    The Irish Deputy Prime Minister, Mr. Spring, yesterday posed the critical question: Has Adams got the leadership and the courage to take his people with him in carrying out his own stated commitment to peace and to going the extra mile? That is the question to which everyone awaits an answer.

    Ash-cum-Ridley (Visit)
    Mr. Dunn: To ask the Prime Minister if he has any plans to visit Ash-cum-Ridley.
    The Prime Minister: I have no immediate plans to do so but I will keep it in mind for the future.
    Mr. Dunn: Will my right hon. Friend confirm that the range and variety of schools available to parents in my constituency and across Kent exist solely and wholly because of the Government's policies and that choice and variety in education would be eliminated if the nightmare policies of the Labour party were endured?
    The Prime Minister: My hon. Friend is entirely right about that. His county of Kent has self-governing schools, selective schools, maintained schools, comprehensive schools and schools that specialise in technology. That is the sort of choice that we believe it is right to offer to parents and will continue to seek to offer to parents. Most of that would be swept away by a Labour Government. They would abolish self-governing schools, abolish city technology colleges, abolish performance tables and abolish the right of parents to know precisely what is happening in the schools that their children go to. As ever, the Labour party would put dogma before common sense.
    Mr. Barnes: Could I persuade the Prime Minister to go to Ash-cum-Ridley, wherever that might be, instead of to Renishaw, Holmewood, Clay Cross and areas in my constituency that have high unemployment and have been

    1025
    devastated by the Government's policies, because we think that the Government are a waste of time? There are other places that the Prime Minister should go—he could take a break and go to Ash-cum-Ridley.
    The Prime Minister: If my hon. Friend the Member for Dartford (Mr. Dunn) cannot persuade me to go to Ash-cum-Ridley, I do not think that the hon. Gentleman will have much luck. As for employment, I share with the hon. Gentleman the wish to increase employment and reduce unemployment in this country. He will have noticed that it has been falling steadily for the past year in this country, unlike any other country in western Europe, and I expect it to continue to fall throughout this year.

    Engagements
    Mr. Oppenheim: To ask the Prime Minister if he will list his official engagements for Thursday 3 February.
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Oppenheim: Does my right hon. Friend agree that it was not the sale of Rover to BMW that lost Britain the chance of having a genuine global player on world car markets? Rather, that chance was lost during the era of misguided Government direction, industrial practices and unfettered union power when British Leyland became the butt of international music-hall jokes. Can my right hon.
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    Friend imagine at that time anyone wanting British Leyland as a gift, let alone paying £800 million for the company?
    The Prime Minister: Rover certainly has been transformed, and I congratulate the work force and the management on their efforts to bring that about, as well as the investment that has been put into the company by British Aerospace. Rover now produces a world-quality product, and it is winning market shares in extremely competitive markets.
    As my hon. Friend said, the contrast with the 1970s could be scarcely sharper. Mass meetings at that time were addressed by Red Robbo, and taxpayers' money was being poured into a bottomless pit. Rover is now a world beater and it will become better.
    Mr. Caborn: Will the Prime Minister tell the House whether he can give assurances to individuals, companies or organisations about the disbursement of the millennium fund and the lottery fund for the construction of sporting facilities?
    The Prime Minister: No, we have given no commitments on that yet. We are looking at the establishment of a committee to determine how the millennium fund will be disbursed, and it will be a considerable period before we are in a position to say what money will be disbursed and where. Consideration of the matter is still in its infancy and it will be some time before we are able to make an announcement.

Business of the House
3.30 pm
Mrs. Margaret Beckett: Will the Leader of the House state the business for the forthcoming week?
The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The business for next week will be as follows:
MONDAY 7 FEBRUARY—Until about Seven o'clock, Private Members' Motions.
There will be a debate entitled "Taking Rio Forward" on a motion for the Adjournment of the House.
TUESDAY 8 FEBRUARY—Second Reading of the Deregulation and Contracting Out Bill.
WEDNESDAY 9 FEBRUARY—Consideration in Committee of the Sunday Trading Bill (Second Day).
Supplemental timetable on and consideration of Lords Amendments which may be received to the Statutory Sick Pay Bill.
Motion on Section 5 of the European Communities (Amendment) Act.
THURSDAY 10 FEBRUARY—Opposition Day (Third Allotted Day).
There will be a debate on the Child Support Agency on an Opposition Motion.
FRIDAY 11 FEBRUARY—Private Members' Bills.
MONDAY 14 FEBRUARY—Motion on the European Parliamentary Constituencies (Wales) Order.
Motion on the European Parliamentary Constituencies (England) Order.
Motion on the European Parliamentary Elections (Changes to the Franchise and Qualifications of Representatives) regulations.
Motion on the Airports (Northern Ireland) Order.
Motion on the Health and Personal Social Services (Northern Ireland) Order.
Mrs. Beckett: May I tell the Lord President that we appreciate the opportunity to use Opposition time for a full debate on the future of the Child Support Act? The Government shirked that this week, although we regret that it has been left to the Opposition to do what we think should be the Government's job.
Will the Lord President not shirk the pressing need for a debate in Government time on the devastating report published by the Public Accounts Committee on today's unprecedented waste, mismanagement and fraud? That is especially important as the huge tax hikes, on which debate was guillotined this week, are a direct result of the Government's failure and incompetence in that respect.
Will he ensure that the Home Secretary makes a statement to the House about any change in policy—a welcome, even if insufficient change—on plans to take political control of the police and the courts? The Home Secretary's predesessor did so when the policy was changed during proceedings on the Criminal Justice Bill 1992.
Finally, has the Lord President seen the report in The Sun in which the Home Secretary's predecessor—the present Chancellor of the Exchequer—claims that he is the Government's fireman, and that he is always being brought in to clear up the mess which has been left by others? Will the Lord President give those "others" the right of reply?
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Will he extend that particularly to those, such as the present Home Secretary, who are having to follow the present Chancellor?
Mr. Newton: First, I ought to apologise to the House, because I failed to turn over the page and announce the European Standing Committees for next week. I will rectify that omission.
The House will also wish to know that European Standing Committee "A" will meet on Wednesday 9 February at 10·30 am to consider European Community documents Nos. 8757/93 and 10761/93 relating to bovine somatotrophin.
[Wednesday 9 February:
European Standing Committee A—Relevant European Community documents: 8757/93 and 10761/93, bovine somatotrophin (BST); relevant European Legislation Committee reports: HC 48-ii ( 1993–94) and HC 48-vi ( 1993–94.]
The right hon. Member for Derby, South (Mrs. Beckett) asked several questions. First, I see no question of my right hon. and learned Friend the Home Secretary seeking at any stage to take political control of the police. Yesterday, he announced some changes in the proposals previously made. Those changes responded to representations made in another place and elsewhere. That is entirely sensible, responsible and right.
As for the right hon. Lady's comments on the Public Accounts Committee, it should be made clear once again, as my right hon. Friend the Prime Minister has several times made it clear, that the report did not suggest that there had been any decline in standards. It rightly criticised breaches, and the Government have made it clear that, in respect of any such breach, they will be determined to see that the proper action is taken.
Lastly, as it happens, I have not seen the story in The Sun to which the right hon. Lady referred, but I shall make sure that I look at it, and I shall read it with care and interest.
Sir Anthony Grant: Would it be possible some time next week, or soon after, for us as gentlemen to consider the problem of lady Members of Parliament, and in particular the difficulties of attracting ladies to take part in our proceedings? One of the inhibiting factors is the lunatic way in which we conduct our affairs, which is a subject of contempt in the country outside, irritation to ladies and derision in other countries? Will my right hon. Friend tell us what is happening and who is responsible for blocking the all-party Jopling report?
Mr. Newton: As I understand it, many Opposition Members, both ladies and gentlemen, strongly support the proposals in the Jopling report. As for who is blocking the prospect of progress on the proposals, there was a perceptive article in today's The Times by Peter Riddell, which I commend to the attention of both my hon. Friend and others in the House. Beyond that, I do not wish to speculate.
To what extent we always gain from the attendance of lady Members in the House was called into question during the guillotine proceedings earlier this week, in which both a right hon. lady and an hon. Lady—the right hon. Member for Derby, South and the hon. Member for Peckham (Ms Harman)—who spoke from the Opposition Front

1029
Bench ended up denouncing the Government at one and the same time for providing too much time and too little time for discussion of the Finance Bill.
Mr. David Rendel: Following the embarrassing decision in the High Court last Friday that the guidelines given by the Secretary of State to the local government review were illegal, can we have a statement from the Secretary of State on the future of the local government review, in particular in relation to the timetable, which must surely be put back, given that much of the work that has been carried out up to now has proved wasted and illegal?
Mr. Newton: As will soon become clear to the hon. Gentleman, he is rather overstating the effects of the decision. The effect of the judgment is to delete a single sentence from the guidance to the Local Government Commission. The rest of it still stands, and the reviews that are under way continue. The Government are not appealing against the court ruling.
Mr. James Hill: My right hon. Friend has probably read recently about the imperfections of car boot sales. The Customs and Excise men go there and recover a tremendous amount of smuggled wines and beers. Petty criminals use the sales to get rid of their stocks. At the same time, there is a health and safety factor, with electrical equipment in particular. Is it not time that someone should be the licensee of sites, and that supervision should be more profound?
Mr. Newton: I am certainly well aware of concerns expressed in many places similar to those which my hon. Friend has expressed. I know that my right hon. and learned Friend the Home Secretary and others are aware of those concerns. I shall bring my hon. Friend's remarks to their attention.
Mr. Martin Redmond: Will the Leader of the House join me and others in condemning the high price of children's footwear? If so, will he make parliamentary time available to debate the issue?
Mr. Newton: I certainly cannot undertake to provide parliamentary time specifically to debate that issue. The appropriate course is to rely on consumer pressure, of which no doubt the hon. Gentleman is part, to exert appropriate influence on those selling children's shoes.
Mrs. Ann Winterton: Has the Leader of the House noticed early-day motion 320 in my name, which has been supported by more than 200 hon. Members on both sides of the House?
[That this House expresses its deep concern at continuing reports that citizens of developed nations travelling abroad may be encouraging the use of children in prostitution and pornography; reaffirms its commitment to the principles of the United Nations Convention on the Rights of the Child which seeks to protect children from sexual exploitation; and calls upon Her Majesty's Government to seek to play an active role in bringing about concerted international action to tackle this problem and in particular to examine ways of ensuring that individuals involved in such exploitation are brought to justice within the United Kingdom.]
It deals with the exploitation of children, through pornography and prostitution, by tourists from developed nations visiting, predominantly, third-world countries.
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Could time be made available to discuss that important matter and its implications? We hope that the Government could lead other member states in the EC to negotiate with the Governments of, for example, the Philippines, Thailand and, in particular, Sri Lanka, which is a member of the Commonwealth and with which we have a close relationship?
Mr. Newton: My hon. Friend will be aware that my right hon. and learned Friend the Home Secretary will answer questions next Thursday, and she may wish to draw the matter to his attention. All hon. Members share concern about such matters and my right hon. Friends will be anxious to find appropriate ways to tackle those concerns as and when they can.
Mr. Barry Jones: Will the Leader of the House consider providing time for a debate on mad cow disease and whether it may enter the human food chain? Will he persuade Ministers to come to the Dispatch Box and to tell the House what research they have commissioned and what the latest advice they have received on whether mad cow disease could enter the human food chain? May I tell him about a distressing case in my constituency—
Madam Speaker: Order. I am afraid that I must intervene. We are not here to hear about cases or evidence, but simply to ask the Leader of the House for a debate on the subject.
Mr. Newton: I cannot promise time for a debate on the Floor of the House, but of course I shall bring the hon. Gentleman's question to the attention of my right hon. Friend the Minister of Agriculture, Fisheries and Food. Such matters may be relevant to the debate in Standing Committee A about bovine somatotrophin to which I adverted earlier.
Mrs. Angela Knight: Will my right hon. Friend consider an early debate on the provisions of the Local Government Act 1972 on councillor convictions and disqualification from office? Is he aware that the Derbyshire county councillor who was recently gaoled for fiddling his expenses retained his committee chairmanship while in gaol and until he lost his appeal this week? Does my right hon. Friend agree that that councillor should pay back that money, and that gaol on the rates must he stopped?
Mr. Newton: It is an astonishing story, and I am sure that those concerned locally will wish to draw it to the attention of the district auditor.
Mrs. Margaret Ewing: Since the Leader of the House has shown his attachment to the importance of the Jopling report, which perhaps applies only to hon. Members living in Greater London and has little significance to those of us who represent far-flung places, will he address the issue of "taking stock", which was defined by both the Prime Minister and Secretary of State for Scotland in the wake of the general election?
Given that the official Opposition have now comfortably voted with the Government to appoint Conservative Members from English constituencies to serve on a Committee that deals specifically with Scottish legislation, does he not feel that now is an appropriate time to debate the issue of "taking stock", which seems to be on the back burner?
Mr. Newton: This is the United Kingdom Parliament, and it is appropriate that it should operate as such. On the hon. Lady's last point, we are genuinely anxious to make progress, but I am afraid it is another of those issues on which progress is not as fast as we would like, because of the absence of the usual channels.
Mr. Iain Duncan Smith: Will my right hon. Friend consider whether we could debate the events surrounding the investigations into Westminster council? I am particularly concerned about a recent newspaper report which alleged that the investigations were tough, but most were conducted without those under investigation being told that they had rights to solicitors? By invoking the criminal sanction—which has been broken by almost every member of the press, and I gather many of the public—many of those who wished to clear their names were unable to do so.
Does my right hon. Friend agree that there has been a great travesty of justice because of the failure to allow individuals to clear their names so that they now stand guilty before they have had the opportunity to clear their names?
Mr. Newton: My hon. Friend probably understands that I would not wish to comment on his suggestions off the cuff. We are concerned—as everyone will be—to ensure that serious allegations are properly investigated. I am equally confident that those people who undertake such investigations will want to ensure that they are conducted in a proper manner, and will examine my hon. Friend's remarks.
Several hon. Members rose—
Madam Speaker: May I remind hon. Members that this question time relates to next week's business and is not an open question time to the Leader of the House? Hon. Members should be asking him to change the business next week so that they can discuss other matters. This question time is not just a free-for-all.
Mr. Peter Hardy: Does the Leader of the House recall that I have mentioned several times the serious situation facing the engineering steel industry in the Wentworth and Rotherham constituencies? Does he accept that such a debate is especially important now that the Government have decided to withdraw the iron and steel industries redundancy payments scheme for steel workers? Can we have a debate about that, if we cannot have one about the survival of the industry itself?
Mr. Newton: I well appreciate the hon. Gentleman's very appropriate constituency interest in those matters, but I cannot undertake to provide time for a debate.
Mr. Jonathan Evans: Will my right hon. Friend make time for an early debate on management of the South Wales police authority? He may be aware that there is widespread concern in south Wales over suggestions that 40 police stations may be closed. Many officers in the force, who are being approached with a view to repaying overtime, are concerned to make the contrast with my constituency, where the Dyfed-Powys police have recorded the lowest crime rate and the highest clear-up rate, and recorded a 13 per cent. fall in crime. Perhaps that contrast needs to be made in this Chamber.
Mr. Newton: One of my hon. Friends has just whispered to me that it must be the influence that my hon. Friend the Member for Brecon and Radnor (Mr. Evans) has on his constituency. In business terms, it seems possible that my hon. Friend might be able to advert to those matters when we discuss the Welsh local government finance orders.
Mr. Ian McCartney: Will the Leader of the House make time on Monday for the Secretary of State for Health to make a statement on the Swan report on the conditions in which seriously ill women are being kept in at Ashworth special hospital on Merseyside? That report follows the public inquiry undertaken by Sir Louis Blom-Cooper QC into the conditions at that hospital and the scandalous behaviour of staff employed there.
The chair of the special hospital has refused right hon. and hon. Members access to details of that report. As a result we cannot represent our constituents [HON. MEMBERS: "Question."] Will the Secretary of State make a full statement in the House on Monday about the contents of the Swan report?
Mr. Newton: I was not aware of the serious matters that the hon. Gentleman has mentioned. I will make quite sure that my right hon. Friend the Secretary of State for Health is made aware of them.
Mr. David Nicholson: Does my right hon. Friend agree that an early statement or debate on the progress of the Banham commission would enable the Liberal Democrat party to make clear its preference for the bureaucratic nightmare of regional government? it would also enable the right hon. Member for Yeovil (Mr. Ashdown) to make clear what he has hitherto only whispered—that he supports the break-up of Somerset into three, a proposal opposed by the majority of people in Somerset, by numbers of Liberal Democrat councillors at county, district, town and parish levels, and by myself and three Conservative parliamentary colleagues who represent the county?
Mr. Newton: My right hon. Friend will find that my right hon. Friend the Secretary of State for the Environment will be making those matters clear shortly and that they will be very much along the lines of what I said in response to an earlier questioner. I must express some doubt as to whether any such statement will draw clarity on this matter, or on any other, from the leader of the Liberal Democrat party.
Mr. D. N. Campbell-Savours: Could we have a debate next week on the right to buy, especially in light of the concerns being expressed in Rutland and Melton by council tenants, who want to know whether under British law it is now possible for companies—or whatever—to buy council houses as intermediaries at a £50,000 discount? They want to know, so can we have a debate on those matters next week?
Mr. Newton: I will simply say that, in my judgment, the hon. Gentleman is doing himself no good by this campaign.
Mr. Keith Mans: Bearing in mind the five implied spending commitments that the Labour party has made this week alone, including one this afternoon by the leader of the Labour party, will my right hon. Friend ensure next week and every week that we have a statement from

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the Chancellor of the Exchequer about the effects of those spending commitments on the taxation of everyone in the country?
Mr. Newton: What a very good idea.
Mr. Tony Banks: May we have a debate next week on London, please, and in particular on the state of London's roads? I do not know whether the Leader of the House has a chance to understand the chaos on London's streets when he is driving around in his ministerial limo being pampered by minions, but hardly a street in London is not being dug up at the moment. The Rotherhithe tunnel and the Albert bridge is closed; it is chaos out there. We need a debate to pin the blame on those responsible. If the Minister for Transport in London spent a little more time in this House rather than other people's houses, we could ask him some questions.
Mr. Newton rose—
Madam Speaker: Order. Before the Leader of the House responds, may I say that long questions prevent other hon. Members from asking questions. I am watching the clock, and I am always anxious to call all hon. Members, but if the questions are too long, I shall not be able to do so.
Mr. Newton: I might respond rather more sympathetically were I not conscious that the next public spending demand from the Opposition may well be more expenditure on the maintenance and improvement of roads.
Mr. Patrick Nicholls: Does my right hon. Friend agree that the time has come for a debate next week to consider early-day motions 341, 459 and 467, which have support from hon. Members on both sides of the House, and about which requests have been made for a number of weeks.
[That this House calls upon the Right honourable Member for Yeovil to disassociate himself from the description by Tom Dommett, a Liberal Democrat County Councillor, of his constituents in Somerset, as 'Yids, Nig-nogs, !ties and Pakis … no better than New Age scum and vermin'; believes that the use of such grossly offensive language about people of other nationalities and races is wholly unacceptable in public life; notes that this is yet the latest example of blatant racism within the Liberal Democrat Party; and calls upon the Leader of the Liberal Democrat Party, the Right honourable Member for Yeovil, to expel Councillor Dommett from the party forthwith.]
Will that not give us the opportunity to discover why the Liberal Democrat party can lecture us in a high moral tone and then use racist literature? Would it not also give us an opportunity to have a look at its latest handbook—
Madam Speaker: Order. The hon. Gentleman must come to the point. I am always anxious to call as many Members as possible. This is an important time for Back Benchers, but if hon. Members abuse it, I shall have to curtail it.
Mr. Nicholls: —which would denigrate people for having regional accents?
Mr. Newton: My hon. Friend was in danger of putting some strain on my support system by linking quite so many widely spaced early-day motions, but I understand that they all refer to the leader of the Liberal Democrat party,
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to whom I have already made some reference. All the persistent and understandable efforts from my hon. Friends to extract things from the leader of the Liberal party appear to be meeting little success, but we shall continue trying together.
Mr. Terry Lewis: Can we have a debate next week on the millennium fund? It seems that every day projects are claiming that they have already keyed into the millennium fund, when the committee has not yet been appointed. It may well be that the Prime Minister himself gives tips and winks to certain projects.
Mr. Newton: The hon. Gentleman will have heard what my right hon. Friend the Prime Minister said on that matter only a few moments ago, and I certainly do not intend to add to it.
Mr. Graham Riddick: Now that there seems to be increased interest on all sides of the House in local government corruption, will my right hon. Friend organise a debate on that topic, and invite comment and condemnation of nepotism and corruption on Labour-controlled Monklands council from the local Labour Member of Parliament, the Leader of the Opposition, who has been strangely silent on the matter?
Mr. Newton: As it happens, I can claim that we are providing some fairly substantial opportunities. There is, of course, a local government debate to follow business questions this afternoon, and helpfully, the hon. Member for Dundee, East (Mr. McAllion) has "the future of Scotland's democracy" as the private Member's motion on Monday. I have not been informed whether the right hon. and learned Gentleman the Leader of the Opposition intends to speak about Monklands, but that possibility should be considered.
Mr. Andrew Faulds: When are the Government likely to make a statement about the apology that they should be extending to the Council of Europe, the Western European Union, NATO, foreign visits by CPA and IPU delegations—[Interruption.]—let me finish, If you would—[Interruption.]—I have a much more attractive voice than you silly beggars—because of the non-attendance of British delegations, a Luddite policy that has been adopted by certain honourable dunderheads in the House?
Mr. Newton: I do not know that I would have cared to apply such a description to those at whom I understand it to have been aimed—particularly the right hon. Member for Derby, South (Mrs. Beckett), who appears to have other preoccupations, and apparently did not even hear what was said by her hon. Friend the Member for Warley, East (Mr. Faulds). Perhaps I should tell her that her hon. Friend was extremely unflattering about her.
Mr. Christopher Gill: Later this afternoon, the House will have an opportunity to discuss certain aspects of local government finance; presumably, in the fulness of time, we shall be given an opportunity to discuss local government structure, following the report of the Local Government Commission. Will my right hon. Friend consider providing us with an early opportunity to debate the functions of local government, and, in particular, to investigate whether the principle of subsidiarity is being fully applied in that context?
Mr. Newton: I am sure that my hon. Friend's ingenuity, combined with his persistence in raising the matters that he clearly has in mind, will enable him to find some way of speaking on the occasions that I have already provided.
Mr. David Hanson: Will the Leader of the House arrange for a debate early next week about quangos —especially their membership—with particular reference to Wales? Or is he happy with the present position, in which many members are still Tories, are unaccountable, and are often unelectable?
Mr. Newton: There is no question of appointees' being unaccountable, whatever their political provenance. We shall ensure that the bodies concerned are conducted properly, using every means at our command.
Mr. Gary Streeter: Will my right hon. Friend please make time next week for an urgent debate on public expenditure? I feel that the House needs to analyse Labour's new policy of increasing spending on health, housing and overseas aid by £16 billion without raising taxes or increasing borrowing. Has Labour discovered a magic formula, or is it just an illusion?
Mr. Newton: I think that it is an attempt—probably the world's largest ever attempt—to have your cake and eat it. We see it every day. I am a bit confused about whether pledges not made in the House count in these calculations; that appears to be another variant of the Opposition's habit of making promises that they can later disown.
Mr. Bob Cryer: On Tuesday, we are to debate the Deregulation and Contracting Out Bill. Will a motion be tabled authorising the Procedure Committee to embark on the process of setting up another Committee to scrutinise the power that the Bill gives a Minister to repeal whole Acts of Parliament? Alternatively, before any such move is made, will the House have to wait until the Bill has been passsed before such a motion is tabled? If the Procedure Committee is embarking on the introduction of such a structure without the authority of the House, why is it doing so?
Mr. Newton: My right hon. Friend the Member for Honiton (Sir P. Emery), the Chairman of the Procedure Committee, is visibly present; no doubt he will respond to what the hon. Gentleman has said, although I acknowledge that he cannot do so now. I have sent both the hon. Gentleman and my right hon. Friend copies of a paper outlining some of the Government's ideas, and suggesting that we would welcome the thoughts of the Procedure Committee. I consider that an entirely appropriate and sensible way in which to proceed. We shall then be able to consider what matters should be put before the House.
Dr. Liam Fox: Will my right hon. Friend make time for a debate on the potential abolition of Avon county council, whose spending priorities are becoming ever more bizarre? Its decision this week to spend £100,000 on traveller liaison officers was greeted with outrage in my constituency, where these people are regarded as an absolute nuisance. Our only possible salvation will lie in the abolition of this dreadful, unwanted and unloved county council.
Mr. Newton: Perhaps I might urge my hon. Friend—should he catch your eye, Madam Speaker—to repeat and elaborate on those remarks in the debate that will shortly take place.
Mr. Eddie Loyden: The Leader of the House referred to BST in his statement, but I apologise for not understanding exactly what he said. Will there be a debate on BST before the Government take a final decision on its use?
Mr. Newton: I announced that European Standing Committee A would be considering documents relating to bovine somatotrophin. The purpose of its deliberations is to inform the Government's approach.
Mr. Harry Greenway: Could we have a debate next week on the new decisions relating to aircraft noise and night flights over west London and elsewhere, in view of their great importance to my constituents, and the people of west London in general, who want no night flights at all?
Mr. Newton: I well understand my hon. Friend's concerns. I am not in a position to promise a debate on that matter, but I am sure that my colleagues will examine his remarks.
Mr. Paul Flynn: Before Friday will the Leader of the House reconsider the subject of tobacco advertising, which is covered in early-day motion 1, signed by 165 hon. Members?
[That this House calls for a ban on tobacco advertising.]
The tobacco industry has told me that it has given inducements to the Conservative party to ensure that such a ban is not introduced. Will the Leader of the House confirm that Conservative Members will have a free vote next week and be able to support what the evidence cries out for—a total ban on tobacco advertising, not the half-hearted half-ban that his party intends to introduce?
Mr. Newton: As the hon. Gentleman knows, following earlier documents the Government will shortly be publishing an action plan describing in detail the measures that they propose in order to reduce even further the prevalence of smoking. That document will describe the Government's plans for the control of tobacco advertising. I think that the hon. Gentleman had better await that document.
Mr. Michael Bates: Has my right hon. Friend had any representations or requests from the Opposition to change the subject of next week's Opposition day to debate early-day motion 457, which deals with taxation and social renewal, and which has been signed by 36 members of the Labour party?
[That this House, noting the grossly unfair distribution of wealth in Britain under capitalism and the widening gap between rich and poor that has taken place over the last 15 years and recalling that the present Budget deficit is entirely attributable to tax reductions given to the richest taxpayers, and the cost of unemployment that was deliberately created, is convinced that the burden of military expenditure is far higher than can be justified and that other Government policies have been wasteful and inefficient; believes that the imposition of higher levels of VAT and its extension to fuel imposes a heavy burden on those least able to pay, as do other increases in taxation imposed in the recent Budget; rejects arguments that all reductions in taxation are

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necessarily desirable regardless of the purpose for which the tax is raised and the social consequences that would follow; affirms that the recovery of full employment, planned defence diversification, the rebuilding of our infrastructure, the extension of essential public services and the regeneration of British industry will require massive public investment, the harnessing of the nation's savings and taxation fairly shared and assessed on the ability to pay; and calls for a clear socialist commitment to be made now, about future economic, fiscal, industrial and social policies to secure these objectives.]
It calls for massive public investment and for a clear socialist commitment to be made now on future economic, fiscal and industrial policies. Does my right hon. Friend agree that such a debate would prove enlightening and terrifying for the House, and especially for the hon. Member for Dunfermline, East (Mr. Brown)?
Mr. Newton: My hon. Friend has made some telling points, which I shall certainly bear in mind when looking ahead to the business of the House.
Dr. Tony Wright: Will the Leader of the House reconsider what he said earlier about the Public Accounts Committee's report? Does he understand that it was a special report and said some damaging and worrying things about the conduct of public business? He seemed to say just now that the Government had some proposals to clean up public bodies. If so, will he arrange for a debate next week so that he can tell us about them?
Mr. Newton: I made it clear that the Government would take appropriate action in the individual cases. The action varies; for example, in the case of the Wessex and West Midlands health authorities, it has already been set in hand. In other cases, reports are still awaiting Treasury minutes or other responses, but the Government will take appropriate action in every instance.
Mr. John Whittingdale: Will my right hon. Friend find time for a debate on a matter in which I know he has a close interest—the politically motivated campaign being waged by the Labour and Liberal administration of Essex county council against grant-maintained schools?
Mr. Newton: As a fellow member of Parliament for Essex, I am of course well aware of the concern about this matter. My hon. Friend might perhaps be one of those who find an opportunity to raise the issue in the forthcoming debate on local government.
Dr. Kim Howells: The Leader of the House will know that hardly a week passes without a fresh scandal involving a quango in Wales. Is he aware that my colleagues are fearful that corruption is starting to take a grip on some of these public bodies, and that it may be a result of the Welsh Office's incompetence in monitoring them, a role which it is supposed to undertake on a day-to-day basis? Will the Leader of the House set aside time for a debate on this critical issue, and on the future of the Welsh Office and quangos in Wales?
Mr. Newton: I do not accept for a moment the hon. Gentleman's suggestions, but I draw his attention to the fact that the Secretary of State for Wales will be answering questions in the House on 14 February.
Mr. Jacques Arnold: Bearing in mind the enthusiasm of the hon. Member for Workington (Mr. Campbell-Savours) for municipal gutters, could we have a debate next week on the Labour-controlled borough of Tameside and the manner in which it contracts out its homes that care for the elderly, a matter recently described so well on Radio 4?
Mr. Newton: It seems to me that that is yet another matter that could be in order in the forthcoming debate.
Mr. Andrew Miller: Bearing in mind the fact that the interim report from the Health and Safety Executive about the Associated Octel disaster, or potential disaster, may be published in the next few days, if it is, will the Leader of the House make arrangements for his right hon. Friend the Secretary of State for Employment to make a statement on that, and on its broader implications for emergency and emergency planning services?
Mr. Newton: I will bring that request to my right hon. Friend's attention.
Mr. Simon Burns: In backing up my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale), I ask my right hon. Friend to reconsider whether there is any possibility, in the business next week or the following week, of having a specific debate about education policy, geared towards the vicious, nasty and vindictive policies that are being adopted by Essex education authority and other county council education authorities? Those policies penalise parents with children who attend grant-maintained schools, or who may want to hold a ballot for grant-maintained status.
Mr. Newton: I do not think that I can add to what I said to my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale), but, as my constituency is the space between the constituencies of my hon. Friend the Member for Chelmsford (Mr. Burns) and my hon. Friend the Member for Colchester, South and Maldon, my hon. Friends can perhaps understand that I recognise their concern.
Mr. Thomas Graham: Will the Leader of the House arrange for the Secretary of State for Scotland to make a statement about the situation at the Royal Alexandra trust hospital? Constituents of mine are still waiting for months—five months approximately—to see a urologist there, and months and months to have operations there. The trust system in Scotland is falling so sadly down that there is a crisis in my constituency. The morale of our people waiting for health treatment is so bad that it is an indictment of the Government.
Mr. Newton: I know of no basis for the general description of the trust system that the hon. Gentleman gives, but obviously I am not informed about the special problems to which he adverts, and I will bring them to my right hon. Friend's attention.
Sir Peter Emery: Further to the question of the hon. Gentleman the Member for Newport, West (Mr. Flynn), will my right hon. Friend next week, for the debate on Friday, try to ensure that, whatever the Government's long-term view may be, they will allow the Tobacco Advertising Bill to get into Committee, so that the effect of

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cigarette smoking and especially the effect on asthma could be fully debated, rather than just on the Floor of the House, even if the Government have to take action at another time?
Mr. Newton: I think that my right hon. Friend, in his capacity as Chairman of the Procedure Committee, will acknowledge that in the end the decision as to what happens to a private Member's Bill is a matter for the House and not the Government.
Mr. Roland Boyes: In the week that the Rover car company was swallowed up, will the Lord President refer to the President of the Board of Trade for a statement that there is still a major car company in the United Kingdom—the Nissan Motor Company in my constituency, Washington, Sunderland, which was the biggest United Kingdom car exporter in 1993? It has exported 182,000 cars, worth £1 billion. In addition, the Micra and Primera cars are built by British workers and British management, and we are proud of that car company in our region.
Mr. Newton: I am genuinely grateful to the hon. Gentleman. He knows of the long-standing interest that I have had in industrial matters in the north-east, not least in the year that I was a Trade and Industry Minister and visited Nissan. It is a considerable credit to that company, and to the work force in the north-east, that we have the gathering success in what is a resurgent British car industry.
Mr. Rupert Allason: Bearing in mind the undoubted but regrettable propaganda coup scored by Gerry Adams in the United States this week, will my right hon. Friend ask his colleague the Home Secretary to come
1040
to the House to give a statement about the future of the broadcasting ban, which at the moment is widely abused and circumvented by all the television companies? I am certain that that would be a recognition of the tremendous unnecessary mileage that was given to a man who is a terrorist and whose brother has been convicted of terrorist offences.
Mr. Newton: My hon. Friend may find that that is a matter for my right hon. Friend the Secretary of State for National Heritage, who is due to answer questions in the House on Monday. However, I shall draw his question to my right hon. Friend's attention.
Mr. Cynog Dafis: Bearing in mind the fact that old-style economic recovery cannot possibly solve the problem of unemployment, and that high unemployment, especially among the young, is likely to have incalculable costs as a result of social alienation and conflict, could we have a debate on that matter, and specifically on European Union proposals that we should aim to shift the burden of taxation so as to encourage the use of labour—that is, people—and discourage or reduce the use of natural resources, because natural resources are the capital on which our future prosperity depends?
Mr. Newton: If the hon. Gentleman considers what has happened to employers' national insurance contributions, which constitute an important cost involved in employing labour, and which the Government are now in the process of reducing again as part of a package of measures taken together, and if he examines what has been done to reduce the contributions paid in respect of less well-paid workers over the past few years, he will realise that the Government have directed much attention to that problem, with the sort of success that is now attracting companies to come here rather than going to places where they incur much higher social costs.

Points of Order
4.10 pm
Mr. Tony Banks: On a point of order, Madam Speaker. Are you aware that from the Terrace—and indeed, so far as I can tell, from the Speaker's Apartments—it is possible to look across the river and see the Japanese flag flying over county hall? Personally, I find that offensive, and I suspect that many other Londoners do, too. Are there not regulations and restrictions prohibiting the flying of a foreign flag from a building other than an embassy which is the property of the country concerned?
Madam Speaker: That is hardly a point of order for me, but if what the hon. Gentleman says is true, I am interested to hear that he has seen that flag from the Terrace of the House of Commons. I must say that I have been rather too busy to notice it from my apartment.
Mr. Peter Luff: On a point of order, Madam Speaker. I should be grateful for your guidance in telling me whether it is in order for the hon. Member for Workington (Mr. Campbell-Savours) to continue his vicious and spiteful vendetta against another Member of the House on the basis of inaccurate information, under the cloak of parliamentary privilege?
Madam Speaker: Had the comments made by the hon. Member for Workington (Mr. Campbell-Savours) been out of order, I would of course have intervened. However, I caution all Members that we should have courteous language here, so that we can conduct our debates in good order and with respect for one another.
Mr. D. N. Campbell-Savours: Further to that point of order, Madam Speaker. Will you confirm that the matters that I have raised are matters of public policy?
Madam Speaker: I think that, when the hon. Gentleman raised the matter the day before yesterday, he was somewhat out of order, and I refer him to the remarks that I have just made. I am sure that there will be other opportunities for him to put his case in a proper manner.

Orders of the Day

  Local Government Finance
  [Relevant document: the First Report of the Environment Committee on Standard Spending Assessments (House of Commons Paper No. 90).]
  4.12 pm
  The Secretary of State for the Environment (Mr. John Selwyn Gummer): I beg to move,
  That the Local Government Finance Report (England) 1994–95 (House of Commons Paper No. 179), which was laid before this House on 27th January, be approved.
  I understand that with this it will be convenient to discuss at the same time the following motions:
  That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1994–95 (House of Commons Paper No. 181), which was laid before this House on 27th January, be approved.
  That the Special Grant Report (No. 9) (House of Commons Paper No. 180), which was laid before this House on 27th January, be approved.
  The debate enables us to reach the culmination of the local government finance settlement for 1994–95. The process began a full 12 months ago, almost before the ink was dry on the previous settlement. During that time we have held extensive discussions with local government about the cost of local services, the need for Government support and how that support is to be distributed.
  Dame Elaine Kellett-Bowman: I am sure that my right hon. Friend gets substantially more kicks than ha'pence in his job, so I am sure that he will be delighted to know that my city council has written to say how delighted it was with the settlement that he has given it. Provided that Lancashire county council does not go berserk, it should enable our citizens to pay less council tax.
  On a sadder note, I hope that my right hon. Friend will join me in regretting the storm damage in Lancaster, which has ripped the roof off one of the university college buildings, caused a chimney stack to fall over—fortunately, with no loss of life—and the whole of Castle hill to be shut because of falling tiles and roofs. Will he also commend the emergency services for doing a superb job?
  Mr. Gummer: I am sure that the whole House would want to commend my hon. Friend for her perfectly proper ingenuity in being able to say publicly what we all feel and to support the emergency services for their work in the particular unpleasant storm damage. I hope that it will be repaired as rapidly as possible.
  I certainly got more than ha'pence out of that intervention in terms of compliments, though I do not know whether one can be absolutely sure that Lancashire county council will not go berserk—but no doubt we shall see.
  We carried out considerable discussions because we thought that it was necessary to try to improve the method of sharing the money out among local authorities. That was a proposal from the local authority organisations. Whatever else may come between us, most agree that the report has been carried out in a thorough way. They may

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  not be entirely happy about the results and they may disagree among themselves, but it was carried out with us in a thorough way.
  At the start of December I announced my proposals for the coming year. Since then my colleagues and I have met 58 delegations from local authorities and received 148 written representations. We carefully considered all the points that were raised with us during consultation. My final decisions are embodied in the reports before the House.
  From the outset, we have made it clear to local government that this would not be an easy year. We knew that we needed to establish a sound basis for future economic growth. That meant cutting the public sector borrowing requirement, and we expect local government to play its part. Local government accounts for about a quarter of spending. It therefore cannot be immune from the pressures that all of us face.
  Tough action to sort out public finances will help to ensure that the economic recovery is sustainable. It is already true that the economic recovery in this country is much more favourable than for most, if not all, members of the European Community. We must ensure that that continues. Inflation has been below 2 per cent. for the longest period since 1960. Interest rates are among the lowest in Europe. Unemployment has fallen by more than 225,000 since January last year. Other countries are looking to see how they can even begin to copy that.
  United Kingdom industry is in an excellent competitive position. Good cost and productivity gains are providing exporters with the opportunities that they need. At this point in the recovery, nothing would be more damaging than a loss of confidence in our ability or willingness to control public spending. We do not intend to make that mistake.
  Mr. Richard Tracey: I am grateful to my right hon. Friend for giving way at this early stage. My point is important. Surely the Government must take steps to ensure that local authorities collect the council tax. Figures that have been made available to us show that a number of local councils are not even starting to do the job properly. Some have collected only 25 per cent. of the 1993 figure. Unfortunately, many of them are Labour authorities. Surely the Government can do something about that and thus assist in the recovery that my right hon. Friend is talking about.
  Mr. Gummer: My hon. Friend is right. If one does not collect the council tax, one can hardly complain about not having the money to provide services. He is also right to say that those who are least good at collecting the council tax are, almost without exception, Labour councils. However, there is likely to be an improvement.
  I heard today that Southwark council—about the fourth worst in the country, I believe—has decided to discuss the possibility of contracted-out collection of its council tax, so unhappy is it with the system that it has at present. One can imagine why the council is so unhappy about the matter. It was unable to collect much of its council tax last year because of considerable difficulties with the collecting staff. I hope very much that other local authorities will take that example and that we shall see a better answer in future.
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  In a difficult period, I am still able to say that I am increasing the provisions we make for local authority spending next year by 2·3 per cent., after allowing for changes in local authority functions. Total provision next year will be £42·7 billion. That is equivalent to £880 for every man, woman and child in the country. It represents a massive commitment to public services—a commitment that we are making even in this most difficult of years.
  Sir Anthony Grant: My point follows the point made by my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). It is one thing for a local authority to get a good standard spending assessment settlement; it is quite another for it to use it sensibly. I give an example. Cambridgeshire needed 68 extra police officers, as everyone agreed. We had an excellent police SSA of £1·5 million, but the Liberal Democrat-Labour coalition on the county council spent only £100,000 of that. That tells us something about the commitment of a Liberal Democrat-Labour coalition to the police and to law and order, and about having a Liberal Democrat-Labour coalition anyway.
  Mr. Gummer: My hon. Friend makes an important point. There is only one party that is committed to law and order—the Conservative party. If there is an advantage to be got from the most recent county council election results, it is that they show just how soft the Liberal Democrats in particular are on any law and order matter. It is very noticeable all over the country; Cambridgeshire is a particular example.
  Government support for local authority spending next year will be £34·3 billion—an increase of 1·7 per cent. over 1993–94. That should enable authorities to provide local services at a cost that their council tax payers can afford. The level of council tax is, of course, a decision for each authority and will depend on, among other things, the services that it chooses to provide, how efficiently it can deliver them and how well it collects what it is owed—the point that my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) made. I am therefore not about to start predicting council tax levels. When taxes are set, local people will be able to judge the performance of their councils.
  Mr. Harry Greenway: My right hon. Friend knows about the position in Ealing. The Conservative council there has succeeded in reducing council tax by an average of £100, and for band D it has been reduced by £122. I ask my right hon. Friend to compare that with the spend, spend, spend policies of the loony Labour council in Ealing between 1986 and 1990. When Labour took over in 1986, there were huge reserve balances. When Labour left office in 1990, having trebled the rates, it left a debt of £2,000 on every man, woman and child in Ealing.
  Mr. Gummer: I feel that I should declare an interest here. During the week, I live in the London borough of Ealing. Everything that my hon. Friend the Member for Ealing, North (Mr. Greenway) says is true.
  I give my hon. Friend an additional piece of information which I am sure that he would like to know. I have had occasion to make some points about Birmingham council in the past. After a long meeting with Councillor Stewart, she has, I am pleased to say, taken my advice. The council has announced that it is likely to reduce its council tax,

  1045
  admittedly by only £22 or £23 for a band C property. At least that authority has seen that it is possible, within this settlement, to do that. I am sure that my hon. Friend agrees that that says something clear about the settlement which has been made at so difficult a time.
  Mr. Nigel Spearing: Despite the increase in funding that the Minister announced in his statement before Christmas, the London borough of Newham received a reduction of 2 per cent. Is the Minister not aware that our homeless expenditure in the borough is £12 million a year? His trumpeted new formula, about which he was so confident a few moments ago, provides only £2 million of that amount, so £10 million has to be taken from the standard level of services that even his Government think is necessary. Is that the partnership about which he lectured us for 40 minutes at West Ham town hall?
  Mr. Gummer: I am sorry that the hon. Gentleman was unhappy with my speech on that occasion. A number of his Labour colleagues said how pleased they were with my speech and how pleased they were with the partnership part of it. Partnership is exactly the word. The SSA in Newham, which has been established on the basis of objective criteria, is reduced by 0·8 per cent. To help Newham, it is receiving a damping grant of £13·3 million to help it over that difficult period. Reminding the public of that £13·3 million does not seem to enter into the hon. Gentleman's definition of partnership.
  Already, the SSA per head in Newham £1,143—well above the average for outer London, which is £782—and it is the fifth highest in England. Before we go to town on the local pressures of Newham and attack all the hon. Gentleman's local government colleagues who have worked hard and before we refuse to accept that they have been careful, we should remember that their SSA is the fifth highest in England. Many other hon. Members who are representatives of councils may argue with the hon. Gentleman, at least on that.
  Mr. Jeff Rooker: I want briefly to thank the Secretary of State for what he has said about the decisions that we expect in Birmingham and the £22 reduction in band C council tax. That is coupled with an extra expenditure of some £40 million on education, which for the first time will take us above the standard spending assessment, which has been reduced. We are extremely grateful for that and we make no bones about it. The day Councillor Stewart was elected leader, three days before the Prime Minister made his speech at the Tory party conference, she uttered the words that in Birmingham we are going "back to basics"—and she meant what she said.
  Mr. Gummer: I do not wish to enter into the painful situation of Birmingham city council, where the present leader thinks that the policies of the previous leader were all wrong, as both leaders are of the same party. When one wants to find divisions, one usually finds them in the Labour party, at least between those two. It was convenient that Councillor Sir Richard Knowles was in charge of the Labour party in Birmingham for a long time—
  Mr. Robert N. Wareing: Not two minutes like George Gardiner.
  Mr. Gummer: It was not two minutes. He carried out
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  policies which have been entirely thrown out by Councillor Stewart. I am pleased that Councillor Stewart has taken my advice and I hope to have further meetings with her. Perhaps we can do even better than the £22 reduction.
  Mrs. Marion Roe: I welcome the revenue support grant settlement for 1994–95 as it affects local authorities in my constituency, and especially the significant increases in the standard spending assessments for Broxbourne, East Hertfordshire and Welwyn Hatfield. May I therefore congratulate my right hon. Friend on his decision to base the SSA formulae on more up-to-date expenditure data and to incorporate information from the 1991 census? That has certainly significantly benefited the
  Mr. Gummer: I thank my hon. Friend for her comments, which were supported by the Select Committee on the Environment in its recent report. It is also clear from that report that Newham would have done worse under the Labour party than for the reasons for which the hon. Member for Newham, South (Mr. Spearing) thinks that he ought to attack me. I notice that Labour Members supported an amendment which would have meant that Newham, like the rest of London, would not have benefited from the area costs allowance. I hope that the hon. Member for Newham, South will ask his colleagues why they voted for that amendment. I should like to know whether Opposition Front-Bench spokemen also support that view.
  I wonder whether the hon. Member for Newham, South has noticed that the proposal would remove about £54 million from Newham and would involve nearly £1,000 million for the whole of London. When people talk about money for London, I hope that everyone will notice that Labour Members on the Select Committee on the Environment wanted to take action which would have affected £1,000 million of money for London.
  Mr. D. N. Campbell-Savours: Where do you get all this?
  Mr. Gummer: I get it from the record of the Select Committee and that is a very suitable place to get it from. No doubt the hon. Member for Workington (Mr. Campbell-Savours) will wish to speak to his colleagues. The proposal might help Workington, but it certainly will not help London.
  Mr. Tony Banks: The Secretary of State is providing information of which I was not aware. I will go away and study it assiduously as soon as possible. However, does he not accept that there are still many people, including some of my hon. Friends, who feel that London receives far too much by way of resources? That is absolutely wrong. Will the Secretary of State confirm that, according to the latest indices for urban and local authority deprivation, Newham is number one? London is not studded with meat pies. There are areas of deprivation in London that are as bad as, if not worse than, any other place in the United Kingdom.
  Mr. Gummer: In a spirit of cross-party support, I agree entirely with the hon. Gentleman. It is perfectly true that London has particularly difficult circumstances. That is why the area cost adjustment is there and why it is not, as the hon. Member for Denton and Reddish (Mr. Bennett) suggested,
  "the result of political judgment rather than statistical fact."

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  As the Minister responsible for London, perhaps I may ask the hon. Member for Newham, North-West (Mr. Banks) to have a word with the hon. Member for Denton and Reddish and make it clear that we are talking about an objective effort. When the area cost adjustment was queried last year, we took a great deal of trouble when we examined the statistical base. The statistics suggested that the figures had been underestimated rather than overestimated in the past, so the new statistics have been taken into account.
  I am sure that the hon. Member for Newham, North-West would want to press that case very strongly. When we consider the figures, it is clear that interference would involve £26 million in Haringey, £35 million in Camden, £45 million in Hackney, £37 million in Islington and £53 million in Lambeth.
  Mr. Campbell-Savours: You have got it wrong.
  Mr. Gummer: The facts are clear. According to the Select Committee report and the hon. Member for Denton and Reddish,
  "the Area Cost Adjustment is the result of political judgment rather than statistical fact."
  I thought that the Labour party wanted statistical fact rather than political judgment. No doubt Labour would be happy for Tower Hamlets to lose £45 million on that basis.
  Sir Anthony Grant: I apologise for interrupting my right hon. Friend again. With regard to the area cost adjustment, I make no comment about London. However, it produces very peculiar results. The most peculiar result of all is that Cambridgeshire receives no benefit from the area cost adjustment while Bedfordshire, which is right next door, does. That is quite absurd.
  Mr. Gummer: One of the problems is that those who win are fond of it, and those who do not win are not fond of it. We have taken the most extensive statistical efforts to discover the facts. I went into all this thinking that the hon. Member for Denton and Reddish and some of my hon. Friends might be right. After all, Suffolk receives no benefit from the area cost adjustment. However, when I examined the facts, and when the figures were examined with great care, we concluded that the figures supported the case.
  I realise that these matters are difficult and I am sure that they are not easy for the constituents of my hon. Friend the Member for Cambridgeshire, South-West (Sir A. Grant) to understand. However, when the work has been carried out so assiduously and in company with the now Labour-dominated local authority associations it is unsuitable and odd for Opposition Members to suggest that as the proposal does not suit their constituencies it must be the result of a political judgment.
  Mr. Andrew F. Bennett: Can the right hon. Gentleman explain why it is that in most areas the allocation per primary pupil is more than £3,000, whereas in places like Tameside and Stockport the corresponding figure is less than £2,000? Given that teachers are paid on a national scale and that those in London receive a small additional allowance, it is remarkable that certain London boroughs need to spend twice as much on a pupil as do many areas in the
  1048
  north-west of England. Can the right hon. Gentleman claim that the situation is based on statistical fact rather than on political judgement?
  Mr. Gummer: I can not only claim it—I can state that it is utterly true. We are dealing here with statistical fact. This is not just my claim. People from all political parties have gone through the facts in detail in an effort to demonstrate that the situation is different. I understand the hon. Gentleman's concern, but as the hon. Member for Newham, North-West will no doubt agree, there are very clear reasons, in terms of total employment costs, ethnic mix, and so on, for the differences.
  When facts relating to a matter of concern to all parties are trawled and they all come to the same conclusion, it is nonsense for the hon. Gentleman to suggest that everybody —including members of his own party—is engaging in some sort of plot to prevent his constituents from receiving money to which they are entitled. We must all try very hard to ensure that the public are not outrageously misled on a matter of this sort. I hope that the hon. Gentleman will think about that.
  Mr. Colin Pickthall: Will the right hon. Gentleman give way?
  Mr. Gummer: I must try to make some progress, as I am sure you, Madam Deputy Speaker, will agree. I shall try at a later stage to facilitate hon. Members who have been trying to intervene.
  We must look closely at the spending priorities of local government and take any opportunities to improve its efficiency. In particular, pay accounts for about 70 per cent. of local authority budgets—teachers' pay alone accounts for about 25 per cent.—so we expect pay awards and pay bills to be kept within what is affordable. We have just received the 1994 report of the school teachers' pay review body, along with those of other review bodies, and my right hon. Friend the Prime Minister has announced the Government's response. For the teachers, we propose to accept the recommendation for a 2·9 per cent. increase. I believe that that award will be affordable provided that local authorities are realistic and sensible in their budgeting.
  Of course pay increases have to be paid for, and this must be achieved through improved efficiency and increased productivity. There will be no extra money. We cannot go on putting more and more taxpayers' money into local authority budgets to cover pay increases that simply cannot be afforded. That is the challenge that everyone in the public sector has to face, and I believe that sensible, efficient local authorities will be able to rise to it.
  Mr. Jack Straw: The right hon. Gentleman has just announced that the teachers' pay award will be 2·9 per cent. That exceeds by far what local authority budgets provide for. The right hon. Gentleman has said that the settlement will have to be paid for by improved efficiency and increased productivity. As the principal way in which schools can increase their efficiency is by increasing class sizes and cutting numbers of teachers, may we take it that this salary increase will be paid for by job cuts?
  Mr. Gummer: The hon. Gentleman fails to remember the explanation that he himself gave in "The Walden Interview" of 14 October 1990, which was before the last general election, when he said:

  1049
  "The most challenging issue in education is not so much the issue of resources but how you manage the service."
  The hon. Gentleman was quite right. It is perfectly possible to manage the service through efficient use of teaching, back-up and administration staff. Account must be taken of the way in which, in the case of many Labour-controlled areas, central administration costs so much.
  In all these areas it is possible to achieve the efficiency by means of which many costs can be met. The hon. Gentleman tried this year when he was shadow Minister of Education. Every year, he claimed that the only way to meet the teachers' pay bill was to reduce the number of teachers, and he put forward figures which in the event turned out not to be so. What I look for are local authorities which start not by reducing jobs but by reducing bureaucracy and inefficiency, and which look to ways of saving money rather than—
  Several Hon. Members rose—
  Mr. Gummer: I think that I should give way to my hon. Friend who is Chairman of the Select Committee.
  Mr. Robert B. Jones: Will my right hon. Friend join me in praising the primary schools in the Dacorum district of Hertfordshire which have set up purchasing consortia? They have agreed to share attendances at outside conferences and working parties so that not every school is denuded of staff at the same time, and they are ably demonstrating that costs can be reduced and services can be improved.
  Mr. Gummer: My hon. Friend is right in his reference to Dacorum. Perhaps it might be said that Dacorum is doing precisely what the hon. Member for Blackburn (Mr. Straw) said that he would like councils to do when he said that it is not the issue of resources but now the service is managed that matters. Not only that: he also said that the bill for teachers is so enormous that it is difficult to pay it. Of course that is true, and we must find ways of doing it through efficiency.
  Mr. William O'Brien: Will the Secretary of State pay attention to the authorities that make up the Webber C'raigh Group, of which Wakefield—my authority—is one? In the past, that group's expenditure has been suppressed because of the lack of rate support grant. This year an adjustment has been made, and we congratulate the Minister and his colleages on that. Because expenditure was suppressed over the years, we are now finding it difficult to make the economies referred to by the Minister. Now that the second level of rate support grant has been reasonably set, will he also set the cap at a reasonable level to meet the demand for services in the Webber Craigh Group, especially Wakefield?
  Mr. Gummer: The hon. Gentleman is right to point to the excellent work that that group has done on these issues. Some of the background work on unemployment and morbidity that has been done there is of great help, and I would not like in any way to underestimate what that is. I am happy to look at any of the specific issues raised by the hon. Gentleman because this authority group has sought to find ways of facing up to some of the real issues.
  This is another example of the sort of area in which we have tried to be closer to the realities in the new SSA formula. As the hon. Gentleman knows, the difficulty is that when it has been favourable it tends to be commented
  1050
  on favourably, but when it happens to have reduced the SSA in an area it is not quite so popular. However, I will certainly look at the points raised by the hon. Gentleman.
  Mr. John Evans: My local authority is also a member of the Webber Craigh Group of authorities. As the Minister and his colleagues know, it has worked hard to get economic indicators as part of the SSAs, and all of us are grateful that the Government have accepted that. Over the past three years, we have had to make savage cuts in our services because of the reform that happened then. Now that the Minister has put that situation right, will he consider that perhaps we are entitled to a little something from the Government for the years that have already passed?
  Mr. Gummer: I hope that the hon. Gentleman will accept that one of the problems about changing this is that those who benefited from the previous situation understandably say that they cannot possibly change now because they have got used to it, and that they must have some help in changing when they have to lower their spending because they got too much in the past. Those who find that the change is in their favour come to me and say that that means that they must have had too little in the past and therefore need extra support now because of that.
  If we are to have a system whereby we are willing to react properly to real and sensible points made by local authorities, we must draw a clean line and say that we will start again from this point and do it as well as we can. Otherwise, the temptations not to change when change is necessary would be great, and I do not want to succumb to those temptations: I want to have a system that we are willing to change when a good case is put to us. The economic indicators aspect is important and I appreciate the work done by various local authorities of very different political views on which we have been able to depend.
  We can expect the usual demands from Labour members for higher spending. Of course, it is a little more difficult this time because the hon. Member for Dunfermline, East (Mr. Brown) would undoubtedly have a word or two to say about that. If one reads the local government press, one sees that many in the local government world are saying that they were expecting a tougher settlement—a cash standstill or worse.
  An article in the magazine Public Treasurer, which I am sure is prescribed bed-time reading, last month said:
  "The local authority finance settlement has come to resemble an elaborate pas de deux"—
  I am not sure whether I wish to do a pas de deux with the hon. Gentleman.
  "After the announcement, councils warn of dire cuts in jobs and services."
  The article goes on to quote Mr. Tony Travers, a leading independent expert on local government finance, as believing that local authorities last year
  "overstepped the mark and caused themselves embarrassment"
  when the number of jobs lost
  "failed to come near their earlier doom-laden predictions".
  Of course, that happens year after year.
  In December, the Local Government Chronicle said of last year's prophecies:
  "It is obvious many of the more vocal councils were crying wolf and their supposed job cuts have failed to materialise."
  I have no doubt that we will have the same from Labour members this year.
  Our grant distribution has one simple aim: to ensure that the available resources are divided fairly so that all

  1051
  authorities are placed on an equal footing. Achieving that, however, is far from simple. In evidence to the Environment Committee recently, the local authority associations agreed—I point this out to the hon. Member for Blackburn, who has made some opposite remarks—that
  "The distribution of grant to 420 authorities in England on an equitable basis is a complex task and it is not surprising that the extensive analysis and research over the years has shown that there are no simple answers."
  I have already referred to the thorough review of the calculation of SSAs that we have carried out over the past 12 months. That review was prompted by the need to incorporate new data on social conditions which are now available from the 1991 census. I am pleased that the review of SSAs has been carried out in close co-operation with the local authority associations. A lot of hard work has been done, and my ministerial colleagues met delegations from individual local authorities to hear their views and discuss their ideas.
  I refer to the views of the Audit Commission. The Commission published its own study and noted that the SSA system
  "is a more sophisticated system for equalising needs than any overseas system examined in this study and it is an improvement on its predecessor in many respects."
  I think that we can accept that as a fairly widely held view. I acknowledge and thank the Environment Committee for its timely report on SSAs. The Committee took evidence from a wide range of people. I am gratified that one of the Committee's first conclusions is:
  "We welcome the openness with which this year's SSA review has been carried out, and we trust that this approach will continue in future years".
  One of its final conclusions is:
  "We recognise that the changes to the SSA methodology this year have led to some common-sense improvements in the 1994/95 proposals."
  I hope that the hon. Member for Newham, South will take that for the important—
  Mr. Spearing rose—
  Mr. Gummer: I am sorry that I tempted the hon. Gentleman. I really want to get on, but I will give way.
  Mr. Spearing: I suspect that the Environment Committee did what is usually called a "quickie". I think that the Secretary of State will find that the Committee took limited evidence from three major local government organisations in one day. There was relatively little in terms of memoranda and the Committee did not address the question of homelessness which I put to the Minister in my earlier remarks.
  Mr. Gummer: I do not want to move too closely into the definition of "quickies". The document has more than 100 pages, so I should have thought that the process was fairly lengthy. I do not think that the hon. Gentleman should dismiss so cavalierly the evidence of the three local authority associations, all of which are dominated by his party. The hon. Gentleman's local authority has the fifth highest standard spending assessment in the country, and it is difficult to see how he can complain.
  Mr. Tracey: I wish to raise a point with my right hon. Friend regarding the Select Committee report. I was interested to read what the report said about the funding of London. Was my right hon. Friend surprised, as I was, to
  1052
  find that Labour Members have suggested that the day visitor principle—one of the principles relating to the calculation of SSA—should be examined? If that principle were to be changed radically, that would seriously affect the number of London boroughs and, of course, it would affect also the number of other parts of the country which are controlled by Labour authorities?
  Mr. Gummer: My hon. Friend is right to point to that element, which has been introduced for the first time and has been widely welcomed. My hon. Friend might like to put together a list of the reductions in money coming to London which would have arisen if the proposals made by the Labour group on the Select Committee were carried through. That piece of information might be of use, not only to the House, but to a wider audience.
  Mr. Ron Leighton: The Secretary of State made an error when he said that Newham was fifth last year; it is now 10th. Does not the index with which he is working with Manchester university put Newham first?
  Mr. Gummer: I was referring to this year, which is still 1993–94. We are talking about next year. If Newham is 10th next year, and the hon. Gentleman finds the whole system unacceptable because of that, he is being a little idiosyncratic in the defence of a system. There is also the significant dampening grant of more than £11 million.
  Mr. Leighton: The grant was £13 million.
  Mr. Gummer: It is kind of the hon. Gentleman to make sure that I did not understate my point. A figure of £13 million for next year is not unreasonable to help people over the change from fifth to 10th. I hope that the co-operation which we have enjoyed will continue, because one must have a system which provides fairness and objectivity.
  It is important that it is not a matter of central Government versus local government, and that the system tries to share out the money in the most effective way. Therefore, these matters must not be party political, but they must be political matters as they involve the distribution next year of over £17 billion in revenue support grant. Grant distribution is therefore not something that I can delegate.
  In any settlement, authorities which do badly are tempted to cry foul but that is not the case this year. Greenwich borough council is not one of the Government's greatest supporters—I am sorry about that and I hope that the council will become so—but it says that it
  "has been heartened by the attention paid in the settlement to the points which it put forward."
  Northumberland county—again, not a Conservative authority—said:
  "The County Council is greatly encouraged by the changes to SSA methodology."
  In his evidence to the Select Committee, Mr. Tony Travers said:
  "A number of commentators have accused SSAs of being politically rigged … Yet there is no evidence of such political intervention".
  That is why I regret and resent the scurrilous allegations of the Opposition—particularly the hon. Member for Blackburn—that the system is somehow affected by the party political divide. That is clearly not true, and all the independent commentators and Tony Travers have said that in turn. I hope that the hon. Gentleman will withdraw

  1053
  that allegation, which is unworthy of him and which is not suitable if we are trying to find the best way to reach an achievement.
  It is perfectly proper for the hon. Gentleman to say that more money should be spent, although the hon. Member for Dunfermline, East might object to that. It is perfectly proper for the hon. Gentleman to object to some aspects of the Government's policy on the matter. It is not proper for him to complain about a system which is known to be objective and which is supported as objective by large numbers of the hon. Gentleman's supporters.
  Mr. Robert Ainsworth: Will the Secretary of State give way?
  Mr. Gummer: I ought to move on, but I will keep my eye on the hon. Gentleman who is attempting to intervene.
  I do not want to weary the House, and I hope to continue the present system. There may be some changes, but I hope that they will not be too radical so that they can settle down satisfactorily. The methodology that I proposed in December is set out today in the local government finance Report which is before the House.
  I do not want to recount all the changes in the methodology, but there is one specific set of changes which have occurred since the start of consultation which I should mention. During the consultation, a number of authorities commented on the data which we had proposed to use in calculating their SSAs. In particular, Havant district council and Tameside metropolitan borough council drew our attention to problems with the data for the number of people claiming housing benefit, which we used in the new economic index. Opposition Members have referred to that.
  In the light of representations from the councils, I have adjusted the data used in the SSAs for Havant, and for authorities bordering Manchester. I hope nobody thinks that that is party political. I have done my best to get as near to the objective truth as I can.
  A number of other data changes have been made where more up-to-date or accurate figures have become available. For example, we have since the consultation been able to incorporate actual basic credit approvals and the latest estimates of supplementary credit approvals into the calculation of the capital financing element. The latest information on the size of local authorities' local tax bases has been incorporated to grant calculation also. In many cases, the effect of the changes is small but accuracy is important if the system is to continue to have the widespread support which the changes have brought about.
  This year's review of SSAs has been thorough and wide ranging. I agree with the Select Committee that
  "there will always be a trade-off between improving the technical content of the SSAs and increasing its complexity."
  I hope that we do not need such a wide-ranging review for some time to come.
  Mr. Robert Ainsworth: The Minister has quoted selectively from the Committee's report, and he has tried to suggest that the only people who believe that SSAs are not an objective and mathematical equation are Labour members.
  Is the right hon. Gentleman aware that the Audit Commission said in evidence that by the choice of the data used, their formulation and the weight which they were given, the system could be no more than a covert way of taking political decisions in the distribution of grants?
  Mr. Gummer: The hon. Gentleman ought to read the Audit Commission report more carefully, and he should be much less selective in quoting what the report said.
  I will repeat what it said in full so that the hon. Gentleman will not in fact miss this out. The Commission said that the system is
  "a more sophisticated system for equalising needs"—
  I cannot think of anything more objective than needs—
  "than any overseas system examined in this study and it is an improvement on its predecessor in many respects."
  I find that difficult to square with the selective comments of the hon. Gentleman.
  Mr. John Whittingdale: May I thank my right hon. Friend for listening with such care to the representations which were made to him by local authorities in the south-east, and in particular for extending the area cost adjustment? That has resulted in Colchester borough council having an increase in its SSA of 14 per cent. Does he agree that, given that generous settlement, there can be no justification for excessive rises in council tax this year?
  Mr. Gummer: My hon. Friend is kind to say that we listened to Colchester borough council. We have listened to all who came to us, and we have tried to make as clear a change as possible. Of course, we cannot make changes for individual local authorities. The system is designed to be objective, so it would be wrong to believe that something special can be done for any particular authority. I agree with my hon. Friend that, given the difficulties of the time, the settlement is sufficiently good for people to expect local authorities to make the kind of efficiency savings which will enable them not to have large rises in council tax.
  I note that both the London borough of Ealing and the London borough of Brent have announced that they will he reducing their council tax by £100.
  It may be that the political complexion of those two authorities explains how they are able to do it against the background of the Labour authorities that they replaced. They may have had a good deal more elbow room. It is more difficult for well-run Conservative councils which have already been extremely good about running their affairs to make such significant decreases. But then people have had the benefit of lower council taxes over the years.
  We shall continue to discuss the SSA methodology with the local authority associations. For 1995–96, we will want to consider the treatment of the police element in the light of the proposals in the police Bill. I have also undertaken to have a further look at the way in which the area cost adjustment in the south-east region decreases as one moves away from London.
  I appreciate the position of authorities which will see a sizeable reduction in the SSA next year. Despite the firm underlying rationale of the changes that I have proposed, authorities will need time to adjust to those changes. Not only have we created a system that we can stand by as objective, but we have seen that where changes are large there must be some help for people moving from one figure to another.
  That is why, in December, I made proposals for a special grant to compensate authorities which have lost more than 2 per cent. of SSA as a result of the incorporation of the new census data, and of the changes stemming from the review. That grant is a generous response to the problems of those authorities and it was

  1055
  widely welcomed during the consultation process. The special grant report No. 9 will establish that grant for 1994–95, and some £280 million will be distributed to local authorities in that year.
  The SSA reduction grant will ensure that authorities which face a reduction in SSA will not have to make an unreasonable demand on their council taxpayers. I shall look closely at the issue again next year before deciding whether it is justified to continue to damp the year-on-year impact on local taxpayers of the SSA changes.
  I announced my intentions for capping for 1994–95 on 2 December. The House will know that I hope that we will not have to have recourse to capping this year. We had few cases of capping last year and I hope that we shall have even fewer this year. Those intentions give effect to the Government's view that local authorities must play their part in controlling public expenditure by setting budgets that taxpayers and the country can afford.
  As the House will be aware, capping works in two ways: by limiting budgets which in my view represent too large an increase over the previous year or budgets which are simply too much. In relation to the former, the provisional criteria allow authorities with budgets close to their SSAs larger increases than authorities with budgets which are higher relative to SSA. Those excessive increase criteria remain my firm intentions for 1994–95.
  I also announced on 2 December my proposals for relevant notional amounts for certain authorities. "Notional amounts" is not a phrase that I like, Madam Deputy Speaker, but it is one that represents the base from which I shall measure increases in budgets for the purposes of the excessive increase criteria. I proposed notional amounts for authorities which are subject to a change of boundary from 1 April 1994 to take account of the effect of their budgets of changes in their area and population. A small number of authorities made representations to us on those proposals.
  In those cases where authorities have submitted information which in our view provides the basis for a better assessment of the effect on their budgets, I have specified a revised notional amount which will be used —if the House approves the notional amounts report—as the basis of the operation of the excessive increase criteria. In all other cases, the notional amounts specified in the report are those originally proposed. So we have tried always to go along with local authorities where they have come armed with effective proof.
  On absolute excessiveness, we have considered whether authorities which are subject to a substantial reduction in SSA as a result of the changes that we have made following the SSA review and the incorporation of data from the 1991 census should be required to reduce their budgets in cash terms. Authorities could not necessarily have anticipated the scale of those reductions and they may need more time in which to adjust their expenditure. I hope that Opposition Members will accept that, again, I have tried to find a way of helping those authorities which could not protect themselves in advance, even in circumstances in which their overall excessive expenditure ought to have made them wish to reduce it.
  In order to help, it is my intention that authorities with budgets more than 12–5 per cent. above SSA, of which the SSA has been reduced by at least 5 per cent., as measured
  1056
  for the purposes of SSA reduction grant, should not be required to make more than a cash freeze on their budget for the previous year in order to avoid designation for capping. In all other respects, the provisional absolute excessiveness criterion which I announced on 2 December remains my firm intention.
  As for start-up costs of local government reorganisation, we have announced details of a scheme for 1994–95 to allow authorities to borrow for certain costs. I have previously announced that if authorities include in their budgets any reorganisation costs, as defined in the scheme, those costs would be disregarded for the purposes of capping. That remains my intention.
  I would not, however, expect provision to be made for significant expenditure by authorities other than those which are to be reorganised from 1 April 1995. Authorities should be quite clear that, when I take my capping decisions, I may come to a different view on the treatment of reorganisation costs. It would, for example, be open to me to decide to take account of all or part of that provision for capping purposes, if authorities had used it as a means which clearly was not part of what was designated or sensible for reorganisation.
  This year's settlement shows the Government's determination to take tough decisions on public spending, while recognising the importance of local services and of providing authorities with the resources that they need to provide those services at a reasonable cost to their taxpayers. It also demonstrates the Government's wish to see a fair distribution of the available resources on a robust basis which uses the most up-to-date information. It shows above all that the Government are willing to listen to local government—
  Mr. Jeremy Corbyn: what about an elected authority for London?
  Mr. Gummer: —and to co-operate in improving the systems within which local authorities must operate.
  Some of the examples which the hon. Member for Islington, North (Mr. Corbyn) would have heard if he had been here, many of which related to London, show that, when we have listened to local authorities, we have changed our proposals to fit what they have asked for. All the SSA changes were changes that the local authorities themselves sought, and we sought to meet.
  Mr.Corbyn: Will the Minister give way?
  Mr. Gummer: The hon. Gentleman—to whom I shall not give way—would have been better advised to listen carefully to the points that I made. Yet again, I was able to show—
  Mr. Corbyn: On a point of order, Madam Deputy Speaker. Is it in order for the Minister to refer to a Member in disparaging terms and then refuse to give way to him to allow him to defend himself?
  Madam Deputy Speaker (Dame Janet Fookes): It is entirely a matter for the Minister, or any other Member who has the Floor, whether he decides to give way or not. It is not a matter for the Chair.
  Mr. Corbyn: Further to that point of order, Madam Deputy Speaker.
  Madam Deputy Speaker: Order. I have dealt with it.
  Mr. Corbyn: What is the convention on the matter?
  Madam Deputy Speaker: The hon. Gentleman has been here for many years and he knows of many ways in which he might pursue any complaint.
  Mr. Gummer: I was coming to the last sentence, but I should like to say, so that the hon. Gentleman should not feel that I have been unfair to him and in response to his intervention from a seated position about London, that I was able to deal with London. I mentioned that his colleagues on the Select Committee suggested measures which, if they were carried through, would remove £1,000 million from London. Others of his colleagues in the Opposition wanted us to change the SSA on daily visits. That again would take money from London.
  The hon. Gentleman should have been here to hear that, because he could have interrupted me to say how pleased he was that I was fighting for London. I am sure that he is pleased that I am fighting for London, and that he will fight with me for London against his honourable colleagues.
  Mr. Corbyn: I am deeply grateful to the Minister for giving way at last. I really appreciate it. I want him to know that. While he is on the subject of London, he will just occasionally have picked up the argument for an elected authority for London so that London's planning, transport, housing and other issues can be properly co-ordinated. Every other capital city around the world—[HON. MEMBERS: "Ah."] Obviously, the Minister's colleagues are upset.
  I should be grateful if the Minister would let me know what he says to Londoners when they respond to his document by asking for the return of an elected authority for London that could help to solve London's problems and enable London to speak with one voice.
  Mr. Gummer: I am happy to say that, of all the issues that Londoners want to talk about, an elected authority is pretty well down the list, even if they want to talk about it at all. It is interesting that, with our enormous investment in the London tube system, we are paying for all those years when the Greater London council did not invest in that system. In almost every case, the all-enveloping London authority wasted thousands of millions of pounds. It also left behind enormous problems, which are now being suitably met both by elected boroughs and by the involvement of Government in the enormous investment in London.
  I commend the settlement to the House. It is a fair settlement in a difficult year and it has been recognised as such across the board. It has wide support and we have sought to achieve a fairer system of sharing out the money. I am pleased that many different authorities, of all political complexions, have suggested that what we have done is well done.
  5.10 pm
  Mr. Jack Straw: In July 1979, the then Secretary of State for the Environment, the right hon. Member for Henley (Mr. Heseltine) announced his strategy to set local government free. He said:
  "We will sweep away tiresome and excessive control over local government. They do not need, they do not want, the fussy supervision of detail that now exists."
  But 15 years on, the reality is very different. Each of the 144 Acts of Parliament affecting local government that has
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  been passed since then has restricted its rights, increased the tiresome and excessive control of which the right hon. Gentleman spoke and extended
  "the fussy supervision of detail".
  The party that once campaigned to roll back the frontiers of the central state has been responsible for a massive extension of the powers of the central state. In an article just last week in The Guardian, a former Conservative education Minister, the hon. Member for Stratford-onAvon (Mr. Howarth) said that the result of the past 15 years has meant
  "the virtual destruction of the autonomy of local government".
  In Britain, local government is more centrally controlled than it is anywhere in the western world, in Europe or outside the old Soviet Union. The Conservative party of Joseph Chamberlain now has a local government policy of which Joseph Stalin would have been proud. The key to the central state power that Ministers now exercise over England's 400 local councils and 24,000 councillors is capping.
  The first objection to capping is that it patently undermines local democracy and local accountability. That view is widely understood across the parties and was even a few years ago. In her memoirs, Lady Thatcher records that the then Secretary of State for the Environment, Chris Patten, was
  "strongly opposed to any kind of comprehensive capping of local authorities. He argued against it … on the grounds that it would undermine the principle of local accountability".
  The second objection to capping is on the grounds of fairness. As long as local government draws a substantial part of its revenue from central Government—that will continue for ever into the distance—there will have to he as fair a system as possible for the distribution of that grant to recipient local authorities. That was the purpose of the standard spending assessment system when it was established in the late 1980s. At that time, as the Audit Commission made clear in its report "Passing the Bucks" published last March, and the Select Committee on Environment repeated in its report:
  "SSAs were now being used for tasks for which they were not orginally designed."
  The Secretary of State comprehensively failed to mention that in his quotations from the Committee's report, which were so selective that I seriously doubt whether he has read or comprehended it.
  The Audit Commission report continued:
  "The manner in which SSAs are used to limit council expenditure has confused accountability for local services between central and local government."
  That is obviously the case because, as the Audit Commission said, when the SSA system was established, less than 50 per cent. of total local authority revenue was controlled by the SSA system. Now, 80 per cent. of local government revenue is directly dictated by the SSA system and the total spending of every authority is controlled by its SSA.
  If one uses a machine in a way for which it was not designed, one imposes intolerable stresses on it for which no design solution exists, and the result will be irrational, unpredictable and, in the case of SSAs, profoundly unfair. I am glad that every member of the Select Committee recognised that truth. Again, the Secretary of State stayed silent on this statement by the Committee:
  "We appreciate that the use of SSAs in the capping process is putting pressure on the SSA system. We recommend the

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  Department address the problem of how to reduce the pressure on SSAs as a result of using them in the capping process and that it considers and evaluates alternative approaches."
  The SSA system is literally a zero sum gain, to use the jargon. One council's improvement is another council's loss: a reform made here will lead to a perceived injustice there.
  However fair Ministers may claim to be in making judgments about the system, some of the conclusions defy human experience and understanding. Under the new social index, Hove in Sussex ranks as a region of greater social need than Liverpool; Runnymede ranks as more deprived than Wolverhampton. Ministers must understand that those absurdities would matter far less if councils had the freedom and flexibility in their revenue base to set their own tax levels and were not the subject of the most monstrous gearing penalties, under which, for every £1 change in their grant, there is typically a £4 change in the level of their council tax.
  The third objection to universal capping is that it does not work on its own terms—it lacks utility. Of course many councils, particularly those in high-stress urban regions, have had their budgets forced down well below the levels necessary to maintain a decent level of service year after year. Many authorities have been forced to cut out discretionary but important sectors of spending. There are also councils, however, whose budgets have been forced up by the capping process and are above the levels that the local electorate and councillors thought appropriate.
  In January 1993, Ernest Mallet, the Conservative leader of Elmbridge district council in Surrey, described the capping system as a joke. He said that, in his view, it encouraged councils to "spend up". He added:
  "if there were no capping, our spending would probably be about £1 million—[or 8 per cent.] lower".
  The Minister for Local Government and Planning (Mr. David Curry): The hon. Gentleman has chosen the worst example that he could give. The spending of the council to which he referred is 49 per cent. above its SSA. It is about the only place in the country where his thesis is unsustainable. Capping is pulling down that expenditure and ought to pull it down. That irresponsible council needs to be taught a lesson.
  Mr. Straw: I am talking about a Conservative council and about what happened in 1993. The Minister should listen rather than quote silly figures. I have used the argument on that council before and it has never been contradicted by Ministers in the past. Mr. Ernest Mallet said that if there were no capping, the council's spending would be about £1 million lower.
  Ministers have played their part in the process. While Environment Ministers, as we have seen, have attacked local authorities for spending too much, education Ministers have attacked the same local authorities for allegedly spending too little. That was precisely the position that Birmingham council was in year after year. It was caught in a vice of Ministers' making. Environment Ministers said that it was spending too much, but education Ministers, year after year, complained that it was spending too little.
  Mr. Curry: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that Birmingham had seen the error of its ways and was trying to make a virtue out of spending
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  more on education. It set a budget that plans for the maintenance of services, but the budget speech did not once refer to the loss of a single job in Birmingham. If the hon. Gentleman's thesis were correct, Elmbridge district council's spending could not be 49 per cent. above its SSA because it would have been capped. He cannot say that its spending would be £1 million lower if it were not for the system. Its spending is 49 per cent. above the SSA. It is one of the councils about which the truth is very clear, but capping is reducing that expenditure.
  Mr. Straw: The hon. Gentleman will have to take that matter up with the Conservative leader of Elmbridge council. I was referring to what that gentleman said in January 1993. His figures were correct. There is plenty of evidence to show that capping authorities that were spending under their standard spending assessments—that applies to some small districts and to other authorities—put political pressure on them to spend up to their SSAs, thus using the assessments as a control figure for which they were never intended.
  The Minister of State mentioned Birmingham. He may not realise—this is also incontrovertible—that having spent years complaining about the fact that Birmingham was spending too little on education, this year he and his colleagues at the Department for Education have cut the amount that it can spend on education by £18 million, so this year Birmingham is spending above its SSA. On this occasion, will he condemn or congratulate Birmingham for doing what last year Education Ministers called for but Environment Ministers damned—spending more on education?
  Mr. Curry: The answer is plain. We have always made it clear that spending is not hypothecated. That is one of the firmest principles of the SSA system and it was sustained by the Select Committee on the Environment. Spending on education is therefore a matter for Birmingham. Of course we must distribute grant according to some sort of methodology and education is one of the elements, but once the grant arrives in Birmingham the council can spend it on what it wants. It may not be wise, but it is legal and that is the essence of the matter.
  Mr. Straw: I am glad to have that on the record and I support the principle. Perhaps the Minister and the Secretary of State—who also takes that view, I think—will talk to their colleagues and especially to the Secretary of State for Education and stop him from saying something wholly different from the message that we just heard from the Minister.
  The problem is that the system ends with something reminiscent of the 1970s incomes policies so despised by the Conservative party. In place of local discretion and negotiations with electors there is a national going rate, regardless of local circumstances. On a normal distribution curve, the pattern of spending before capping is translated into a single vertical line.
  As a delegate to the Conservative party conference last autumn, Miss Sarah Whitehouse, put it
  "under rate capping"—
  meaning the system of capping that we have now—
  "you can't tell the difference between Labour and Tory."
  I think that one can, but her remarks contain an essential truth, as there is no longer any discretion at a local level enabling people to enter into a bargain with their electors about what they should spend.

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  What is more the effect on public spending is perverse. I am not aware that the Treasury and the Department of the Environment have undertaken any studies on the utility of capping. No doubt they are frightened of what they might discover. Several times in his speech the Secretary of State quoted with approval the views of Mr. Tony Travers—a man whom he described as
  "an independent expert on local government finance".
  A study by that same Mr. Travers—from the London School of Economics—which was published in July 1992 found that capping had
  "led to higher spending by councils, the opposite result to that intended".
  During the debate on housing last week I warned Conservative Members, with my customary concern for their welfare, about the dangers of relying on the briefs produced by Conservative central office. When such giants as Iain Macleod, Rab Butler and Enoch Powell worked there, Conservative central office research department had the enviable reputation that, however disputatious the arguments advanced, its assertion of fact would be beyond question. As standards have plummeted as much inside the Tory party as they have within the Conservative Government, much of that department's material is now tendentious, inaccurate or downright mendacious in the extreme.
  Ten days ago central office, panic-stricken by the effects of Labour's exposure of the Conservatives' tax fraud at the last election, produced the so-called list of Labour spokespeople's alleged spending commitments that I have here. In it, central office alleged that the cost of ending capping and compulsory competitive tendering—as I made clear in a speech in Brighton on 1 October 1993—would be £800 million. Were the Secretary of State or his political advisers or officials consulted about that figure? Where did it come from? If not, was the statement a straightforward invention—like so many statements from Conservative central office? [HON. MEMBERS: "Answer."] I am happy to give way to the Secretary of State at any moment.
  When will he and central office wake up to the truth that the policy that we intend to adopt on local government finance is, with one important additional safeguard, precisely that policy outlined by the Prime Minister, in the White Paper that I have here, when he was Chief Secretary to the Treasury in July 1988? When the White Paper was produced the Secretary of State was a local government Minister, so I assume that he had something to do with it and approved of what it said.
  In the White Paper the Government announced that they would
  "in future exclude expenditure from the public expenditure planning total which local authorities finance or determine for themselves."
  It went on to explain why they intended to do so, saying:
  "The present procedures lump together expenditure for which the Government has different degrees of responsibility. This blurs the status of the various aggregates—grant on the one hand and locally raised finance on the other. A further disadvantage is that by counting the total expenditure of local authorities in the planning total insufficient attention is paid to the grants that central government provide to local authorities."
  It went on to say:
  "Very few other industrial countries plan public spending in this way. For federal states, such as Germany, the United States or Canada, this would conflict with their federal constitutions but even in other unitary states such as France or the Netherlands the Government generally makes budgetary plans only for central government expenditure … the new process of public expenditure control would be enhanced by redefining the
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  planning total so that it distinguishes expenditure which was the responsibility of central Government from that which is the responsibility of local government",
  which would be excluded from that planning total.
  I am not surprised that the Secretary of State is burying himself in his notes on the Bench. The crucial question is, if that policy was right then and he endorsed it, what—apart from the monumental mismanagement of the Secretary of State and his colleagues in the Cabinet, which has brought the economy to such a low point—has changed since? That policy was sensible and is the one that we shall adopt.
  As the hon. Member for Stratford-on-Avon said in his excellent article in The Guardian last week:
  "We should end capping, re-establish local government and allow it to resume its traditional right to act on behalf of local communities, answerable to them through the electoral process."
  Mr. Tracey: While the hon. Gentleman is on the question of policy, will he say what is the Labour party's policy on councils that do not collect council tax in such great measure?
  Mr. Straw: Our policy on Labour, Tory, Liberal or any other council that does not collect council tax is that it must do so. We have only one policy; it is the same for the collection of local and central Government taxes. The hon. Member for Surbiton (Mr. Tracey) should devote as much attention—proportionately more, given the weight of the problem—to the collection of Inland Revenue taxes by the Government as he devotes to the minor problems associated with collection of the council tax. It is a scandal that £1·7 billion of income tax and other central taxes are uncollected. When will the hon. Gentleman start to condemn his hon. Friends for that?
  On top of that, I hope that the hon. Member for Surbiton will look at the appropriation accounts for 1992–93, which spell out the extent to which Ministers are complicit in tax dodging in the black economy—that is in addition to the £1·7 billion of tax that has been levied but not collected. The Inland Revenue and the Public Accounts Committee say that there may be an annual tax loss in the black economy of several thousand million pounds per annutn. That is in paragraph 171, vol. 12 of the appropriation accounts. The hon. Gentleman needs to spend more time doing that instead of nit-picking at the excellent record of most Labour authorities.
  Mr. Gummer: May I bring the hon. Gentleman back to local government? If the London borough of Southwark is not collecting its council tax, it cannot spend it. Does the hon. Gentleman support the proposals of the London borough of Southwark to put council tax collection out to tender?
  Mr. Straw: I support the right of democratically elected councillors of Southwark to make their own decisions. The Secretary of State is a centralist and believes that he should make the decisions for every single council in the land.
  Mr. Curry rose—
  Mr. Straw: The Ministers are now doing a Mutt and Jeff act. I will give way to Jeff.
  Mr. Curry: In an article this morning, the hon. Gentleman said that part of his formula for local government was a universal system of election by thirds. Is that telling local government what to do or leaving it the choice?
  Mr. Straw: That is an absurd proposition.
  Mr. Curry: Well, the hon. Gentleman suggested it.
  Mr. Straw: The Minister is making the utterly absurd proposition that local government should entirely write its own rules. Of course it should not do that.[Interruption.] Local government is part of the national democratic framework, or should be—[Interruption.] The Secretary of State—
  Madam Deputy Speaker: Order. There are too many sedentary interruptions. I am also concerned that instead of debating local government finance, we are now discussing other matters which may be related but are not the heart of the matter we are debating now.
  Mr. Straw: I say parenthetically that the Secretary of State does not even know what the rules are.
  By law, without discretion, in every metropolitan borough there are elections by thirds, except in one year when there is a bye. In London boroughs, there are elections every four years. In the shire districts, there are either elections by thirds or all-outs every four years. In the shire counties they are once every four years. That is a rag-bag of a system. Democratic accountability could be improved by elections by thirds everywhere and by changing the financial year so that the local elections each year could genuinely be a test of the local authorities' financial proposals to their electorate.
  Mr. Rooker: Does my hon. Friend accept that it is a fundamental principle that there is a direct and specific connection between local government finance and accountability at the ballot box? The House is the Parliament of the nation—it is our duty to write the rules. One of the rules that we should like to write would provide for annual elections. I have repeatedly asked the Government to restore annual elections, even in Birmingham, to give us back the missing year from the abolition of the county council. It is wrong that one year in four should be missing and that London should have the chance to vote only once every four years.
  Mr. Straw: My hon. Friend is exactly right. Our proposal of annual elections is very popular with the electorate. They want the chance to choose; why is the Secretary of State denying it? I am astonished that it has become a partisan issue. We should all be agreed on it as it extends accountability.
  Mr. Gummer: Let me bring the hon. Gentleman back to the collection of council tax. I am not asking him whether he would insist that Southwark does that, but the public would like to know, as he has been extremely diffident in his advice. Is he or is he not in favour of contracting out, and would he or would he not support the London borough of Southwark? It is perfectly reasonable to ask whether he would or would not support it—or does he not know?
  Mr. Straw: Although I am not in favour of compulsory competitive tendering, as I believe in local democracy, I believe that local authorities have a right to decide whether their services should be directly delivered or put out to contractors. If Southwark decides that that is the most appropriate way to collect the council tax, I will support Southwark's right to make that decision. It could not be clearer.
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  I am sorry that the Secretary of State has turned accountability into a partisan issue as we support greater accountability. If the financial year for local government were changed, as we are proposing, each year's local elections would not only be a test of local government policy but could act as a referendum on the budgetary proposals of local councils.
  The Secretary of State had much to say by way of self-congratulation about how well he had done in the public expenditure round. He seemed not to recollect the embarrassing table on page 97 of the Red Book, which shows that his Department suffered the largest cut by far in planned expenditure of any single Department—three times that proposed for the Ministry of Defence which suffered the next highest cut. He also referred to claims made last year about job losses. I notice he could not produce any claim that I had made which turned out to be inaccurate because the claims made by the Opposition turned out to be all too accurate. We did a proper study of the likely effects of last year's settlement upon job losses.
  The previous Secretary of State said that there would be no job losses. As the recent study from the Local Government Management Board made clear—a study in which Department of the Environment statisticians take part—there has been a reduction of 50,000 local government staff in the year to September. At least 30,000 of those were reductions in staff as a direct result of the local authority financial settlement last year and not because of transfers to compulsory competitive tendering or of transfers of staff to grant-maintained schools.
  It is too early to predict the overall consequences of the settlement, but we know two things. First, there will not be sufficient money to pay teachers and other public servants. What I object to about the Secretary of State's statement and the Government's stance is the pretence. They promise to make the pay award of 2·9 per cent. recommended for teachers, and seek to curry favour with a particular section of the electorate by doing so, but fail to follow that through by providing the necessary resources. As local authorities' administrative expenses as a proportion of the total are now tiny, many local authorities will have to pay for teachers' pay awards increases with the jobs of other teachers.
  The settlement will have a severe effect on some local authorities. Liverpool is one example. Under the ludicrous ranking of the new social index, Liverpool is only the 85th most deprived area of the country, below Salisbury, Bath, Hereford and other green and pleasant cathedral towns. In the real world, however, simple observation shows that Liverpool has one of the worst concentrations of social and economic problems, not just in the United Kingdom but in the whole of western Europe.
  The Government know that that is true. That is why they supported Merseyside's successful argument for objective 1 status, which revealed that the average income of households in the region was only 79 per cent. of the EC average. That great city, responsibly led by Harry Rimmer and his colleagues, now for its pain faces a gratuitous cut of £4·5 million in its SSA. Most of that is explained by an absurd cut—not offset by other improvements—of £11·5 million in its SSA for children.
  Mr. Peter Kilfoyle: The Secretary of State made several references to the fact that the Government were accommodating, flexible, ready to meet local authorities and hear their objections. We have faced capping and cuts. The city council then decided to

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  commission Miss Rita Hale as a consultant and took its case to the Minister of State. Is my hon. Friend aware that it went away with another cut of £100,000 in its grant? That is another gratuitous kick in the teeth for the city council.
  Mr. Straw: Yes, I am aware of that. I was saddened by reports of the meeting, and I hope that the Minister will consider Liverpool's problems again.
  As we know—not least from the harrowing James Bulger trial last year—Liverpool's problems in relation to children at risk are no less severe than those of other areas. Where is the rationale in earmarking a 30 per cent. cut in Liverpool's spending on children at risk and on other children's services? That is irrational and is bound to be harmful. The vice in which Liverpool is now caught is a direct result of the total central control that Whitehall—200 miles away—now exercises over Liverpool city council's ability to solve its problems.
  Mr. Wareing: My hon. Friend mentioned that the European Commission had granted objective 1 status to Merseyside: it recognised the area's problems. Liverpool fears, however, that not much money will be available to meet objective 1 aims. All other programmes have been cut, and the Merseyside development corporation is likely to be phased out by 1997. We are told that the European objective is to create employment and services for the people of Merseyside—contrary to the aims of the gauleiters who reign from Marsham street. If the gauleiters are to review Liverpool's programme, they should consider the need to match the objective 1 funds.
  Mr. Straw: My hon. Friend is entirely right: he has illustrated the extent of Liverpool's financial problems.
  Within living memory, the Conservative party and its allies the progressives held sway in Liverpool, as they did in many other great towns and cities. Now, the Conservatives have been reduced to a rump in local government. That may explain why so few Conservative Members are present for this debate, why so few were present for the debate on housing, and two weeks ago, in the debate on the flagship policy of the national business rate, why for hours on end not one was in the Chamber to support Ministers.
  The Conservatives now control just 10 London boroughs, one metropolitan borough and one shire county. In contrast, Labour has never been stronger in local government, with good reason: people know that Labour provides a higher level of service and better value for money than either of the other main parties.
  Of the 10 councils with the best record on nursery education, seven are Labour-controlled; none is controlled by the Tories. In Labour areas, 40 per cent. of three and four-year-olds have the chance of a nursery education; in Conservative areas, the figure is only a third of that—just13 per cent. Of the five local education authorities with the best record on class sizes, three are Labour, while four of the five worst LEAs are Conservative-controlled. Contrary to what was said by the Secretary of State, class sizes have risen as a result of the intense squeeze on LEAs.
  Of the 16 most efficient councils named last year by the Local Government Chronicle, eight are Labour, while just two are Conservative. Of the 25 most efficient housing authorities named before Christmas by the Minister for
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  Housing, Inner Cities and Construction, 11 are Labour-controlled, three are Labour-dominated, and only four are Conservative.
  Collection rates have been mentioned. Far the worst council in regard to rent arrears is Conservative Brent. It is owed £16·8 million—a third of its rent roll. The Conservatives have been in power for four years, and they cannot even collect the rent. If we consult the Department of the Environment's computer to find out which authority has the highest proportion of homes that are available for rent but empty, which authority emerges at the top of the list? I almost hesitate to name it. This authority has only 40 council houses, although 1,463 people are on the waiting list; of those 40 houses, 13—30 per cent.—are empty. I refer to the district council in the Secretary of State's constituency.
  Conservative Ealing has the highest council rents by far: £66·06, twice the national average.
  Mr. Tracey rose—
  Mr. Straw: The hon. Member for Surbiton (Mr. Tracey) clearly wants another fact to take around his local estates. Every one of the five councils with the highest rents is a Conservative-controlled London borough.
  Mr. Corbyn: One of the strategies adopted by Westminster council was to leave homes empty, so that the homeless remained on the streets, in hostels or in bed-and-breakfast accommodation, and then sell them to the highest bidder, thus depriving the poor of somewhere to live. Is not the Secretary of State's local authority likely to adopt the same strategy?
  Mr. Straw: Yes—and we look forward to hearing some condemnation of what has happened in Westminster. I shall return to that later.
  As I think the whole country now knows, average household council tax bills are £14 higher in Conservative areas than in Labour areas, although they generally provide worse services. The Secretary of State said that it was up to councils to set the level of their taxes, but that is not so. The total revenue of councils is set by the Secretary of State in the capping orders and notional amounts: it follows as night follows day that council tax levels all over the country are also effectively being set by the Secretary of State.
  Let me warn the Secretary of State and the country that, if his decisions about the relation between capping and SSAs cause average bills to be higher in Labour areas than in Tory areas—contrary to this year's position—that will serve only to confirm our claim that Conservative Ministers tend to favour Conservative rather than Labour authorities. The absolute power of Tory Governments over councils must be accompanied by corresponding responsibilities for council tax levels.
  For all the fancy words of the Prime Minister—who said last year that he wanted a "renaissance of local government"—or the Minister's frequent mention of the need for a new consensus, Ministers can rarely bring themselves to praise local government. Instead we are fed a diet of low-grade, mendacious abuse, especially by Conservative central office.
  Two weeks ago, it published a dossier on the London borough of Haringey: it is a tissue of fabrications, inaccuracies and downright lies. According to one of its sections, after the demolition of Wood Green and Hornsey

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  town halls, a secret report to the Labour group had recommended the sale of a grade 2 town hall for about £5 million.
  We can argue about statistics, and we sometimes do; we can argue about political philosophies. It is difficult, however, to argue about whether a building is standing or has been demolished. For the benefit of the Secretary of State, here is a photograph of Hornsey town hall. It is still standing, as is Wood Green town hall.
  Mr. Tony Banks: Will my hon. Friend refresh my memory? Was it not Conservative-controlled Kensington and Chelsea council that knocked down a town hall overnight when the preservation order was about to be served?
  Mr. Straw rose—
  Madam Deputy Speaker: Order. Perhaps I should point out that this is not a general survey of council properties. We must return to the main thrust of the debate, which concerns local government finance.
  Mr. Straw: I entirely accept what you say, Madam Deputy Speaker. The point is that, had those town halls been demolished and had Haringey council lost the money —as Conservative central office alleged—serious spending cuts or a council tax increase would have been necessary. This is not just an aberration in an otherwise impeccable statement about Haringey's record; it is symptomatic of the lack of care and the tissue of innuendos and lies that emanate from Conservative central office.
  Mr. Gummer: I am happy to accept that Wood Green and Hornsey town halls are still standing, but can the hon. Gentleman explain why Haringey's long-term debt is double that of Romania?
  Mr. Straw: My answer is that, until I see further and better particulars from Conservative central office, I should not dream of accepting that what the Secretary of State said was remotely accurate.
  Mr. Eric Pickles: If the hon. Gentleman is not happy with the documents produced by Conservative central office, I commend to him a document called "Haringey Council" written by the council's deputy leader. It describes the council as having a legacy of waste, inefficiency and centralism and says that it suffered from a crisis of management which still infests the council's culture. Does the hon. Gentleman agree with his own side?
  Mr. Straw: No, I do not. Haringey has a very fine record and produced an extremely good rebuttal document which deals with the town hall and the rest of the lies. I recommend it to the hon. Gentleman.
  I am glad that he intervened because I understand that he is the chairman of the local government committee of Conservative central office—a part-time post if ever there was one. He racketed from Bradford to Brentwood with failure in his wake. It was he who, as leader of Bradford council, diverted £13 million of housing capital allocation to fund the inner-city ring road, cut £13 million from the education budget in a single year and increased rents by £8, thus losing £8 million in subsidy from the housing revenue
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  account—no wonder Bradford Conservatives lost control as quickly as they had gained it. Now he is in Brentwood and cannot gain the support of his senior party officials.
  The Brentwood Weekly News of 20 January 1994 states that Mr. Dashwood-Quick, the chairman of West Horndon Conservatives, went on air to say that the Government
  "had a clear lack of responsibility, poor leadership and disregards the views of grass roots Tories who helped get us elected".
  He is also reporting as saying:
  "all decisions seem to be governed by a need for expediency rather than what is right."
  Mr. Dashwood-Quick was right.
  The Secretary of State for the Environment mentioned Birmingham, Britain's second city. Under Labour control, the economy and environment of that great city has been transformed for the better. The programme of public buildings in the centre of the city, from the international convention centre, the symphony hall, the council house and down to New street, makes the area one of the finest cities not only in the United Kingdom but in Europe. It is so fine that the Prime Minister was all too happy to share in the reflected glory for the Birmingham summit in October 1992.
  Of course, such programmes of inner-city and urban renewal require vision and cash. Of course, they were bound to cause controversy, but Birmingham Labour leaders and Birmingham Labour party had the courage to see their vision through. No one can gainsay their achievement, except the small-minded partisans among the Conservatives and their lickspittles in the Conservative press.
  Last Friday, the Under-Secretary of State for the Environment with responsibility for housing, the hon. Member for Banbury (Mr. Baldry), issued a tacky, two-page attack on Birmingham, under the heading "Birmingham the Barmiest". However, not even he could bring himself to make his assertions with absolute confidence. He said that Birmingham was coming up on the inside as the new loony left authority but added the important qualification
  "if you believe last week's Mail on Sunday."
  My advice to the hon. Gentleman is that it would be dangerous to believe The Mail on Sunday last week or any week, as he clearly realised.
  In the same disreputable handout, the Minister relies on the Birmingham Evening Mail. Virtually every adverse story about Birmingham which appears in the national papers begins life in the Birmingham Evening Mail or its sister paper The Birmingham Post. The headline "20 Barmy Ways Labour Waste Cash in Brum" which appeared in The Sun was a direct lift from the list of 50 such charges in The Birmingham Post last November. There is, of course, a reason for that. The Birmingham Post and the Birmingham Evening Mail are owned by Midland Independent Newspapers. One of the few surviving Tory Members of Parliament for Birmingham is the right hon. Member for Sutton Coldfield (Sir N. Fowler). He is not only chairman of the Conservative party but chairman of Midland Independent Newspapers.
  The man who is allowing Conservative central office to peddle whoppers about town halls in Haringey and even bigger untruths about tax is the man who heads the two monopoly papers in Birmingham which tell lies about Birmingham city council. Instead of acting as the mouthpiece of Tory central office and denigrating it, those two papers should be speaking up for that great city. If

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  there is any meaning in the word "independent", the group could begin to show it by inviting someone other than the right hon. Gentleman to act as its head and appoint as chairman someone who does not have such a patent and vested interest in shoring up the fortunes of a Tory party on the slide in that great city as elsewhere.
  Mr. Roy Thomason: If Birmingham city council is the paragon of virtue that the hon. Gentleman describes, will he explain why the current leader only recently took control in a left-wing coup, dispossessing the Labour group's chosen leader?
  Mr. Straw: I am almost tempted not to allow any more interventions from Conservative Members for fear of their humiliating themselves. in case the hon. Gentleman had not spotted it, the truth is that, when my good friend and great colleague Sir Richard Knowles retired as leader of Birmingham city council, there was an election. In the Labour party we honour our elders and allow them to go in their own time—not for us the backstairs coup for which the Tory party is even today sharpening its knives.
  Mr. Gummer: Hardly had Sir Richard Knowles left office than the new leader attacked his polices, said that they were wrong for Birmingham and wanted new ones. The hon. Gentleman must decide which Birmingham he is talking about—the Birmingham of Councillor Stewart or that of Sir Richard Knowles—because Councillor Stewart said that she would have preferred to use the money very differently.
  Mr. Straw: I happen to know both people rather better than the Secretary of Stale, and one cannot put a sheet of paper between them. I have here the budget statement of the new leader of Birmingham city council who went out of her way to praise her predecessor's record.
  As for the charge of inconsistency, the Secretary of State should be careful. We have heard him pontificate about the merits of the council tax but I have here the 27-paragraph speech—called "The Morality of the Community Charge"—which he made in Blakeney in Norfolk in 1988 and which I suspect that he wants to forget. In it, he castigated the idea of any tax based on property. It contains the fantastic sentence:
  "As a moral traditionalist, I have grave misgivings about situational ethics"—
  whatever they may be. He then described the iniquities of domestic rates. He ended by saying that the community charge was indeed
  "a morally superior alternative"
  Madam Deputy Speaker: Order. Could I be very boring and inquire how this relates to the financial reports that we are supposed to be debating?
  Mr. Straw: I was challenging the sincerity with which the Secretary of State is recommending the new system when only four years ago he was supporting a completely different system—the poll tax—and when he also supported the 1988 White Paper, which set its face against capping.
  In the list of councils that did best and worst in the provision of nursery education—
  Ms Estelle Morris: Does my hon. Friend agree that the picture painted by the Conservatives of the difficult decisions taken by Birmingham city council with its limited finances is not
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  accurate? Does he agree also that the Government's handling of the economy prevented the council developing the city centre and promoting housing, social services and education? It is only as a result of clever leadership that Birmingham has been the only city that has invested in its city centre and saved jobs. What Councillor Theresa Stewart means is that now we can turn our attention to meeting other pressing needs, and the needs of other parts of the city.
  Does my hon. Friend agree about two matters? If the Government had taken—
  Madam Deputy Speaker: Order. Interventions should be short and this sounds as though it is going to be a mini-speech.
  Ms Morris: No, it will be a very short intervention, Madam Deputy Speaker.
  Does my hon. Friend agree that if the Government had taken a lead from Birmingham city council and invested in industry, the nation would not be in the mess in which it is now? Does he also agree that there is no difference of opinion between councillors in Birmingham city council? We are tackling all our problems, but because of the way in which the Government give us finance we need to do things one by one instead of being able to do them all at the same time.
  Mr. Straw: I agree. I congratulate Birmingham city council on its excellent record in economic and social development. On the issue of the so-called prestige projects, Councillor Theresa Stewart said in her budget speech:
  "I want to say a word about the so-called prestige projects which I am supposed to love to hate. I believe we have safeguarded their position"
  in the budget. She recognises their importance to economic development in that city.
  In the list of councils that did best and worst for nursery education, to which I drew attention some minutes ago, the few Liberal Democrat councils that exist are at the bottom of the list, not the top. The Isle of Wight, where the Liberals have been in control since 1985, is 96th in the list of 107 local education authorities for nursery education. Only 7 per cent. of children in the Isle of Wight have the chance of a nursery education. By their deeds shall ye know them. The only appearance of a Liberal council anywhere near the top of the list—Tower Hamlets—reflects the investment of ILEA, not of that Liberal borough.
  In the past few months, the country at large has seen the reality of Liberal Democrat control of councils—overtly racialist, unprofessional and literally out of the control and influence of the national policy. As the ombudsman said of Tower Hamlets, many of the problems of Tower Hamlets stem from the Liberal Democrats' decision to decentralise administration of seven neighbourhoods.
  To try to salvage their fortunes, the Liberal Democrats in Tower Hamlets have now hired the services of the television reporter Mr. Vincent Hanna, not as a public relations adviser, but as acting chief executive, for a fee of almost £3,500 a week. Mr. Hanna is now earning—
  Mr. Corbyn: He is not worth it.
  Mr. Straw: Mr. Hanna is now earning, I understand, almost as much as Mr. Ian Wright, Arsenal's excellent striker. I think I know who is better value, and it is not Mr. Hanna.
  Only 12 months ago, the Prime Minister said that we must build a new accountability fit for the 21st century, a new accountability that goes directly from those who run public services to those who use them. The Prime Minister was correct, but I doubt whether he realised what he was saying, for contained in those words was a revealing admission that, 14 years after the Conservatives came to power, there is a crisis in the accountability of the public services. Indeed, far from having a system fit for the 21st century, we have one that is slipping back to the 18th century, in which graft, corruption and favour reign supreme.
  That was the message of last week's Public Accounts Committee Report. It had nothing to do with denigrating loyal career public servants and everything to do with blowing the whistle on Ministers and their appointed cronies who fail to understand how vigilant they must be in maintaining the critical line between the public's interest and the interests of the Conservative party and its backers. Far from strengthening accountability, it has been weakened by Government policies. Responsibility for £24,000 million a year of public services has been removed from local government and a high degree of cynicism has been generated about the way in which some so-called flagship authorities have been favoured at the expense of the rest.
  Everyone knows that, year after year, grant was stuffed the way of Westminster and Wandsworth. This year, 17 per cent. of the total of transitional relief is going to a single borough—Wandsworth. The arithmetic is plain for people to see. Everyone knows too that the trail from Westminster city hall and its appalling policies of social cleansing and political gerrymandering leads straight back to Conservative central office and to a number of hon. Members, in this House and in the other place.
  Of course we accept that there should be due process, but that was not, by the way, what was accepted when it came to Labour councillors or other councillors who were being surcharged at the behest of Conservative objectives. We do not have to wait for the procedure to be through before we hear from Ministers about their view of the policy. After all, when those objections were made three years ago, Ministers in the other place were saying that the scheme of designated sales was a very good scheme which addressed a difficult problem for Westminster. Ministers have never been slow to criticise or condemn Labour councillors on the flimsiest evidence or none. When, then, will their trappist silence on Westminster end?
  The hon. Member for Stratford-on-Avon, in the excellent article in The Guardian to which I referred, said:
  "The superseding of local responsibility by centrally appointed bodies and individuals has gone too far and weakens the democratic political culture".
  He is right.
  We oppose the orders because they are the tangible representation of a centralised system of control, which denies people proper choice, which removes responsibility from elected local councillors and which has undermined the standards of the public service and the health of our democracy.
  6.5 pm
  Mr. Barry Field: I do not want to continue along the road down which the hon. Member for Blackburn (Mr. Straw) has led us, but I wonder whether he could help me. I do not know whether he is listening to me, but I wonder whether he can confirm that the Vincent Hanna whom he mentioned is the same Vincent Hanna who had such fame in the BBC exit poll in 1979 that was the subject of an inquiry in the BBC. Is he one and the same?
  Mr. Straw indicated assent.
  Mr. Field: I take it amiss when the hon. Gentleman tells us that Conservative Members are uninterested in local government or are somewhat opposed to it, because my family have served for five generations in local government and we have enjoyed our service immensely. I think that many of my hon. Friends would share that view. We think that local government is an honourable service and that to serve it is a way of putting something back into life in return for what we receive from our local community. I resent the assertion made by the hon. Member for Blackburn that Conservative Members do not value local government and the service that it provides.
  The hon. Member for Blackburn took us from Joseph Stalin to Dashwood-Quick; we went via Romania. He focused on the empty houses of my right hon. Friend the Secretary of State for the Environment—all 13 of them. I have heard a de minimis argument maximised from time to time in the House, but never in such an extraordinary way. When he discussed capping and his usual antipathy to it and proved the way in which it encouraged everyone to spend, it seemed to me that he must have been thoroughly in favour of it, if that was the nature of his argument. It is well known, however, that his views about local government are about as up to date as a wicker shopping basket.
  My hon. Friend the Member for Hertfordshire, West (Mr. Jones), Chairman of the Environment Select Committee, hopes to catch the Speaker's eye in Monday's debate about the aftermath of and the follow-up to the Rio conference. In his usual generous-hearted way, he asked if I would introduce the Environment Select Committee's report on standard spending assessments this evening, as a member of that Committee, rather than hope that he might catch the Speaker's eye on two separate occasions in a short time. I am happy to have that opportunity this evening.
  My right hon. Friend the Secretary of State made some kind and courteous comments about the Select Committee's report, for which I thank him. He referred to Mr. Tony Travers, who was one of the witnesses who came before the Select Committee, and pointed out that a report by Mr. Travers said that the doom and gloom of last year's settlement had been very much overdone by Opposition Members. Indeed, if every one of us who has served in local government had a pound for every occasion when an initiative of the Government or some announcement or settlement was going to be the end of local government and bring it to a screeching halt, we would be richer than the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and we would all be able to afford a council house in Westminster.
  The report makes more than 20 recommendations, which encompass a mixture of technical and procedural

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  changes, as well as matters of presentation. The theme throughout the report is an acknowledgement of the genuine attempt that Ministers, officials and local authority associations have made to bring a better understanding and a greater transparency to what was a rather opaque process. Although that process hardly ignites the interest of the citizens of our nation, it certainly touches on each and every one of their daily lives in the cities, boroughs and districts in which they live.
  There was a universal welcome for the openness of this year's standard spending assessment review, and our recommendations reflect the Committee's desire for that progress to be taken further and improved so that it is as transparent and open as possible. That could be done by improving the technical construction of SSAs and by reducing the pressure on the whole system by reconsidering their use for purposes other than grant distribution.
  I know that many Opposition Members wish to speak, so I shall not take up the time of the House by going through all the Committee's recommendations. Instead, I shall highlight some of them. One recommendation, which is especially pertinent in view of a number of the interventions in the speech of my right hon. Friend the Secretary of State, concerns openness. That is a good place to start.
  Most, if not all, of the members of the Committee had had experience as councillors, either on our present local authorities or elsewhere in the country, so we appreciated the fact that there is a cake-cutting system. Sometimes—in fact, practically always—that system is seen as political. Our recommendations include a suggestion that it would be useful if Ministers highlighted where they had exercised judgments, spelt out those judgments and explained why they had been made. I see no reason why we should be shy of doing that. After all, politics is what we are here for, and Conservatives are here to form a Government and discharge our responsibilities. We should not be shy of setting out where Ministers have made those decisions.
  Much time was taken up in the Committee by discussions on a subject that has already featured in our debate—the area cost adjustment. I believe that my right hon. Friend dealt effectively with that subject when he opened the debate, but I am certain that if we could see the way in which Ministers take decisions, and when and why they take them, we could begin to depoliticise the process, which would be helpful.
  The Committee thought that the Department of the Environment could be more helpful to local authorities if it provided them with individual completed calculations to show the composition of their SSAs. I do not know whether my experience is typical—one cannot help drawing on one's own experience of the way in which matters are arranged by one's own local authority and of taking deputations to see: Ministers—but it seems to me that hon. Members are often used by their local treasurers to see Ministers in order to explore the figures behind the decisions, and to get down to the formula, or the arrangements of figures, for their local authority.
  An enormous amount of public money seems to be spent, and national resources wasted, by deputations coming to Marsham street from all over the country. It is a time-honoured craft. I am sure that some people come because they like shopping in Harrods and others because they like singing "The Red Flag" in the four-ale bars in the
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  House. So there may be other agendas involved. In general, I believe that the deputations come in order to get down to the nitty gritty of the figures.
  If, when they weigh that recommendation, my right hon. and hon. Friends in government believe that it would be expensive and onerous, I wonder whether they might consider making the data available, in disc form compatible with local authorities' computers, to each family of authorities—perhaps to a few authorities in each family, as an initial experiment, if they are not prepared to go the whole hog and dish out all the facts and figures, which I appreciate would be a pretty mammoth exercise. I believe that that could lead to considerable savings.
  We agreed with all our witnesses that hypothecation should not feature in SSAs. I especially homed in on that thought, because we read reports that the Labour party is now flirting with the idea of hypothecation to overcome the great problem caused by the fact that it keeps telling us where it would spend money but never tells us where that money would come from. We also know that the Liberal Democrats fought the general election on the idea of a hypothecated tax.
  In my view, that idea strikes at the core of democracy, because if we start hypothecating taxes we cause all sorts of problems. No doubt we should have to create a vast bureaucracy to ensure that all the money raised in that way was allocated and spent accordingly. The main reason why hypothecation should never be attempted in local government, which has been alluded to by hon. Members on both sides of the Chamber, is that it specifically undermines local democracy.
  Two principal divides take up much of the time spent on local government in the Chamber. The first is the quantum, and that subject will be with us for ever, whatever Government are in power. The other concerns the fact that local councils want the maximum freedom to make the choices that affect their local communities.
  Mr. Robert B. Jones: While my hon. Friend is talking about democracy, and the Liberal Democrats, does he recall the right hon. Member for Berwick-upon-Tweed (Mr. Beith) leading a campaign to get rid of area cost adjustment? Does he think that that campaign will be revealed by Liberal Democrat candidates in the London boroughs, or might the Liberal Democrats say one thing in the north of England and something entirely different in the south of England?
  Mr. Field: My hon. Friend contributes, as always, a reasonable and practical point. The Secretary of State dealt well with area cost adjustments in his opening speech. Although there is antipathy in some parts of the Labour party for area cost adjustments, clearly London would have a problem if they were abolished.
  If my hon. Friend thinks it rare for Liberal Democrats to contradict themselves between the north of England and London, he ought to come and see what happens in the Isle of Wight, where they contradict themselves between one side of the island and the other. That is a much smaller area than the United Kingdom.
  One rather interesting result of our report was an article that appeared on the front page of the Evening Standard last Tuesday, arising from recommendation 9, concerning responsiveness to local circumstances. I have taken some soundings from my London colleagues on that recommendation. The Committee received evidence that the SSAs for

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  London skewed the national SSA analysis and distribution, so we recommend that London should be taken out of the system for the rest of the country—or at least, that the Department of the Environment should consider taking it out, and evaluate the pros and cons of doing so.
  I have been an officer of the Back-Bench tourism committee for some years and nobody knows better than I the problems that tourism creates in London. The House itself is a magnet for international tourists, and we have to work our way through groups of evil little French children who seem to block our way during the summer months. I remember that our dear old friend the late Robert Adley was always on about the problems of coach parking in London and the difficulties and traffic congestion that tourists created.
  I believe that most of my hon. Friends think that the recommendations of the Select Committee give us the opportunity to take London out of the system. Judging by the soundings that I took, they believe that if we get the formula right everything else flows from that. Indeed, when we look at this year's settlement and see the damping that has been put into a number of London boroughs, because of the way that the formulas work this year, we hope that our recommendation will commend itself to Ministers and officials. Nowhere in our recommendation did we have the temerity as a Committee to make the point about the quantum, which is on the front page of the Evening Standard. Other things may flow from our suggested reform, but we certainly did not go that far.
  In opening the debate earlier, my right hon. Friend the Secretary of State has probably almost dealt with the point about the reform of local government. I hover over it, however, because I very much hope that the Isle of Wight will be the first unitary authority under the local government reorganisation in the United Kingdom. I must make the point that any reform of local government structure will create considerable turbulence in the SSA in the short term. My right hon. Friend mentioned that he has already announced arrangements for the costs of reorganisation. With the greatest respect, that is a differernt point from the one that we make in our report, on turbulence.
  One of my concerns has always been that the merging of three local authorities into one—there will perhaps be greater combinations of that elsewhere where recommendations have been made—might lead the system to believe that the pruning of bits of the SSA for districts, when they go into counties, or vice versa, could take place. That is rather worrying.
  We homed in on the use of data and the census information. A number of us found that our population projections had been overstated in the interim. Once the census has taken place, there is a fairly dramatic effect once a decade. Although it is true to some extent that local government has a bit of a vested interest in over-egging the cake in the interim, and gets a holiday out of it, in this day and age, with the use of computers, it must be possible to try to keep the information more up to date. We hope that our officials will take that point on board rather than have that precipice at the end of every 10 years.
  The point was made about year-on-year change in SSAs. I listened carefully to my right hon. Friend, who said that he hoped to keep them much as they are, and with as
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  few changes as possible in the future so that the system could settle down. The Committee was concerned about how the cost of delivering a standard level of service could change dramatically from one year to amother. I have already alluded to the damping that has been made available to some London boroughs. We hope that the Department will carry out more research into the real cost of service provision and the additional educational needs factor, which has been alluded to.
  This has been my contribution to introducing the Select Committee's report on SSAs. It is a dull subject and hardly bedtime reading. I hope that I may now be forgiven for introducing my own constituency interest in the matter.
  The Select Committee met my hon. Friend the Under-Secretary of State for the Environment on 13 January, following a meeting with my hon. Friend the Under-Secretary of State for Health, the hon. Member for Battersea (Mr. Bowis), on 12 December about community care funding. We had a difficulty because of the huge distributional difference that arose between 1993–94—50 per cent. was based on local income support cases and 50 per cent. on the then current SSA—and the revised basis of the SSA in 1994–95.
  We appreciate the fact that local authorities knew that the distribution system would change in 1994–95, but the only information that we had was that contained in the 1993–94 SSA data. No one in the Department or in local authorities knew at that time what the revised SSA would be. Further, there was no prior suggestion to local authorities that all the resources for community care in SSA and special transitional grant would be distributed on a 1994–95 new SSA basis.
  The national resource total has been preserved, but the distribution in different years has changed by factors from a multiplier of 5·537 in the City of London to one of 1·206 in Sefton, with the Isle of Wight in the penultimate position, a multiplier of 1·435, and a national total factor of 2·254.
  The delegation to the Department of Health on 21 September sought to persuade the Department to reconsider the distribution at least to the extent of agreeing that the excessive swing above and below the national average increase should be dampened. I am still waiting to hear the outcome of that meeting from my hon. Friend, but I remain concerned about the effect that it will have on the SSA for 1995–96, because it seems that next year's figures will set that figure in the future.
  Another concern is much longer running. I thank my hon. Friend the Under-Secretary, because when we met him with his officials on 13 January he said that we were the only local authority deputation he had seen who had raised with him the fire and civil defence SSA. He generously told us that he would take up the matter with the Home Office. I draw his attention to the fact that, on 24 May 1988, we took a deputation to the Home Office to meet the noble Lord Ferrers. There was a letter on 31 October 1991 to the Home Secretary from the chairman of the public protection committee about the problem. I wrote again on 23 January 1992. We received a reply on 18 February 1992 from Mr. Gilderoy at the Department of the Environment, which was referred to the Home Office.
  We took another delegation on 5 March 1992 to meet the noble Lord Ferrers. We had a meeting on 5 March 1992 to discuss the matter and, on 6 December 1992, met my right hon. Friend the Secretary of State for Wales, who was then Minister at the Department of the Environment. On 4

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  February, we took his excellency the lord lieutenant for the Isle of Wight to the Home Office. When I met my hon.Friend the other day in his Department, he said that he could see our frustrations at having gone backwards and forwards between the Home Office and the Department of the Environment. We had a problem with the Department's definition of the SSA as
  "the appropriate amount of revenue expenditure which would allow the authority to provide a standard level of service, consistent with the Government's view of the appropriate amount of revenue expenditure for all local authorities".
  That is significantly at variance with the appropriate amount for a standard level of service as determined by Her Majesty's inspectors of fire brigades. Thus, in the island's case, two separate assessments of need by the same Department of State produced two totally different answers. Clearly, both those answers cannot be right. I ask that my hon. Friends do all in their power to put that right. Our archaeological curator on the Isle of Wight, when we were discussing coastal erosion and sediment transportation, likened the Isle of Wight to a giant Alka Seltzer which was dissolving into the sea.
  I have given the long litany of deputations and meetings, involving Ministers at the Home Office and at the Department of the Environment, about the fire service standard spending assessment for the Isle of Wight. We can hardly dial 999 and expect the adjoining fire brigade in Hampshire to catch the ferry to help us put out the fire. That gives us great cause for concern. If we are not an Alka Seltzer dissolving into the sea, we are in this respect a ping-pong ball which has gone backwards and forwards between the Department of the Environment and the Home Office. I look to my hon. Friend the Under-Secretary not only to ensure that there is fair play but to put the ball right out of court so that we can stop this administrative nonsense, which is quite unnecessary.
  6.30 pm
  Mr. Ron Leighton: The London borough of Newham has more than its fair share of problems. Its economy was based on port-related activities in the docks and on the railways. All that has gone, leaving a great void. Newham's docks, the Royal docks, are still an eerily empty moonscape. The promised development associated with the London Docklands development corporation has just not happened. Newham has suffered greatly from the recession. It has more than double the national average rate of unemployment, with all the damaging and debilitating consequences. Few of Newham's school leavers get jobs.
  Much of the borough's housing was built at the turn of the century, and is in bad condition. The council has a huge waiting list, and it has 3,000 people in temporary accommodation. The most recent survey, conducted by the Department of the Environment and Manchester university, shows that Newham is the most deprived local authority in England and Wales. I am not proud of that; we want to get away from that. Many people in Newham are striving valiantly to improve things; they want the Government's support, not their hindrance.
  One area in which progress is being made is education. There has been a big increase in good GCSE results in Newham. The one exception is Stratford school, where the results are abysmal and a scandal; that school has opted out. The education service is working against great difficulties.
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  I visited one comprehensive school and saw, in the reception area, a long list of more than 20 languages. When I inquired about it, I was told that it was a list of the home languages of pupils in that school. We have many refugees. I was told by the representative of one group that there were 7,000 Somalis in Newham. Not only are their children not fluent in English when they arrive, but, because of the war, they have not gone to school to learn to read and write their own language.
  Some 50 per cent. of Newham's children have a home language other than English. Section 11 was a great help to us because section 11 grants paid for teachers to help with the teaching of English, but that money has now been cut. I led a deputation to the Home Office. The Minister of State listened to what we said, congratulated the deputation on its cases, and more or less said that he agreed with it. However, he then said that his budget had been cut.
  Last year, Newham was aggrieved by its revenue support settlement, which allocated unfair standard spending assessments—the Government's estimate of what a local authority should spend to provide a standard level of service. The borough was short-changed by more than £22 million.
  There were two main reasons. The first was that Newham's capital SSA was based not on the real amount that the council had borrowed over the years, with permission from the Government, to invest in houses and schools—£208 million—but on a notional amount of £109 million. Under that ludicrous arrangement, Newham received a capital SSA of only £18·5 million, while it was committed to spend £29·75 million to service its capital debt. That left a shortage of £11·25 million, which had to be taken from somewhere else, robbing other areas of activity.
  The second reason is that Newham has an acute homelessness problem. It has a statutory obligation to house homeless families in priority need, using temporary accommodation if necessary. Last year, Newham had to spend £11·25 million and there was no statutory provision —no SSA recognition—for that. Once again, other budgets had to be raided. With a shortfall of more than £11 million for capital and another shortfall of more than £11 million for homelessness, Newham was short-changed by more than £22 million.
  Newham, a deprived inner-city borough with multiple problems, had to spend under its SSA less than the amount that even this Government think we should spend on services across the board, including education. It was a nightmarish situation, and all our problems were made worse.
  Out of concern for the damage that was being done and for the unfairness of the settlement, local people got together to form the Newham Needs Campaign. It consists of the Churches, voluntary organisations, local trade unions, the borough council and the local newspaper, the Newham Recorder. It arranged a deputation to the Department of the Environment to see the Minister of State. It organised a conference at the town hall and a rally in Trafalgar square.
  The campaign—this grouping of local people—rejoiced and had high hopes and expectations when it was learned that the SSA methodology which had so penalised Newham was to be reviewed and changed. It was felt that, at last, Newham's grievances would be remedied. Here was an opportunity to give the borough a fair settlement.

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  The House can imagine the consternation, the dismay, the shock, the disbelief and the sense of betrayal when it was discovered that that new settlement and the new methodology were more damaging than the old, and that they gave Newham an even worse deal. Indeed, if the previous system had remained unchanged, Newham would have received £18·75 million more than it was allotted under the new arrangement. This year, a one-off reduction grant of £13 million is being paid to cushion the effect of that cut. Even that is guaranteed only for one year, and, if it is removed, things will be even worse in a bleak future.
  The three Members of Parliament and the council leader came to see the Under-Secretary of State at the Department of the Environment. He told us that the settlement was formula-driven—that the formula was fed into a computer and that what came out was the settlement. It appeared that Ministers had no discretion: that we had government by computer. That proves to me that the straitjacket of a rigid formula does not meet the individual needs of each authority. The effect on Newham is perverse and appalling.
  I can illustrate that point by comparing the borough with its neighbours. The SSA per head for Barking and Dagenham was increased by £42 compared with the figure for last year. For Tower Hamlets it was increased by £45 per head, and for Havering it was increased by £46 per head. For Greenwich it was increased by £73 a head, but for Newham there was a reduction of £31 per head. That is outrageous—it blights all our hopes, and sabotages all our efforts to improve life in the borough.
  Do Ministers want a spirit of hopelessness to pervade the borough's affairs? Are they proud of the fact that we cannot spend up to our SSA on education, and that our teachers are expected to struggle with less than even the Government think we should spend on education? If our SSAs are reduced this year—we have had confirmation of that—will Ministers please tell us what else should be cut? I should like them to give us guidance today. Perhaps they think that we should shut the borough's swimming pools, or close even more of our libraries. How many more staff are they asking us to sack?
  Ministers have a duty to tell us what ought to be cut. I want the Ministers to come to Newham to meet the people on the ground, to see the damage done by that settlement and to discuss with those people what should be done.
  The Secretary of State, who is not present, came to a recent conference at Stratford town hall. He did not come to listen to any of the speeches that preceded his. He made his own speech and disappeared immediately, without any contact or discussion with anybody else. His theme was partnership.
  After the financial stab in the back that we have just heard, a hollow laugh and much cynicism is likely to greet that theme. We feel let down by our partner, who is kicking us in the teeth. If any life is to be breathed back into that partnership, the Secretary of State should agree today that he will visit Newham to discuss on the spot in the borough how that settlement is to be implemented and what he thinks should be cut.
  Mr. Spearing: My hon. Friend witnessed the exchanges that I had with the Secretary of State on that word "partnership". Does he agree that the Secretary of State and the Government must explain why we are being short-changed by £20 million-worth of expenditure
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  through an SSA calculation which they claim to be fair, but which is clearly fraudulent? It is breaking down local government in London, while their quangos and partnerships are able to provide patronage, and will do even more in the coming financial year.
  Mr. Leighton: It is fraudulent. We saw the Minister about the fact that we were short-changed on capital financing and homelessness last year, and he did not dispute the point. If the old SSA methodology had remained, we would have received £18·75 million more than we have been offered under the present settlement. That cannot be right. Whatever formula was fed into the computer, it must have been defective.
  Let us consider the future. If the £13 million reduction grant which has been allocated to compensate for the loss of £18·75 million is removed next year, we shall certainly be looking into a big black hole. The only glimmer of hope on the horizon is contained in a letter from the Minister for Local Government and Planning, which I received on 27 January. That letter said of the representations that the Minister had received from local authorities:
  "They raised many interesting issues, some of which we will want to look more closely at for future years."
  I hope so. I also hope that the Minister and the officials in the Department of the Environment will carefully study the letter that they received from Drew Stephenson, the chief executive of Newham local authority, of 5 January.
  There are four areas which I would like them to consider for the forthcoming year: capital financing, homelessness, the needs indices and the use of expenditure data. This year, there is a £10·7 million gap in capital financing in Newham. Perhaps the Under-Secretary of State will remember that he suggested that local authority associations supported what he had done.
  I was able to point out that Price Waterhouse and Co. was supported by the Association of London Authorities and by the Association of Metropolitan Authorities when it proposed a different capital criterion, the non-housing credit ceiling for 1990, as opposed to the notional debt figures. We agreed. If that system was in operation, Newham would have had an extra £9 million in its capital SSA.
  This year, there is a £10·3 million shortfall between what the council will have to spend on homelessness this year and the SSA that it will receive. I hope that Ministers and officials will consider that there should be a separate sub-block for homelessness expenditure.
  Mr. Tony Banks: Before my hon. Friend moves off the issue of homelessness in Newham, would he draw conclusions from the fact that, in 1981, the borough spent around £50,000 a year on homelessness, and it now spends £10 million a year?
  One of the big problems in Newham is the number of refugees who are attracted to the area. We are not objecting to the Government allowing people who are fleeing from oppression to come to the country, but they should not wash their hands of their responsibility for those people at the port of entry. Refugees put great stress on the services of boroughs such as Newham, Haringey, Camden and Islington, without those boroughs receiving additional resources to deal with the problem.
  Mr. Leighton: My hon. Friend is right, although he underestimates the situation. We spend more than £10 million, and receive only a little bit of that back in the new

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  SSA. The gap is £10·3 million. My hon. Friend is right to say that, a few years ago, Newham spent virtually nothing on housing homeless families in temporary accommodation.
  However, because the Government have prevented local authorities from building houses, the homelessness situation is worse. There is now a statutory duty on local authorities to house homeless families who are in priority need. Newham is obliged to spend that money, but it gets no recognition for it from the Government.
  That money must be taken from somewhere else. It has to rob other budgets, such as the budget for education, to pay for homelessness, because the Government will not recognise the need. Only a small number of London authorities have that great problem of homelessness, and there should be a separate sub-block for homelessness in the SSA settlement.
  Mr. Corbyn: Does my hon. Friend recall that the London group of Labour Members constantly pressed for a formula which would have enabled London boroughs to be properly recompensed for the legitimate needs of refugees in their communities, and to link it with the problems of severe homelessness, which are worst in the inner-London boroughs, of which Newham is one?
  Mr. Leighton: It is true that we have a large number of refugees—some 7,000 Somalis, as I mentioned previously. I visited one primary school recently, where there were over 20 home languages in one class. I also mentioned Langdon school in my constituency, which has done extremely well. In its reception area, there is a list of over 20 home languages. As my hon. Friend the Member for Newham, North-West (Mr. Banks) has said, no one can say that we are not willing to do our best for refugees, but that presents extra challenges, for which there should be some financial recompense.
  Despite that additional difficulty, we have to spend less on education than the Government say we should in their SSA, because we have to spend more than £10 million on capital financing and more than £10 million on homelessness than we get in SSA. Can that be right? Can Ministers be proud of that? I want them to visit my borough, talk to the teachers and justify that situation. It cannot be right. I hope that Ministers will take that matter on board, and will be willing to discuss education with the borough's teachers.
  We must have new needs indices, because they too penalise Newham. Newham has been relegated. The Secretary of State said that Newham was fifth in the country. That is not true. It was fifth last year, and it is now 10th. The Under-Secretary knows that his Department is drafting indices with Manchester university which put Newham first.
  One of Newham's especial objections is that the lack of bathrooms or inside WCs, which was previously required in the all-ages social index, has been removed. That is an example of deprivation. Many houses in Newham do not have those facilities, yet the requirement is being dropped from the new index. Once again, that penalises us.
  Expenditure data in the SSA are used to measure the need to spend. From 1990 to 1993–94, that measure was based on the 1987 expenditure data. However, that has been changed this year, and we are now going to use 1990–91. It is unjust to Newham to use that year, because, in that year, Newham cut its expenditure by £7·6 million in
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  the face of anticipated rate-capping. That year is compromised as a basis because of the expenditure constraints in that year. I hope that Ministers will re-examine that.
  I have mentioned the four areas which must be re-examined to give justice and a fairer deal to Newham. I hope that Ministers and officials will consider my comments seriously. I hope that officials in the Department will read what I have said and consider it for future years.
  Newham has great potential. It is anxious to work in partnership, but the Government must prove to be a better partner than they are being at the moment.
  6.50 pm
  Sir Peter Fry: I hope that the hon. Member for Newham, North-East (Mr. Leighton) will forgive me if I do not follow his argument. We have heard rather a lot about Newham today, and perhaps it is time to move on to other parts of the United Kingdom.
  No doubt the Opposition spokesman, the hon. Member for Blackburn (Mr. Straw), thought that he gave a very clever speech. All he proved was that he has excellent research assistants. His speech seemed to be composed entirely of quotations from other people. It was very short on Labour party policy—except perhaps that relating to removing the cap, with the typical Labour contempt for the problems of local council tax payers.
  Over the years that I have been a Member of this place, I am afraid that I have had to make representations several times about central Government funding for local government in Northamptonshire. I have always done that on behalf of the county council. This year, the problem is somewhat different.
  Hon. Members who represent the county find themselves in a difficult situation, and I would like to explain briefly why. As we all know, on 2 December last year, the provisional revenue support grant settlement was announced. It apparently became clear to the present county leaders that Northampton was going to be very badly affected.
  Unfortunately, there was no communication from the county leadership to the county's Members before the consultative period ended on 10 January. Therefore, we as a group had no opportunity or information to enable us to intervene or make proposals during the consultation period.
  None the less, the new Labour leadership managed to put a case together, and asked for, and obtained, a hearing on 12 January with the Minister for Local Government and Planning. I want to assure the House that the county's Members would have been willing, and indeed anxious, to take action at that time. Parliament had already resumed after the Christmas recess and alas, as we all know, we have been in almost constant attendance ever since.
  It is also interesting to note that, on that same day—12 January—Northampton's education department issued a letter to all head teachers and chairmen of governors announcing that there would be a cut in the most sensitive area of all: the age-weighted pupil unit. That is the money given directly to schools on a per-pupil basis, and it was a cut of £3 million.
  That cut seemed to run contrary to what the chairman of the education committee stated on that day. He said that his policy was one of protecting front-line services as much as possible. What was worse was that he then had the gall to

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  call on the county's Members to attack the core problem. At that time, he knew—or he should have known—that the details of that core problem had not even been communicated to us.
  School governors were urged to hold meetings. They were told to write to their local MPs and to persuade parents to demand action. All that took place without any direct contacts between the county council leadership and me or my colleagues. Indeed, my first intimation of the extent of the problem occurred when I received a lobbyist, a member of UNISON, the county council's local trade union, on 18 January. That was six days after the papers were issued to head teachers and governors.
  That trade unionist gave me a summary of the meeting that took place between the county leaders and the Minister on 12 January. Irrespective of one's political affiliations, I suggest that many people would agree that that was hardly an ideal way to conduct affairs between the leadership of the county council and those who have the honour to represent it in this House.
  I have listed those events because, like some of my colleagues, I fear that we have been deliberately set up for purely party political motives. Historically, we have always supported the county leadership, be it Conservative-controlled or Labour-controlled, to do our best for the people of the county and to try to keep the tax at a reasonable level.
  I want to make it quite clear that, although we may be angry about the way we have been treated, that does not prevent us from being concerned about the way in which the county's SSA has been calculated this year. To begin with, it is necessary to set out the county's basic case. That case is fairly simple.
  If we consider the movement of population between 1981 and 1991, the latest year for which figures are available, we see that, while the population of England and Wales was virtually stagnant and increased by only 0·08 per cent., the population of Northamptonshire rose by 8·2 per cent. Our school population dropped by only 10·2 per cent., while it dropped by 15·9 per cent. in the rest of the country.
  Perhaps even more significantly, in the zero to five age group, national figures show a rise of 10·9 per cent., while ours increased by 15·2 per cent. Therefore, I submit that, on population grounds alone, it is at least somewhat surprising to discover that our SSA shows a reduction of 0·3 per cent. for 1994–95. Ours is the only shire county in which there is a reduction.
  It has been suggested that previous county councils were never over-generous in education provision. The current average primary expenditure per pupil in England and Wales is £1,632. Northamptonshire is spending £1,555. For secondary level, the national figure is £2,310, while Northamptonshire is spending £2,139. In the expenditure league tables, we are 32nd of 39 shire counties on primary school expenditure, and 28th on secondary school expenditure.
  One does not have to be a public relations genius to be able to whip up strong feelings based on a presentation of the figures to which I have just referred. However, I will refer later to another issue that is very relevant to those figures.
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  Many people in the county are saying to themselves, "What's gone wrong?" My first reaction to what has happened was to remember the story of the lonely man who went to a dating agency and asked for a young, beautiful, exotic female with slim legs and red hair. He discovered to his horror that the computer dated him with a cockatoo. The problem with the system is that one can feed the information in, but one does not necessarily get the result one expects.
  From my discussions with the Department, I now understand that other factors in the calculation outweigh our population increase. I understand that there have been changes in the weighting of payments to take account of the number of children of single-parent families and the number of families on income support and of ethnic minorities—quite apart from changes concerning homelessness, unemployment and long-term sickness.
  It seems to me, however, that Northamptonshire may well be losing because it has become slightly more affluent. One accepts that a more affluent county should have to bear a greater proportion of its essential costs, but the increasing population, by causing a reduction of the allowance for sparsity of population, has resulted in a wider gap, and this has been very damaging in the current year.
  I turn now to the one aspect of the county's current education spending that has been common to the Conservative and Labour leaderships in recent years. Northamptonshire is one of the counties that have for some years been educating all their rising fives. This has had a considerable effect on the primary-sector budget.
  It takes about £10 million to make provision for all children to go to school after they reach their fourth birthday. Thus, the average cost per pupil is brought down, as under-fives expenditure is not recognised by the Government on the ground that it is purely voluntary, and no grant is forthcoming. That complication indicates a very crucial fact—that, no matter what the budget is, the county council decides its own priorities. If the county is to continue its policy of educating the rising fives, the next 12 months will undoubtedly be very difficult indeed.
  Mr. Tony Marlow: I—like all my Northamptonshire colleagues, I believe—share my hon. Friend's plea for a fair deal. We are deeply concerned about this matter and are confused by the fact that a county with a rising population and an increasing number of children should receive a lower grant, even at a time of low inflation.
  Sir Peter Fry: It is clear that, if the standard spending assessment were based merely on the number of schoolchildren, the result would be different. The SSA and the way in which the level of grant is worked out are now so complicated and so continually refined, and there are so many other factors—to some of which I shall return in a moment—that the increase in school population does not automatically ensure that funds come from central Government. That is the terrible truth that we in Northamptonshire have discovered this year. In a moment, I shall suggest how we might address it.
  On the basis of all the discussions that I have had, I believe that, no matter how we look at it, the Government's calculation was absolutely correct. It may not suit Northamptonshire—we may be the odd one out—but there is not much doubt that the figures that were fed in and those

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  that came out were correct. I should make it clear, however, that I do not regard the result as at all satisfactory —in fact, it is far from satisfactory.
  For the reason to which I referred at the beginning of my speech—involvement only after the end of the consultation period—I regretfully accept that at this stage very little can be done about the amount of SSA, and therefore about the grant that we shall receive for 1994–95. I accept that any formula change at a late stage would affect not just Northamptonshire but all other local authorities, with the confusion and delay in settlement that would be caused.
  I should like to deal with two matters at which I hope the Government will look carefully over the next few months—certainly before this time next year.
  First, at present, the date on which we take the number of children at school for the purposes of grant calculation is 1 January. I suggest that that is far too early, and that it certainly does not take into account areas where the school population starts to rise. From the under-fives figures that I have provided, it is very clear that we shall soon have a considerable increase in the primary education needs of the county.
  I hope that my hon. Friend the Minister will confer with the Department for Education to see whether the date could be changed to 30 September. That would have the very real advantage of including part of the school year in which the financial year starts at the beginning of April. The Government say that they want to use up-to-date figures. Here is a way in which that could be achieved.
  The second matter at which I hope the Government will look carefully has been mentioned by the Secretary of State and by other hon. Members tonight—the area cost adjustment. To those of us who have been members of county councils since this adjustment has been in force, this is not a new Department of the Environment problem.
  What we do not understand is why, no matter how worthy the adjustment, and however necessary it is in London and other inner-city areas, there should be such disparate figures for adjoining counties. Bedfordshire, Buckinghamshire and Oxfordshire—the last two hardly less affluent than Northamptonshire—receive more than £20 million extra in grant. I do not expect the Government suddenly to give us parity with those counties, but there should not be such a stark contrast between adjoining counties with very similar standards.
  Surely this allowance should be revised, the support varied or tapered, so that it is reduced as one moves further and further from London. Surely that would be better than the current sharp break. I submit that, nationally, it would be much more equitable. It would remove the grievance of my constituents about their being unfairly penalised. This is a matter that my right hon. and hon. Friends in the Department must consider over the next few months.
  Because of the complications that have been introduced at such a late stage, we can only make these representations tonight. I shall not withhold my support in the Division Lobby, but the people of Northamptonshire would not forgive me if I were to fail to tell the Government that we feel that there must be some improvement in one or both of these areas before we come to next year's settlement. If there is no improvement, support will become more problematical.
  In the meantime, the county council will have to live within the budget that has now been fixed. However, the arbitrary reduction of the age-weighted pupil unit is the worst possible option that the county council could have
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  taken. It may lead to a number of redundancies in the teaching profession. When one realises that there may be a need for increased redundancy provision, one sees the weakness in the policy. The truth is that, because of the increase in the provision for redundancy, a cut in the AWPU figures will produce a much smaller gain than we had thought.
  There is another element. When I suggested to the leader of the council that implementing some of his election pledges on extra expenditure could be put off this year, I was met with a refusal. In other words, the current council leadership are saying that they are prepared to see teachers' jobs sacrificed to their social doctrine or—dare I say it?—their own pig-headedness. That is the attitude of the county council, and I hope that the teachers and unions will take note of it.
  Many other savings could have been made. I pay credit to the Conservative opposition on the council, who presented an alternative budget which would have reinstated the AWPU payment in full. It would have gone further than that—it would have reduced the level of the total council tax that is required, and the county would not need to spend up to the capping limit.
  I suggest that, in the interests of both our schoolchildren and county taxpayers, it is a tragedy that the leadership of the council ignored that alternative strategy, refusing to consider even a part of it. I can understand the concern of many parents, teachers and governors, but we must make the point that it is the county council, not the Government, that sets the priorities within the budget available.
  What I am asking for is a clear commitment that the present system, refined and complemented as it has been, is not perfect, that some change is desirable and that that will be considered over the coming year. In all local authority finance matters, there must be a balance between the level of service and the cost to the taxpayer. On both counts, we shall be losing in Northamptonshire in the coming 12 months.
  The loss of grant, plus the political decisions of the ruling group, make for a bleak year. I am making a public plea today for a return to the traditional co-operation between the county's MPs and the county leadership, regardless of their politics. That would be a first and useful step forward. But an encouraging response from my hon. Friend the Minister tonight would do us much more good, and give us real hope for the future.
  Our opponents have claimed that Northamptonshire has been punished for electing a Labour county council. Of course that is totally untrue, but the only way of proving it untrue by actions is in the hands of my right hon. and hon. Friends. I look to them to consider our case, and to make us somewhat happier when we debate these matters next year.
  7.11 pm
  Mr. David Rendel: I hope that my remarks will help to persuade the hon. Member for Wellingborough (Sir P. Fry) that he should use his vote in line with his conscience and what appear to be the wishes of his constituents and join the Opposition in the Noes Lobby. Certainly, it seems to be important that we should take real action now not simply to talk about this issue but to persuade the Government that none of the three reports should be approved.

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  The Government introduced the council tax originally to overcome their unpopularity over the poll tax. It was a fairly desperate move. I do not believe that it has worked, and it will be seen not to have worked even more this year as a result of the huge increases in council tax levels which are liable to take place in certain parts of the country at least. Such increases are due to the fact that transitional relief has nearly ended. In my authority, for example, the only places that will be left with any transitional relief are those houses in bands G and H—the top two bands. One might think that if relief is to be given to anyone, it should be given to the poorest members of the population. In practice, what is happening in my authority is that relief will be given only to the richest members of the population —those who own houses in the top two bands. That is a topsy-turvy policy if ever there was one.
  External support for local authority funding will be increased, but not by as much as SSAs. Because SSAs are becoming not simply the maximum but the minimum amount of money to be raised and used by local councils almost everywhere, that means in effect that council tax payers will be paying much more in council tax. Certainly, the increases will be greatly in excess of inflation.
  We must make it clear as far as we can to all and sundry that those huge increases are directly to the account of the Government, not local authorities. Especially hard hit will be those who are currently appealing against council tax bandings which are too high. The reason, as I found out in the reply to a written question that I put down recently, is that some of those people will still be waiting for their appeals to be decided three years after they started paying council tax. In some cases, when their appeals are decided they may be owed £500 or £600. If that is the case, that money will eventually be paid to them but without interest. It is interesting that the Government claim interest on unpaid national taxes after only a few months but refuse to repay overpayments of council tax with interest even after three years.
  The Conservative party will suffer in the local elections this year as a result of the big increases in council tax. It is interesting that the special grants that the Government are making to reduce their losses will affect some of the largest and most notorious Conservative-run county councils and local councils. Of course, very few areas where the Liberal Democrats are in charge will gain anything from the special grants.
  As has already been said, there is one interesting aspect of the Minister's statement which is welcome—his promise to review the area cost adjustments. There can be no sense at all in giving a much bigger area cost adjustment on the east side of, for example, the Dorset-Hampshire border than is given on the west side. There is no reason to suppose that teachers are more expensive one mile further to the east, so a review of that system will certainly be welcome. The sudden breaks that take place at present as one moves across the boundary of an area subject to an area cost adjustment are nonsense and should be reviewed.
  Local Government financing is in a mess at present—I do not think that there is any doubt about that—and desperately needs to be reviewed. Perhaps one way to force a review is by voting against these three reports tonight. Too high a proportion of local government finance still
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  comes from central Government. That is bad for democracy. Another thing that is bad for democracy is capping. By capping local government spending, central Government are inevitably using their power to take from local electors the right to decide on the level of local services.
  Mr. David Harris: I wonder whether I heard the hon. Gentleman correctly. Did he just say that too much of the money came from central Government? His colleagues in Cornwall are for ever saying that more money should come from central Government to help council tax payers.
  Mr. Rendel: The two are not incompatible. What we need to do is to change to a system of local income tax. If we did that, it would be possible to reduce the proportion of local spending funded by the Government while at the same time reducing national income tax, which would allow us to make the two compatible. Unfortunately, we do not have such a system.
  Mr. Gummer rose—
  Mr. Rendel: I am sorry—I have been asked by the Speaker's Office to finish quickly and not take interventions. I have already taken one intervention, which is one more than I should have taken. The Secretary of State will have a chance to respond at the end of the debate. [Interruption.] I have been asked by the Speaker's Office to finish quickly, and I respect the Speaker.
  I am unhappy to have to say that there is another reason why local government funding is in a mess at present: the grant system is too obscure. It is difficult for local people and, indeed, for local authorities to work out why they are receiving the level of grant that they receive. This year it seems that nothing is being allowed in total spending for increases for our teaching staff; yet we have been told today that increases will be given. It is hypocritical of the Government to say that no increases should be allowed in the total spending for local authority teachers and at the same time give teachers their increases.
  Huge increases have been caused by the Government's decisions about what local government will receive to spend and what will have to be raised from council tax payers. That will also bring local government into disrepute. I believe that that is the wrong way to go. Sometimes local government funding is based on out-of-date figures. It is often unfair and it is always obscure. It desperately needs a total review. We know that there will be huge national tax increases in April. In addition, we now see the likelihood of huge local tax increases. I believe that the Government are set on a path to even greater unpopularity. If the Government want to avoid that path today the House should refuse to approve any of the three papers.
  7.20 pm
  Mr. Eric Pickles: I am not surprised that the hon. Member for Newbury (Mr. Rendel) refused to take interventions, because he suggested that a local income tax might be workable. It is a fact that the man who devised the local income tax for the Liberal party, Dr. Truscott, is on record as saying that at the election the Liberal party seriously underestimated the effects of a local income tax.
  Mr. Gummer: Is it not a fact that a local income tax under the present system would mean that there would have to be people in every town hall who would compute how much local people would pay? Would not everybody in those town halls know what each person's income tax was? How would that affect poorer people who would not like people to know how small their income was? Does my hon. Friend agree that this is the usual Liberal business of having a busybody in every town hall?
  Mr. Pickles: I am sure that my right hon. Friend is right, but he should go further. Such a tax might prove to be quite expensive for poor people, who would have to pay a lot of money.
  The hon. Member for Newbury also complained that no Liberal county council was receiving any of the dampening. The simple reason is that the dampening is designed to go to county districts, metropolitan authorities and London boroughs.
  It would be churlish of me not to thank my right hon. Friend for the settlement, particularly as two authorities within my constituency received increases. Epping Forest received a 21 per cent. increase on its SSA and Brentwood a 36 per cent. increase. Those increases have been welcomed by all political parties within my constituency, and even on the pages of the much-quoted Brentwood Gazette.
  The Conservative group at Brentwood stressed to me that the most challenging thing facing the council was its SSA. It was my view that serious underestimations had been made of the needs of the people of Brentwood. The truth is that the early versions of the SSA repeated many of the anomalies which existed in the previous grant-related expenditure. That is not a particularly tough criticism, as trying to find a system to distribute grants is extremely difficult. The local government information unit has commented that the
  "difficulty of achieving fairness … is at a premium".
  Many overseas countries have faced similar problems. I commend to the House two recent reports concerning SSAs which give an overseas comparison. The Audit Commission said:
  "a more sophisticated system for equalising needs does not exist in any overseas system."
  The much-quoted Tony Travers said that no overseas country appears to have a full grant system which goes so far in achieving full equalisation.
  The changes in SSA are extremely welcome. I particularly welcome the changes in social services, with respect to the indicator of long-term illness among the elderly. I believe that the changes go a long way towards encouraging the Government's initiative of care in the community. In terms of the social index, I particularly welcome the recognition of the position of homeless households, children in rented accommodation and children with parents on income support
  Mr. Robert Ainsworth: The hon. Gentleman has welcomed the inclusion of homelessness as one of the indicators of deprivation or need. Does he accept that one of the authorities which asked for homelessness to be included was Westminster council, which happens to be the ninth-best gainer out of that inclusion, while Coventry, which anybody would have a hard job saying was less deprived than Westminster, comes 264th? Will the hon. Gentleman explain how that is a measure of social need?
  Mr. Pickles: From memory, I note that Westminster city council last year rehoused 1,297 homeless people. Frankly, that record is far better than that of a number of adjoining Labour authorities, which spend their time leaving council houses empty and not rehousing homeless people.
  The hon. Member for Sheffield, Attercliffe (Mr. Betts) made some important and coherent points about ensuring that a number of economic factors, and unemployment in particular, were included in the calculations of SSA. I am particularly pleased that the words of the hon. Gentleman and of his colleagues in local authorities have been listened to and that unemployment has been included in the calculations of SSA.
  Mr. Clive Betts: The inclusion of unemployment and other health indicators is to be welcomed, as it has marginally helped the position of Sheffield in relation to other authorities. Does the hon. Gentleman accept that, in terms of SSA distribution, the problem is that the year-on-year capping restrictions mean that Sheffield city council cannot use the extra SSA to spend on services for the public? Does not that mean that there is the nonsense of cuts in services and reductions in council tax at the same time?
  Mr. Pickles: I may regret mentioning and praising the hon. Gentleman in my speech. I must remind him—I say this in friendship—that Sheffield council decided before the election that there was going to be a Labour Government, and that it was going to go for bust. There were one or two minor problems with the financing of the world student games, and perhaps that has more to do with what he says than the level of capping.
  If the council decides that there are rules which will apply only to Sheffield and that it will look towards a Labour Government to bail it out, we should not be surprised if it has to face the consequences thereof. Nevertheless, I did agree with the hon. Gentleman on unemployment.
  As someone who has moved from the north of England to the south, I am more persuaded about the need for area cost adjustment. The argument now with regard to employment costs in the south-east of England—
  Mr. Betts: The hon. Gentleman has changed his mind.
  Mr. Pickles: I have had more experience of the employment costs, which I recognise are much higher in the south-east. I hope that area cost adjustment will remain within the calculations of SSAs for the foreseeable future.
  I was also particularly pleased to see that day visitors will be compensated for. We must recognise that the populations of many of our cities, towns and resorts artificially grow during the day. There are many extra burdens for authorities in those areas, ranging from litter to general wear and tear on the fabric of the city.
  My right hon. Friend should recognise that there is need for a period of stability in SSAs. We must recognise that the census will have some effect on next year's figures, particularly with regard to the age profile of councils. Such changes in SSA can mask efficiencies and inefficiencies. A period of stability would give local taxpayers a better chance of comparison.
  The standard spending assessment should be a living thing and it should adapt to modern circumstances. The changes which have been made are important. They have

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  been broadly welcomed by local authority associations, academics and individual councils. We must not lose sight of the fact that stability is as important as resources.
  The system places enormous burdens on those authorities that are winners. Those authorities must share the increases in their SSAs with their populations, and the most effective way to do that is to cut the council tax. I welcome the commitment given by many Conservative authorities to do just that.
  I hope that in his reply to the debate my hon. Friend the Minister will take the opportunity to scotch a silly rumour that has been circulated in some councils that if councils do not spend up to their additional SSA, the Government will penalise them. That is clearly ridiculous. It is clearly not what is going to happen. It gives credence to the suggestion of the hon. Member for Blackburn that capping encourages people to spend up. I hope that my hon. Friend the Minister will take the opportunity to nail that lie.
  It is important that we do not have misleading information on local government finance. I was shocked to hear the hon. Member for Blackburn (Mr. Straw), who is no longer in the Chamber, say on 2 December:
  "the Secretary of State has sought to distort the system so as to stuff grant the way of a few favoured Tory councils."—[Official Report, 2 December 1993; Vol. 233, c. 1177.]
  It is a matter of regret that that allegation was repeated this afternoon. It is clearly not the case that the system has been distorted. It has been checked by academics and the specialist press. The allegation has been found to be untrue. In the words of the Local Government Chronicle:
  "There is a myth of a political fix by Conservatives."
  I hope that the hon. Member for Blackburn regrets his remarks. He has not made a good start by continuing to suggest that there will be job losses. He suggested that the settlement would cause thousands of job losses. That is a familiar tale. It is a tale that we heard last year. We were told that thousands would be put on the dole. I recall that in Birmingham—
  Mr. Betts: Fifty thousand.
  Mr. Pickles: The hon. Gentleman talks about 50,000 job losses. With the figures for grant-maintained schools and further education taken out, we get down to a figure of about 30,000, or the part-time equivalent. Given the millions who are employed in local authorities, that figure hardly justifies the number of redundancies that people said would take place last year, I cannot find a better way of putting it than to quote the Local Government Chronicle. It said:
  "Last year Birmingham City Council grabbed the national headlines when it announced 3,000 jobs would be cut to find savings of £40 million, while tens of thousands more were said to be threatened across the country.
  A year later it is obvious many of the more vocal councils were crying wolf and their supposed job cuts have failed to materialise."
  I believe that the figures produced by the joint staffing in December bear out that view. It is certainly my view that, if councils run their authorities in a prudent, efficient and sensible way, they should avoid compulsory redundancies this year.
  The hard truth is that councils were expecting a much tougher settlement. I cannot remember a settlement welcomed by so many local government leaders at any time in my experience of local authorities. But there is still
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  some room for savings. I noticed that the hon. Member for Blackburn fell into perhaps the worst sin that a politician can fall into by quoting himself. He quoted from this morning's Tribune article, in which he castigated Tory Brent for having the worst record for rent collection in the country. What he did not say was that for many years Brent was Labour controlled. The Conservative administration is trying to get back to the position of a normal authority. He did not mention that the top 10 authorities with the worst records for rent collection were Brent, Hammersmith and Fulham, Lambeth, Ealing, Southwark, Greenwich, Newham, Hackney, Haringey and Camden.
  We have heard much about the London borough of Newham in these deliberations. The good people of Brentwood and Ongar do not have much experience of Labour councils—that is to say, except for the tenants of the estates run by the London borough of Newham. If my right hon. Friend the Secretary of State is looking for ways in which to judge the pleas that he has heard today, let him bear in mind the way in which that council mismanages the estates in my constituency.
  That Newham mismanages its estates is the view not only of a Conservative politician but of the local citizens advice bureau. I have had a disproportionate number of cases from the London borough of Newham. People have been threatened with eviction. They are usually elderly. They have usually paid their rent. They are usually fairly confused as to why they have been threatened.
  The cases follow a particular pattern. My constituents write to the London borough of Newham and ask why they are being threatened with eviction when they have paid their rent; they are ignored. They get their children to write to the London borough of Newham; they are ignored. Eventually the tenants either go to the citizens advice bureau or come to see me.
  I have never in my years dealt with a more inefficient bunch than the London borough of Newham. Letters are lost. Care of the elderly people is ignored. If the London borough of Newham wants increased resources, the first thing it should do is look long and hard at the way in which its housing department is run. It might be good enough for the London borough of Newham, but it is not good enough for the people of Brentwood and Ongar.
  There is sufficient room for increases in efficiency in local authorities. More savings are acceptable. Compulsory competitive tendering has proved to be a great boon to local authorities. It has challenged the way in which local authorities are run. It has given them much more commercial sense. I was pleased to see that Mr. Jeremy Beecham, the leader of Newcastle council and chairman of the Association of Metropolitan Authorities, recognises that many of the savings that have accrued under compulsory competitive tendering would not have accrued without it.
  It worries me that much of the creative energy behind compulsory competitive tendering has been dissipated by local authorities trying to get around the regulations. Bristol made it impossible for a private company to bid for its contracts. It put out a single huge tender for refuse collection, street cleaning, public convenience cleaning and building cleaning. Not surprisingly, no private firm felt able to provide a contract.
  Birmingham put out a 2 ft high stack of documents on the cleaning of just 364 buildings. One could virtually have

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  stood on the stack to clean some of the windows. All the contracts had to start on the same day, thus making an outside bid unrealistic.
  Mr. Betts: Would the hon. Gentleman like to comment on the case of South Oxfordshire council, which I understand is Conservative controlled? Without going out to tender, it awarded a computer contract to one of its own officers. That matter is now being investigated by the auditor there. As well as awarding the contract, the council awarded a lot of subsidies to that officer to set up a company, which has subsequently made substantial profits. Does the hon. Gentleman regard that as a proper way for local authorities to behave?
  Mr. Pickles: We shall have to see the outcome of the police investigation, then I will comment on the case. I shall come back to the hon. Gentleman's specific point when I refer to Tameside.
  Nottingham put its contract for road sweeping and refuse collection out to tender and awarded the contract to its own work force. In the process, it organised a party costing about £2,000 to celebrate.
  Returning to the hon. Gentleman's point, I have been concerned of late to read articles in the specialist press about externalisation, which seems to be the latest fashion. We often see fashions move in local authorities. The latest idea is to provide services, but not by providing direct employment within the council. That obviously has an appeal to Conservatives. However, some of the articles suggest that the primary motivation for that is to get around the regulations and avoid compulsory competitive tendering. As I think I demonstrated earlier, if that is the sole motivation, it is likely to lead to disaster.
  The hon. Member for Attercliffe talked about. South Oxfordshire. I should like to talk about Tameside council, which is currently being investigated by Greater Manchester police fraud squad. It is investigating £2 million losses by Tameside Enterprises Ltd.—a company created by the council to look after old persons' homes. I shall not go into the various allegations because they are still under investigation.—[Interruption.] If I were the hon. Member for Denton and Reddish (Mr. Bennett), I would not be so confident because a lot of elderly people have had a poor deal out of the process. I hope that hon. Members on both sides of the House are prepared to admit it when things go wrong. I am prepared to give the Labour councillors the benefit of the doubt until the investigation is complete. It seems that a clever wheeze was thought up to get around compulsory competitive tendering and insufficient thought was given to the level of service that would be delivered.
  Mr. Bennett: Does the hon. Gentleman accept that, since the trust and Tameside Enterprises took over the running of elderly people's homes in Tameside, the quality of care in those homes has been as good as anywhere else in the country? Does he further accept that the directors and the council asked for a full investigation into the sad misbehaviour of one of the employees, and the council, directors and trustees asked the police to investigate the matter? The investigation is not a criticism of the council. The council, the trustees and the directors sought to put right an unsatisfactory situation created by an employee who appears to have broken the law.
  Mr. Pickles: I am grateful to the hon. Gentleman for that information, but that is not my argument. If more thought had been given to the way in which the external trust was put together, many of the problems that have surfaced in the allegations could have been avoided. I commend to my right hon. Friend the Secretary of State an article in the Municipal Journal, which bears close scrutiny. There is a disaster in the making unless the Government are prepared to offer guidelines on external funding.
  The grant settlement is more generous than local authorities were expecting. It can be implemented without widespread compulsory redundancies across the country. I shall walk into the Division Lobby to vote for it with enthusiasm.
  Mr. Deputy Speaker (Mr. Michael Morris): A large number of hon. Members still wish to speak. May I make a plea for slightly shorter speeches?
  7.42 pm
  Mr. Jeremy Corbyn: I shall be as brief as possible. The hon. Member for Brentwood and Ongar (Mr. Pickles) spoke for only 21 minutes—it just seemed much longer than that. I shall try to be much briefer.
  I put on record the fact that I am sponsored by UNISON, formerly the National Union of Public Employees. I used to be the union organiser representing local government workers, who are bearing the brunt of an awful lot of what the Government are doing to local authorities.
  There have been many redundancies. Compulsory competitive tendering in local authorities has led to the awful sale of jobs every five years to the lowest bidder. The people who lose are part-time school meals workers, education helpers and school cleaners who work on disgustingly low weekly or hourly wages. They often have no job security and are unable to do a job properly.
  Local government workers, whom I represented before I came to the House, used to be proud to work for the local authority, and proud that schools were clean and good places for children to attend. All pride in work disappears when there is no guarantee of job security and wages are lowered every time compulsory competitive tendering comes up.
  The hon. Member for Brentwood and Ongar went on about the problems of compulsory competitive tendering and the way in which some local authorities have stacked the bid in favour of local authority direct services. But he should bear in mind the fact that, when a local authority's bid for a service is successful, there are nearly always job losses, a deterioration in working conditions, loss of training opportunities and trade union facility time and many other factors.
  Working conditions are getting worse, not better, in the public sector. We should bear that in mind, because we all rely on the efficient work of refuse collectors, street sweepers, maintenance workers, school meals workers, social workers and social services centre workers. Instead of offering a constant stream of condemnation, Ministers should remember that.
  I am also the chair of the London group of Labour Members, and I want to mention the problems in London. At present, there are 465,000 jobless people in the capital city. London's unemployment mirrors the national average for the first time in many years, and the position is getting

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  worse. There are 39,000 homeless people in London living in hostels or bed-and-breakfast accommodation—some of them, tragically, living on the streets of the capital.
  We have chaos in transport and planning, yet, overall, the settlement undervalues London by £600 million in local authority spending. If we want a decent, clean capital, we have to be prepared to fund it. Above all, however, we need to bring some sense to the way in which London is managed.
  It is not surprising that London did not even have the opportunity to make the British bid for the Olympic games, and that London lost the chance to make the British bid for the Commonwealth games. Nobody will take seriously a city that has no unified form of local government. Who would one talk to if one wanted to bring the Olympic games to London? It would not be easy to arrange a meeting with the 32 London boroughs, the City of London and 25 quangos. It is not a sensible or good way to run the capital.
  When the Secretary of State said that he wanted to hear what Londoners thought about such matters, he craftily sent out the questionnaire in copies of the Evening Standard. That questionnaire asked people to reply, but it was loaded with questions such as: "Do you like the parks? Do you like the open spaces? What do you like most about London?" He did not include in the questionnaire the fact that Government money has been taken from London and that the elected Greater London council has been taken away from us.
  Across the river from the House, we now have the nonsense of European, Japanese and company flags outside county hall, which has been bought by a Japanese hotel chain. That building belongs to the people of London, and I hope that it will be returned to them, hopefully by compulsory purchase order by a future Labour Government.
  The subject of urban deprivation is not a debate or a competition between the north and south of the country or between Opposition Members. We all have problems in our communities, and we all have problems of underfunding. The 1991 census's score list on urban deprivation shows that seven of the top 10 regions are London boroughs. The list is headed by Newham, Southwark, Hackney and Islington, with Haringey in 10th position. There are many arguments about how the score list is drawn up. If we consider the SSAs of those boroughs in the settlement, we find that Newham loses 6.9 per cent., my borough of Islington loses 5·1 per cent., and so it goes on.
  The 1991 census was extremely inaccurate. It was plagued, as was the country for several years, by the appalling poll tax and by people fearing that answering questions posed by the census enumerator would lead to someone coming round and trying to make them pay the poll tax, even if they were staying at that address for only a short time. London has lost a lot through the poll tax. It is losing a great amount of council tax because of the way in which house prices are falling.
  The Government propose that, from next year, there should be a unified regeneration budget for London. I cannot work out—I am still open to persuasion on the matter—whether that is a late admission by the Secretary
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  of State that London needs unified local government to tackle its needs, or, as I suspect, yet another attack on individual local authorities in London.
  My hon. Friend the Member for Newham, South (Mr. Spearing) sent a series of questions to the Secretary of State about how the scheme would operate. The answers that were finally given to my hon. Friend showed that there would be a sort of Government gauleiter appointed to look after the regeneration budget for London. I understand that Manchester and Birmingham will also have such a scheme.
  If the Government recognise, as perhaps they finally and lamentably have, that there are overall needs in a city the size of London, why cannot they honestly say so? They could then give us an authority that was elected by the people of London so that they, and not an endless parade of quangos, could decide what Londoners want.
  The former Secretary of State for the Environment—he with the blond hair, who waves the Mace—said that he was going to kill the quangos in London. However, he and his successors have ensured that London is dominated by quangos—mostly filled with placemen nominated by Tory central office. Are those people fit to run a combination of estate action programmes, education and training support, section 11 grants, regional enterprise grants and business start-up and local initiative funds? They are the sort of people who will decide how that money is spent in London.
  I hope that the House will at least recognise that the way in which the standard spending assessment operates seriously mitigates against inner urban areas of this capital. We want something done about it.
  My borough has serious problems, and is not a wealthy area by any means. Unemployment in my constituency is around 22 per cent., and in some estates is as high as 40 per cent. and rising. There is a sense of desperation and misery, especially among young people and older pupils who are approaching school leaving age. They feel a sense of hopelessness about the future, and also deep frustration that their local authority cannot meet their needs in any way—through youth provision, social services, libraries and so forth.
  I do not condemn the council, but simply point out the impossible bind that my local authority has been put in year after year. It has been told to make cuts, and on top of the £20 million in cuts last year, it will have to make more cuts this year.
  While the capping level for Islington council's spending has increased slightly, it will not meet the increased statutory requirements that have been placed on the local borough because of the introduction of community care and the like. On top of that, every council tenant has been told that rents will have to rise by £2·90 per week, which is yet another attack on people in the poorest sectors of society.
  I hope that the Minister will be able to deal with one issue when he replies to the debate. I understand that representations about housing benefit indicators were made to the Secretary of State during the SSA consultation period—in cases where the SSA goes to the landlord authority rather than the resident authority.
  Only boroughs or councils which made representations to the Secretary of State benefited. Those councils which did not—like mine, which has a considerable number of City of London properties within it—have lost. I should be

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  grateful if the Minister could tell us what attitude the Government will take. It is an important problem, and he should be aware of it, although I do not know that he is.
  Mr. Tony Banks: Has my hon. Friend any knowledge of another practice which seems to have become common? Liberal-controlled Tower Hamlets has been putting homeless familes in the next borough—my borough of Newham—and leaving them there for some considerable time. It has then made them an offer that they can only refuse, thus rendering them homeless in the very borough that it put them in, which results in greater problems for Newham. It seems a deplorable practice, and one which is normally associated with Westminster, but it seems to have spread to Tower Hamlets.
  Mr. Corbyn: I can confirm that. I have also had some experience of Tower Hamlets council and its treatment of homeless families living in bed-and-breakfast accommodation. I am not surprised that the Liberal spokesperson gave what must be the shortest speech on record in a local government debate. There was no chance for anyone to intervene to ask what Tower Hamlets council was doing. If he wants to intervene now to tell me, I shall be happy to give way.
  My hon. Friend the Member for Newham, North-West (Mr. Banks) is right, and that problem underlines the importance of having a London-wide housing strategy. We have an appalling vista of local authorities trying to get rid of their responsibilities for homeless families, refugee children and anyone else. They are pushing them from one borough to another.
  Surely to God we ought to care for those people who need a roof over their heads, rather than play ducks and drakes with the rules. The way in which central Government operate, however, encourages local authorities to play ducks and drakes, because they know that they will not get the money back at the end of the year for needs that they were totally unable to assess in the first place.
  I shall be brief, because there is not a lot of time, and other hon. Members wish to speak. I have been given a copy of the briefing document from the Association of Metropolitan Authorities about budget reductions in 1993–94. I am sure that other hon. Members also have a copy and it makes very sorry reading.
  For example, 184 job losses were achieved through redundancies in the borough of Barnet. The jobs were taken from special needs staffing in schools, from discretionary awards and from closing day nursery and elderly people's homes. Camden has lost 2,000 jobs, and borough after borough has been forced to make people redundant or lose them through natural wastage. That all adds up to an inferior service for people who desperately rely on local authorities to maintain some sort of standard of life, whether through social services, housing, recreation or other services.
  Why are half the libraries in London shut most of the time? Why are swimming pools not open as often as they should be? Why are so many families living in bed-and-breakfast accommodation? Why are local authorities encouraged to spend money lining the pockets of bed-and-breakfast landlords and private landlords, while the Government tell them that they cannot use their own resources to invest in decent housing for the people of this capital city?
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  I spent yesterday morning visiting one of a number of schools in my constituency. Highbury Quadrant school is a splendid school, with brilliant teachers and lovely kids—25 languages are spoken in the school, and everyone there is proud of that fact and proud of their cultural diversity. It is a lovely school. Ashmount infants school, which my son attends, is also a wonderful school, where many different languages are spoken.
  All the schools are terrified about what will happen because of the cuts in section 11 funding. My borough is set to lose £900,000 in section 11 money because the Government have changed the formula. I hope that it can absorb the cut within the budget, but I doubt it. I suspect that some very good teachers will end up unemployed as a result of that cut, and a lot of very bright kids will end up short-changed by the education system because there will be no one to teach them English as a second language, or to give them the support they need.
  These are desperate times to be in local government. I do not envy the lot of any councillor. The settlement is always used as a form of attack. The Government think that local government is the problem and must be attacked all the time, but without good and responsive local government, what sort of society are we?
  I am fed up with the attacks on local government. I want a return to real democracy and an acceptance of central Government's need to give proper financial recognition for deprivation in inner urban areas such as my constituency.
  7.56 pm
  Mr. Christopher Gill: I shall do my best to comply with your request for short speeches, Mr. Deputy Speaker. I thank my hon. Friend the Minister for Local Government and Planning for his patience and understanding and for his unfailing courtesy, first at the meeting at which he met me—I was also representing my right hon. Friend the Member for Shropshire, North (Mr. Biffen) and my hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway)—and secondly when he subsequently met senior officers and group leaders of Shropshire county council.
  I do not wish to dwell upon the disappointment in Shropshire at this year's settlement, but people are disappointed about the changes in the settlements for area cost adjustment and sparsity. The 1994–95 reduction in sparsity weighting is estimated to have cost Shropshire's SSA £2·9 million and the area cost adjustment is clawing back around £5·4 million annually from the SSA.
  For the record, during the period of the new rate support grant system Shropshire's SSA increase has been the lowest of all countries and the capping increase has been lower than 37 of the other 38 counties. However, I do not intend to dwell on that.
  In his opening speech, my right hon. Friend the Secretary of State told the House how he and his colleagues had met deputations representing 58 councils. My contribution to this debate is set against the background of the annual round of representations and deputations resulting from decisions about local government finance.
  My hon. Friend the Member for Isle of Wight (Mr. Field) queried the cost of that annual ritual of deputations. It is impossible to quantify that cost, bearing in mind the time, effort and energy that has been expended, but I

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  suggest that it must be quite substantial. The time expended on those deputations and delegations is time not spent on more productive work in the shire and town halls.
  The Government champion subsidiarity—the principle of allowing decisions to be taken at the lowest competent level. They also champion deregulation. As the House knows, the Second Reading of the Deregulation and Contracting Out Bill is next week. They also champion the reduction of the burden of public expenditure, and the House will have noted the remarks of my right hon. Friend the Secretary of State when he opened the debate. My proposals are deregulatory, thrifty and fully in accord with the principles of subsidiarity. I advocate an end to the sharing of responsibilities. Many of the difficulties that we have—and those difficulties produce the deputations and delegations with which we are all so familiar—arise from the fact that on so many scores responsibilities are divided between central and local government.
  I further advocate an end to the separation of authority from responsibility. That is one of the cardinal principles of good management. It is impossible to run a business, a local authority or a Government if one separates the authority for carrying out a function from the responsibility. If one tells a manager in a business, "You are responsible for that function, but you must not make any decision without further reference to a higher authority", that is a great demotivation to the manager and the management of the company suffers accordingly.
  I further advocate the vesting of total control for providing and funding of local government services in the same pair of hands. My recommendation is that those hands should be existing district councils as the new unitary authorities. I shall not regret the demise of county councils—that most remote and expensive tier of local government which is increasingly recognised by my constituents as the tier that we could do without. One of the three weaknesses about the present system of local government is that there are too many tiers, and the one most eligible for abolition is the county council.
  If subsidiarity means anything, it means cutting the Gordian knot that binds local government so tightly to central Government. It means critically examining the functions that we intend local government to discharge in future.
  There are three things to take into consideration if we want efficient local government. First, we have to consider how it is financed. We have had three different methods of financing local government in as many years: the rating system, the community charge and now the council tax.
  Secondly, we have to consider its structure. We reorganised the structure of local government 20 years ago. My fear is that we are in danger of reorganising local government again and not coming up with the right answer. We shall then have a botched reorganisation of the structure.
  Mr. Andrew Mackinlay: The Conservatives reorganise local government and the National Health Service as frequently as the Forth bridge is painted. They do not even finish before they start again. In the past 20 to 25 years there has been a tradition of Conservative Governments expensively reorganising public services with little to show for it at the end of the day.
  Mr. Gill: The hon. Gentleman makes an interesting point. I hope that he will listen to the rest of my speech.
  Having attempted to put the financing of local government on to a proper footing and get the structure right, we have neglected to examine its functions under a microscope and decide exactly what we want local government to do. Having decided what we want local government to do, we must not hedge our bets by saying that local government should carry out part of a particular function while central Government do the other part of it.
  I am advocating a complete demarcation between resonsibilities which can and should be discharged at local level and those which can be discharged only at central level.
  There may be howls of anguish—even from the hon. Member for Thurrock (Mr. Mackinlay)—when I suggest that we might have to consider abolishing local education authorities, but there is some logic in that. As an increasing number of schools opt for grant-maintained status, it is clear that the importance of local education authorities will be diminished and ultimately one can envisage their demise.
  Mr. Gordon Prentice: Does the hon. Gentleman appreciate that every local government reorganisation since the war has been carried out by the Conservatives? Why should people have any confidence whatever in any future organisation on which the Conservative party wants to embark?
  Mr. Gill: The reorganisation that we carried out in the early 1970s resulted from taking off the shelf the blueprint left there by the previous Labour Administration. I entirely agree with the hon. Gentleman. I personally regret that my party took the blueprint prepared by the previous Administration and implemented it. I see that the hon. Gentleman is nodding in assent to what I have just said.
  The gist of my speech today is that whatever we do in future must be in a form that we can all understand. It would be a brave hon. Member who pretended to understand all the intricacies of local government finance. I invite hon. Members to consider everything in the documents that accompany this evening's debate.
  Undoubtedly, much of the system of calculating a grant for a local government settlement depends on arcane calculations and equations which I find difficult to understand. I am sure that local councillors have difficulty in understanding them, too. Frankly, we cannot expect good, efficient, economic local government if councillors cannot understand the way in which the whole operation is funded.
  We have to have intelligible systems which essentially need to be simple so that we can all understand them and make a better showing of delivering services to the general public.
  I was saying that I advocate the abolition of local education authorities. I also suggest transferring social services to district health authorities. Both those services —education and social services—are in effect funded not by the council tax but by the taxpayer.
  Ministers have said more than once this evening that we do not have hypothecation of taxes in this country. However, let me illustrate my point. Education in my own county of Shropshire will cost £148 million in 1993–94. Social services in the same period 1993–94 will cost £33 million. The total of those two services is £181 million and

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  the total external support that the county will attract in the same 12 months is £182 million. The two figures neatly cancel each other out, which proves that the two services could be removed from the local government equation and become a charge on the taxpayer, with all other services being deputed to the unitary authority.
  Three things must be done. First, local authority functions must be scaled down to match the local revenue-raising potential of the council tax. Secondly, councils and councillors must be required to raise £1 for every 100 pence that they spend. Thirdly, they must be exclusively answerable to the electorate for the services that they provide.
  The hon. Member for Pendle (Mr. Prentice) shakes his head, indicating disbelief. I apologise for not knowing his background, but what I am saying is predicated on a lifelong involvement in management and trying to motivate people to do a good job. One of the important lessons that I have learnt from that experience is that it is not possible to motivate people by giving them half a job, by giving them responsibility but ordering them to refer decision making to another authority or by facing them with an unintelligible system: they find that completely demoralising.
  We can create transparency of both funding and efficacy by making councils responsible for all their functions—including raising revenue for their spending—making them wholly accountable to their electorates and by defining their functions precisely so that they can be discharged within the limits of local fund-raising capacity. That, in turn, will lead to increased accountability and economy, which I—along with the Government and, I believe, every council tax payer in the country—want to see.
  There can, however, be no local accountability while there is doubt about who is responsible for which function: that is why it is so important to the Government to consider which tier should do what. Nor can there be accountability while funding remains a maze of arcane equations and calculations. Similarly, there will be no thrift while councils continue to spend ever-increasing amounts of other people's money. The figures speak for themselves: 75 per cent. of money spent by local authorities now comes from central Government, while only 25 per cent. comes from the council tax.
  Last but by no means least, there can be no prospect of improving the calibre of councillors, or of involving the business community, while the current position continues. Ministers do not need a commission to tell them what to do; the answer stares them in the face.
  8.13 pm
  Mr. John Evans: I am sure that most hon. Members will agree that local government finance is the most mysterious, arcane and complex subject in the political calendar. I suspect that, apart from council finance officers, few people—including national and local politicians—have any idea of the complexities involved.
  Having said that, let me add that I am grateful for the opportunity to speak on behalf of the people of St. Helens. I am sure that the Minister will not disagree when I say that St. Helens is one of the councils that have had a raw deal ever since the SSAs were established some three years ago. As he knows, a small group of northern authorities was heavily handicapped by the lack of any factor relating to
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  unemployment or economic decline, although all had been affected by the rundown of the mining, steel, engineering and, in the case of St. Helens, glass and chemical industries.
  For three years, those authorities—St. Helens, Wigan, Wakefield, Barnsley, Rotherham, Doncaster and Sheffield—have fought to right the current wrongs, constantly making representations to the Government. It is only fair for me to add that we are grateful to the Government for recognising the validity of our case and accepting that economic and social indicators should be included in the assessments; that has undoubtedly benefited St. Helens.
  During the Secretary of State's speech, I suggested that he should consider giving some recompense to those authorities in recognition of the three years for which they were so severely handicapped. St. Helens borough council, for instance, has been forced over the past three years to spend its entire balance in cutting £20 million to set a legal budget. Last year, it was forced to take £10·5 million from a budget of £142 million. Even jobs in the authority disappeared, in a town that has lost 20,000 jobs over the past 10 years as a result of the decline in our traditional industries. It had to close a library, an elderly people's home, a day nursery, a family centre and a day centre, while increasing charges for home helps, school meals and meals on wheels. We were not just cutting essential services; we were cutting the authority's work to the bone.
  It was with some trepidation that I heard today's announcement that the Government had accepted the teachers' 2·5 per cent. pay claim but that there would be no additional money. I doubt very much that St. Helens will be able to find the money to cover that increase without having to slash services further.
  The people of St. Helens are mystified by some of the unfairnesses in the SSAs. Over the past two weeks our two local newspapers, the St. Helens Star and the St. Helens Reporter, have run a series of articles comparing St. Helens with the London borough of Westminster, whose population size is almost identical. They pointed out that, on the social index chart, Westminster ranks as a much more impoverished borough—as do Kensington and Chelsea, City of London and Kingston upon Thames, to name but a few.
  Most people would be astonished to learn that Westminster is more impoverished than St. Helens. It is very peculiar, given that St. Helens is part of Merseyside, which the European Commission has just recognised as one of the most deprived regions in the European Union and has granted objective 1 status—which means substantial extra funds.
  What mystifies people in St. Helens even more, however, is the difference between the grants that it receives and those received by Westminster. In 1994, Westminster is to receive £2,622 per primary school pupil, while St. Helens will receive £1,851. In other words, it costs £770 more to educate a pupil in Westminster than it does in St. Helens. The figures for secondary pupils are even worse: Westminster receives £3,677 per pupil whereas St. Helens receives £2,590, so Westminster receives more than £1,000 more per pupil. For the care of the elderly, Westminster receives £18 million more than St. Helens, which works out at almost £1,000 per elderly person.
  The Secretary of State said that the figures for London boroughs were fair. If he says so, I have to accept it but I

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  should be grateful if he would write and explain how the figures are arrived at. I guarantee that his answer will be published in the St. Helens newspapers.
  Mr. Gill: Will the hon. Gentleman give way?
  Mr. Evans: No, I shall not give way because time is getting on. The hon. Gentleman spoke for a long time and several of my hon. Friends still wish to participate in the debate.
  I shall now complete the comparison between Westminster and St. Helens. Both councils have received the auditor's report. Most people will agree that the report on Westminster was rather damning. Indeed, some Westminster officers and councillors were criticised unmercifully. In St. Helens, the district auditor, Frank Kerkham, gave a special mention to the council's
  "sound and business-like management".
  He especially praised the way in which the authority collects and monitors the council tax. The district auditor said:
  "By the end of October 1993 the money owed in Council Tax was £4·9 million. This represents 3·9 per cent. of the gross debit for three years of the community charge's existence."
  The council believes that that is a good performance, given that it has had to introduce and collect the council tax in tandem with the residual community charge. In other words, Westminster receives a great deal more finance from central Government than St. Helens but received a damning and damaging report from the auditor whereas St. Helens received praise.
  I wish to raise a more immediate and pressing problem. As I said, the new SSA is beneficial to St. Helens and we are grateful for that, but the roof has fallen in on St. Helens council once again. A major road is being constructed, a link from the M62 to the town centre. It is vital for the economic regeneration of St. Helens, but the area through which the road passes contains almost 300 hectares of some of the most contaminated derelict land in the country. More than 180 hectares of the land have been identified as potentially excellent development sites. Indeed, a couple of years ago Pilkington decided to locate its UK5 and UK6 flute glass plants in St. Helens rather than on the continent or in southern England because of the benefits that would flow from the new road. The prospect of the new road has already begun to attract people to St. Helens.
  The original tender for the main contract, which was awarded in May 1991 when the total cost of the scheme was estimated at £35 million, was for £19·2 million. The current estimate of the final cost is £53·6 million. I shall not go into all the details, but the increase in costs has been caused by problems over which the council has no control. They include hitting unknown dumps of highly toxic waste which have had to be removed to the ends of the country because of the new environmental protection legislation and hitting deposits of coal which have also had to be removed. Gas mains were discovered which no one knew were there, public utilities have also had to be removed at considerable expense and a serious problem arose with British Rail over the new bridge that had to be constructed as part of the project. The costs and delays have added to the council's problems.
  As the problems arose, the council notified the Departments of Transport and of the Environment but, out of the blue, the Department of Transport informed the
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  council at Christmas that it would receive no assistance with the additional costs. That was a considerable bombshell to be handed to the council as a Christmas box. The council must now attempt to fund the project out of revenue which, as I am sure the Minister of State will accept, is utterly impossible.
  This morning, I led a council delegation to the Departments of Transport and of the Environment. We are grateful for the sympathetic response that we received from both Departments and I pay special tribute to the Under-Secretary of State for the Environment, the hon. Member for Banbury (Mr. Baldry). Ministers were courteous and sympathetic, but I do not know whether they can help us to solve the problem. I want the Secretaries of State for the Environment and for Transport to understand the problem and accept that St. Helens council is in a catch-22 situation.
  If the council attempts to fund the scheme out of revenue, it will not only have to slash education and social service provision once again—they have already been decimated in the past five years—but will undoubtedly have to overspend and be capped. The alternative, which some people in the town are beginning to demand, is for the council not to complete the road, although 80 per cent. of it has already been built. If it were left unfinished, the centre of the town would be in utter chaos and look like a first world war battlefield. It would mean that the main contractor and many small contractors would face a financial crisis, to say the least.
  I suggest that no council should have to face problems of this nature involving the construction of a major highway. I appeal to the Secretaries of State for the Environment and for Transport to ensure in the coming three or four weeks that St. Helens receives assistance to solve the short-term problem.
  8.25 pm
  Mr. David Harris: I am pleased to follow the hon. Member for St. Helens, North (Mr. Evans), because the contrast between the problems facing his local authority and the problems with which I shall deal later could not be greater.
  I wish to speak about the Isles of Scilly. The mention of the Isles of Scilly in the same breath as St. Helens highlights the fact that local government has to meet very different needs in different parts of the country. I am also pleased to see sitting next to the hon. Gentleman the hon. Member for Newham, North-West (Mr. Banks), with whom I sat for many years on the Greater London council. I mention that only because I do not share his view about the demise of that authority, a view which is supported by some other hon. Members.
  I look back on the GLC with great nostalgia. I was a member for eight and a half years, and in those days it had a role to perform. That role largely disappeared because of the fact that services such as sewerage were taken over by the boroughs. The GLC's role was rationalised, and in the end it was left searching for something to do.
  Mr. Tony Banks: I shall be brief because I do not want to prevent the hon. Gentleman from talking about the Isles of Scilly. Is it not odd that London is the only capital city in the world that does not have a single authority or an elected mayor to speak on behalf of its population? If such a system works in every other capital city, why not in London?
  Mr. Harris: I understand the hon. Gentleman's point, but to return to that huge bureaucratic structure would be a retrograde step. I have read all the opinion polls that are trotted out on this subject and, despite their findings, I do not sense among the people who live in London a great longing for a return of the GLC. I, too, spend the week here, and return to Cornwall for the weekend.
  I am still recovering from the remarks of the hon. Member for Newbury (Mr. Rendel). I pay tribute to him for sitting patiently through the debate. He said—I intervened to ask him about it—that he thought that less money should be provided by central Government, albeit in the context of the local income tax and the raising of more money locally to fund local services. I pointed out that that was not the view of his colleagues on Cornwall county council.
  I think it is fair to say that the Liberal Democrats who now control Cornwall county council—the chairmen of its various committees—virtually have season tickets to come up to London on delegation after delegation to plead with Ministers for more essential Government money to meet the needs of Cornwall. They cannot really lose. The Liberal Democrats come up to London and say, "You Ministers must give us more money." If the Ministers do not give them more money, they blame the Government, but if they do give them a bit more money, they say, "Liberal Democrats are wonderful people, because we have got more money from central Government for the needs of the people of Cornwall."
  The hon. Member for Newbury should have a word with his colleagues at county hall in Cornwall, and try to get the party line clarified on that aspect of policy, as on so many others.
  Mr. Rendel: Obviously, I did not make myself clear. There is no incompatibility between local people now calling for greater Government intervention in terms of providing money towards local costs at a time when local costs—and SSAs—are increasing, but unfortunately the Government are cutting the grant.
  A policy of local income tax—which would allow whatever rate was set by the Government under the present system for grant from central sources to decrease gradually, while more and more of the rate was taken on to a local income tax—would mean that national income tax was decreasing, while local income tax was increasing. Taxation would remain at the same level, but more of the kcal tax would be raised locally. That is the important argument. That is why the two principles are compatible.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. I remind the House of the 50 minutes available before the wind-up speeches begin. Five hon. Gentlemen are hoping to catch my eye. Long interventions do not help.
  Mr. Harris: I will not pursue that point, but I could pick many holes in the hon. Gentleman's argument.
  I want to use the time allotted to me to discuss the special problems of the Isles of Scilly in my constituency. The contrast between the Isles of Scilly and many of the local authorities that have been mentioned in the debate could not be greater. The isles of Scilly council is unique in local government. It is a unitary authority with a population of slightly fewer than 2,000, but it has all the responsibilities, at all layers, of local government. The difficulty is that any small change is therefore greatly
  1106
  magnified. I shall illustrate that by outlining the difficulties that the Isles of Scilly council foresees in the current settlement.
  There are three problem areas. The first is education. The standard spending assessment for education has been cut by £59,000 for the Isles of Scilly—a minute amount compared with the expenditure of other authorities that have been mentioned, but large in proportion to the budget of the Isles of Scilly. That has come about simply as a result of a factor mentioned by Conservative Members—the fact that the figures on which the formula is based are already out of date. There are 22 more pupils in the Isles of Scilly than there were when the figures were collected. That is a minute number, but it has big funding implications for the Isles of Scilly.
  There are other factors. Several of the pupils who account for the increase live on the off-islands. They have to be boarded on St. Mary's, the main island. That adds to the cost.
  Another factor is that the formulae do not take account of the fact that there are no educational facilities for pupils aged over 16 on the Isles of Scilly, so they have to go to the mainland, which means that the Isles of Scilly council pays about £75,000 every year in boarding and travel costs to take those pupils to the schools on the mainland, mainly in Penzance in my constituency. The formula takes no account of that factor, and it adds to the difficulty. There is, therefore, a significant shortfall in the spending on education.
  My hon. Friend the Member for Isle of Wight (Mr. Field)—perhaps the Isles of Scilly and the Isle of Wight are similar in some respects—mentioned the costs of providing the fire service on an island. Those costs and those difficulties are compounded on the Isles of Scilly, because all five inhabited islands need some fire cover. Yet, as I understand it, the money that is made available to any local authority that is a fire authority depends in part on the number of calls and the number of false alarms that are made during the year.
  Fortunately, very few people cause a false alarm on the Isles of Scilly, but if one adds all those factors together, there is a big shortfall in the funding of fire services. It costs £91,000 to provide fire services on the Isles of Scilly. The SSA for the islands is only £57,000.
  The third factor is the revenue that is handed over to local authorities to recognise to some extent the extra expenditure they incur as a result of dealing with tourists. That is done on a national basis, as I understand it. There has been a decrease in that revenue, because the feeling is that surveys have shown a decrease in tourism in the past year. That, fortunately, is not true of the Isles of Scilly, where there has been an increase.
  Those factors add up to a cut in the SSA for the Isles of Scilly council of 2·9 per cent. In fact, its SSA has been reduced this year from £2,556,000 to £2,482,000a decrease of £74,000. Incidentally, the reason why the council has apparently so large an SSA in relation to the population is that, as I mentioned earlier, it is a unitary authority providing all services, and with large extra costs because they are provided on an island.
  I understand from the documents and from the speech made by my right hon. Friend the Secretary of State that the special grant to take account of decreases in SSA will apply when there is a reduction of 2 per cent. As I said, the SSA for the Isles of Scilly has decreased by 2·9 per cent. I ask the Minister of State whether he can throw any light

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  on the situation when he replies to the debate, because the Isles of Scilly are not mentioned in the document as qualifying for that special grant. I hope that he will consider that. If he cannot give me an answer tonight, I know that he will provide one later.
  However, my plea to the Minister of State and his colleagues is to reconsider the special features of the Isles of Scilly. We all go in for special pleading in a debate such as this. I make no apology for doing just that for the islanders I represent, and I hope that my arguments will be considered—not only seriously, as I know they will be, but sympathetically.
  8.39 pm
  Mr. Eric Illsley: I shall be as brief as possible, and I intend to talk about the standard spending assessment and capping criteria. As we know, the Government are now trying to use the capping criteria to get local authorities to spend exactly to their SSAs.
  You will be aware, Mr. Deputy Speaker, of my opposition in previous years to the methodology used in calculating standard spending assessments. They use out-of-date census data and inadequate indicators that take no account of need, unemployment, social deprivation, or the need for health education. They use inadequate ethnicity factors, and they make too much use of proxies, rather than direct indicators.
  I am pleased to be able to say that the Secretary of State has at last taken on board many of the complaints that have been made in the House, especially by people representing areas covered by the Webber-Craigh authorities, such as my hon. Friend the Member for St. Helens, North (Mr. Evans), and has altered the SSA calculations to take account of those complaints. I especially welcome the economic index, which takes account of unemployment and long-term illness, both of which are prevalent in my constituency.
  The resulting standard spending assessment per head of population for my local authority shows an increase of 6·9 per cent.—the second highest increase for any of the metropolitan districts. I believe that our new level of SSA under the new methodology totally vindicates our complaints in the House against the previous SSA. Had the changes been implemented earlier, my local authority would have been spared the losses that it has suffered over the past three years, and would not have been capped in 1990.
  However, even with a 6·9 per cent. increase Barnsley is still 32nd out of the 36 metropolitan authorities. The gap between the highest and the lowest SSAs has closed, but it is still quite large. Last year, I used the example of Manchester, and then the difference between my local authority and Manchester was more than 60 per cent. That gap is still 47 per cent. Manchester has an SSA 47 per cent. higher than that of Barnsley to provide a standard level of service. Hon. Members have already referred to Westminster; last year its SSA was 102 per cent. higher than Barnsley's, and this year it will be 79 per cent. higher.
  As I shall explain, the increase in SSA has been completely overshadowed by the capping criteria that caused the existing lower level of SSA to be capped. The changes to the SSA methodology are welcome, but further
  1108
  review will be necessary. All the problems with the SSAs cannot be addressed in one year alone, and in future years we shall need further fine tuning.
  The capping regime had an impact on the levels of SSA for previous years, which were artificially low. That means that we shall have a low level of spending in the forthcoming year, despite the increase in the SSA. The losses from the past are never likely to be made up. As I have said, the Government want to equate spending to the SSA, using a form of what may be called permanent capping.
  The SSAs will never be the fairest method of dealing with local government finance, and further work is still needed in examining the methodology. Barnsley's SSA has increased, giving a possible increase of £8 million, but the authority cannot spend anything like that. Its revenue support grant has been increased by 18 per cent.—£11 million—but that will serve only to reduce the level of local council tax.
  I am sure that many of my constituents would be happy for the council tax to remain the same if some of the services that we have lost over the past three years were restored—for example, the excellent music tuition centre, and all the other local government services that have either had charges imposed or been removed altogether. I should especially like to see more funding for special needs education, and the residential care homes that have been closed over the past 12 months in Barnsley being reopened. I should also like to see the reintroduction of the discretionary education awards that were ended last year and have still not been restored. I am sure that the people of Barnsley would like to keep council tax levels as they are and retain those services.
  Because of the capping criteria, there will be a shortfall of £8 million in the local authority's budget. The council is meeting now to try to draw up a budget to avoid capping while maintaining as many services as it can, and it is under extreme pressure in trying to achieve that.
  I must also mention council tax transitional relief, which was intended to last for two years. I referred a constituency case to the Secretary of State involving a household which on the specified date for the measurement of transitional relief contained an artificially high number of people—four. When the household was reduced to two people, although their home was in a high council tax band, the family could not take advantage of the transitional relief. Could the relevant date be changed or, even better, could there be some sort of appeal in the mechanism to allow a family who did not qualify for transitional relief when it had more people in it on the specified date, to go back to the local authority and show that their circumstances had changed so that they could take advantage of the relief?
  Representatives of the South Yorkshire fire and civil defence authority came to meet Ministers at the Department of the Environment and the Home Office. During that meeting, the chief fire officer admitted that the steps that the authority were taking to save money, difficult though they were, would not prevent it from falling below the Home Office accepted minimum standard. That authority is, therefore, facing a difficult situation. It cannot maintain Home Office standards on its present funding. The SSA for the authority has increased by 5·7 per cent., but it has been capped at 1·75 per cent., despite the fact that the budget has been reduced substantially over the past two years.

  1109
  Fire stations in my area have been closed to accommodate a five-year rolling programme and to facilitate the building of a brand-new fire station to serve the area and improve the service. Unfortunately, that plan is now under threat because of the difficulties that the authority faces. Its balances have been reduced to £200,000 —substantially below the balances recommended by the chief finance officer.
  The authority has suggested three possibilities, but even if it maintains its current freeze on recruitment it will still be £1·1 million short of adequate funding. It is £1·38 million short of what it needs to maintain Home Office minimum standards, and £1·77 million short of what it needs to restore its balances to the minimum recommended by the finance officer. It is falling below the minimum standard.
  The Minister was asked whether, due to the difficulties with pension payments by the fire authority over the past year, those could be capitalised for this year and the authority given permission for supplementary credit approvals to borrow the money to meet that capitalisation. If permission is given to capitalise that sum, but no credit approval is given, the capital would have to come from existing programmes and the new fire station proposed at Tankersley would be stopped. There would not be enough money in the capital programme to maintain the building and to meet the capitalisation of the pension commitment. The two go hand in hand. I am looking to the Minister to give some sign today that South Yorkshire will be allowed that capitalisation and given the authority for supplementary credit approval. I hope that he will consider that request seriously.
  8.48 pm
  Mr. Andrew F. Bennett: The background to the debate is the Government's 1987 claim that they would make local government finance simpler and easier for people to understand. Against that criterion, they have created three major problems for local authorities. First, they have made money more difficult for local authorities to collect. It is amazing to hear Conservative Members go on about local authorities' failure to collect, because they do not recognise that many of the problems were created by the Government. The rates were a simple way of collecting money and most local authorities had a good level of collection. First with the poll tax and now the council tax, the Government have made collection much more difficult.
  The second problem that the Government have created is in dramatically reducing the tax base for local authorities. Before the Government started with the reorganisation and changes, local authorities raised about 55 per cent. of their income by local tax, the remainder being made up by the Government. Now local authorities raise about 20 per cent. of their income. The result is that, for a small cut in Government grant, local authorities have to put up their charges by substantial amounts—the ratio is about 1:4.
  Thirdly, instead of bringing clarity and understanding to local government finance, the Government have made it even worse. There is no way that individual electors can make a judgment about their councillors and their effectiveness in the way that they spend the money on the basis of this extremely complicated formula. It seems to
  1110
  me that it is against that background that we must judge the Government's record on local Government finance. It is pretty terrible.
  I was disappointed with the Minister for Local Government and Planning who, when he came to the Select Committee, did not accept that most of the decisions on the standard spending assessments are political. He kept trying to claim that they were somehow objective and fair, based on the figures. I do not complain that he makes political decisions, but he should defend them rather than claim that there is some statistical validity in them. One particularly blatant example was the original introduction of extra money for overnight visitors and then, as a result of the outcry from that, the extra money for day visitors. In his introduction, the Secretary of State suggested that, by my objection to day visitors being included, I wanted to take money from London.
  I certainly do not. But I want to take money away from Westminster, Kensington and Chelsea and ensure that it goes to places such as Newham, because the money for day visitors simply means that some central city places and seaside resorts do very well out of it. I cannot see any justification for the idea that day visitors automatically add to a local authority's costs. Stockport is one glaring example. It maintains Lyme park, which is within Cheshire. It costs each of the council charge payers in Stockport £5 a year. It is good value, but Stockport gets no compensation from the grants scheme for maintaining Lyme park. The people who benefit are in Cheshire.
  Many of my constituents like to go to Alton park. It is good value. It is a fun fair. Staffordshire will now benefit from that facility, yet it is almost totally self-contained. It will cost Staffordshire very little to maintain the tourist facilities there, whereas Blackpool fun fair, which is nothing like as self-contained, may well cost Blackpool. The idea about day visitors is nonsense. Some will be a source of revenue for a local authority through parking charges and other aspects from which it can benefit; some will be a serious drain on its resources. To say that it has anything to do with fairness is a myth. It has to do with where the Government want the money to go, which in this case, sadly, tends to be towards Tory authorities.
  Another example of the way in which the system is particularly unfair is the SSA for schools. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) compared Manchester and Barnsley. I do not begrudge the money that goes to Manchester. I have been into the schools there and think that they need the money. But it is amazing that, at the Reddish and Denton end of my constituency, where it comes up to Manchester, there are schools within about a mile of each other: one in Manchester, one in Denton within Tameside and one in Stockport. I cannot see any justification for the difference in the allocation of money to those schools. The Manchester school gets £2,214 for the primary school; the secondary school gets £3,106. In Tameside—within a mile—the primary school will get £1,826; the secondary school, slightly further away, £2,556. The primary school in Stockport will get £1,776; the secondary school, £2,484. Those primary schools are within a mile of each other. The secondary schools are within some three miles of each other.
  I am perfectly willing to concede that, between my constituency and somewhere like Moss Side in Manchester, there is a big difference in the problems of teaching children, but there are not those problems between those areas within a mile of each other. Because

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  of the local management of resources in schools, Manchester schools get so much more than those in Tameside or Stockport. As teachers' salaries are fixed nationally, the small amount over which an individual school has discretion is a substantial problem for the Stockport and Tameside schools. They are badly underfunded. I can see nothing fair about that. I would argue that the Government must look at the weighting that they give to extra educational needs, to make it fairer.
  Other hon. Members referred to the area needs cost. I make no complaint in arguing that, compared to London, schools in the north of England need extra resources. I do not want to take funding away from London schools, because they need the resources, but I cannot see how schools in areas such as Stockport and Tameside can cope with the present level of funding.
  If the Government believe in democracy, they must take away the process of capping. Let the electors make the choice—either pay for higher services or not do so. At the moment they are caught in this situation. The financing is difficult to understand. They are not able to make a judgment about whether local councillors or the Government are failing to provide the service that they want. Let us get rid of capping, let local authorities make their decisions and let the electorate make the decision on that. If we want a healthy democracy, we must return democracy to local government. That means that local government needs a bigger tax base. Local councillors should be able to make decisions about the level of tax raising that they impose. The electorate can please themselves whether to support them or not. The present situation is a farce.
  8.59 pm
  Mr. Colin Pickthall: I am sorry that the hon. Member for Ludlow (Mr. Gill) has gone for a pie and a pint, partly because he is a good lad and was right on Maastricht, but also because he said that he was looking forward to the abolition of the county councils and a future of secure and more clear government.
  Before the hon. Gentleman left, I handed him a copy of the reply that other colleagues and I have had from the Secretary of State about the court judgment on the Local Government Commission guidance notes, in which we are told
  "The Government is not appealing against the court ruling … The Government believes that unitary authorities will often be the best way of achieving these objectives … They will therefore often provide the best form of local government … However there is no national blueprint and the Government does not rule out consideration of two tiers in particular circumstances, with or without changes to the status quo".
  I thought that the hon. Member for Ludlow would be interested in seeing what sort of monster is shambling towards Jerusalem to be born. I bet, that as he has an outside chance of retaining Ludlow at the next election, during the next Parliament he will see that what is proposed will have to be undone, with consequent complex financial ramifications.
  I obviously have a strong interest in Lancashire, both as a Lancashire Member and as a former county councillor. I am well aware of the problems of fishing in local government revenue support figures and of the ease with which anybody can come up with an old boot. I am also aware that one can hardly make the case for a particular
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  authority being hard done by without appearing to wish to disadvantage another authority. Comparisons are odorous, as someone once said.
  The only way in which the position in Lancashire can be illustrated is by comparison with authorities of similar size —1·5 million people. The three other counties in that category are Essex, Hampshire and Kent. My main concern is that Lancashire's financial allocations have been deteriorating steadily since 1989–90, during which time Lancashire's standard spending assessment has gone up by 23·7 per cent.; the average shire increase is 29·4 per cent. That is a considerable disparity.
  This year, Lancashire's SSA has gone up by 1·43 per cent., whereas the SSA for Essex has gone up by 3·35 per cent., the SSA for Hampshire by 2·97 per cent. and the SSA for Kent by 3·09 per cent. In 1989–90, Lancashire, Essex, Hampshire and Kent had virtually the same grant-related expenditure, as it then was. In 1994, after a period of steadily widening graphs, Lancashire is way lower than the others—£100 million less than Kent. From 1990–91 to 1994–95, Lancashire's basic credit approval has gone down by 41 per cent., whereas the average county reduction has been 13 per cent. At the same time, Lancashire's budget increased by 58·9 per cent., whereas the county average was 62·1 per cent. Those are general figures against which this year's allocations and this year's difficulties must be seen.
  I know that the Minister for Local Government and Planning has looked at the figures, because we discussed them at a meeting with a deputation a few weeks ago. He assured us that he had no ideological or theoretical objection to changes in the methodology of allocation and that he was open to persuasion about the mechanics. Lancashire can show itself to be underfunded on at least six counts: the area cost adjustment, the special transitional grant, interest receipts, the education of under-fives, capital financing and the further education transfer. Lancashire estimates the total shortfall to be about £56·2 million. I am talking not about a wish list but about significant, punitive or partial calculations. I shall pick up three aspects of that.
  As the Minister knows well enough through his knowledge of his own local authority's finance control—he comes from the right half of the country—the area cost adjustment is a major source of justified complaint among authorities outside the south-east. About £1·6 billion this year is skewed south-eastward by that device. After all the vigorous representations from local authorities and their associations over the past few years, it came as a slap in the face to find that this year the ACA has been increased by 15 per cent. The Association of County Councils has argued for its redistribution among all authorities; pro rata, that would mean £15·9 million extra being allocated to Lancashire.
  I listened carefully to the exchanges earlier today between my hon. Friends who represent London constituencies and the Secretary of State. Anyone in Lancashire—I am sure that my hon. Friends the Members for Pendle (Mr. Prentice) and for Burnley (Mr. Pike) agree —can understand the need for extra provision for London because it has extra and special problems. However, no one could persuade people in Lancashire that Kent, Sussex, Berkshire and some of the other leafier areas around London required the same provision—
  Mr. Bennett: The Isle of Wight.
  Mr. Pickthall: Or the Isle of Wight. I cannot believe that they require that skew.
  The element allowed for the pay of higher education teachers, police and firefighters should be assessed by reference to London weighting allowances which are actually paid rather than by reference to a new earnings survey. The Department's own paper, No. 93/51, which was considered by the SSA sub-group last summer, described the ACA approach to those worker groups as dubious. It recommended actual London weighting, the incorporation of which into the SSA would make the ACA factors correspond more closely to the real world. It was the Minister's own Department which said that.
  Authorities disadvantaged by the ACA are, therefore, especially aggrieved by the inclusion of areas around London that they believe should not be included. I can quote a specific example of the effect of that exclusion by reference to primary and secondary SSAs in 1994–95. Each primary child is worth as follows: in Essex £1,972, in Kent £1,961 in Hampshire £1,929 and in Lancashire £1,867. A Lancashire primary pupil is allocated £94 less than a Kent contemporary. Annually, a typical school of 100 pupils in my constituency receives £9,400 less.
  In secondary schools the same thing applies, but on a greater scale. A Lancashire secondary school student is allocated £145 less than an Essex contemporary. That means that in a typical school of 800, a Lancashire school receives £116,000 less than it should. Schools in each of those four authorities face similar costs, certainly in wages, and no one can possibly imagine that such disparities are remotely fair.
  I shall cut my speech short because my hon. Friends are dying to speak on similar matters and I shall mention only briefly the standard spending assessment funding for under-fives' education. In view of the Prime Minister's recent discovery of the importance of nursery education and the fact that the Secretary of State for Education grudgingly agreed with him not too many days ago, it is absolutely preposterous that the SSA element for under-fives' education is judged on the population of an area rather than on the provision. That basis specifically discourages good providers such as Lancashire from improving and it specifically discourages bad providers from improving their performance. That could be changed without, in the first instance, any implications for the overall allocation. It is a matter of adjustment. I shall allow somebody else to jump in.
  9.6 pm
  Mr. Gordon Prentice: I shall be brief because my hon. Friend the Member for Newham, North-West (Mr. Banks) is straining at the leash in his desire to get into the debate. The settlement is a bad one for local government. We were told that there would be a 2·3 per cent. increase, but the figure represents a 1·2 per cent. cut on the current year's local authority budgets.
  The Secretary of State said that the teachers will get a 2·9 per cent. increase. How will that be paid for? The Evening Standard headline said that it was "an inflation busting increase". As my hon. Friend the Member for Blackburn (Mr. Straw) said, it will be paid for only by employing fewer teachers, by having fewer local government employees and by having bigger classes.
  The Secretary of State also said that the predictions of massive job losses this year would not materialist. That is
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  wrong. On the authority of the Local Government Management Board, 50,000 fewer staff were employed in local government up to September in the past year. The hon. Member for Ludlow (Mr. Gill), who is not in his place, talked of motivating people in local government. One does not motivate them by sacking them. The Secretary of State, as always, has dealt in assertions, just as he used to assert that the poll tax was a fair tax and that there was no way that a property tax could ever be fair.
  In 1988 or perhaps before, I remember the right hon. Member for Mole Valley (Mr. Baker), who was then the Secretary of State for the Environment, likened the system of local government finance to stumbling about in a bog in a fog. The report of the Select Committee on the Environment, which came out a couple of weeks ago, said that the system of local government finance was difficult for the expert to understand, hard for the councillor to follow and almost impossible for the non-expert voter to use to make judgments. That is certainly true.
  In north-east Lancashire, there is a feeling of absolute bewilderment at the savage nature of the settlement. We met the Under-Secretary of State, the hon. Member for Banbury (Mr. Baldry), a few weeks ago and he listened politely enough, but we got absolutely nothing at all from our discussions.
  My hon. Friend the Member for Lancashire, West (Mr. Pickthall) touched on nursery provision. We were told in November by the Daily Express that the Prime Minister was committed to a drive to give every three-year-old a place in a nursery school. That message was plastered across the front page of all the Tory-inclined tabloids.
  The reality is that Lancashire county council already provides more nursery provision, but it is discrimated against because the SSA formula is based on the under-five population and not on the under-five population in nursery schools. Lancashire is doubly discriminated against. It has a much better record than North Yorkshire, which includes the constituency of the Minister for Local Government and Planning. However, North Yorkshire receives more money than Lancashire.
  My hon. Friends the Member for Lancashire, West and for Denton and Reddish (Mr. Bennett) referred to the massive injustices in the education SSAs. I have two examples to underline those points. Why should a primary school child in Lancashire receive £119 less than a primary school child in East Sussex? Why should a secondary school pupil in Lancashire receive £208 less than a secondary school pupil in the Isle of Wight? People are bewildered by that.
  In my district authority of Pendle, the SSA per head has slipped from 70th to 150th. The unviersity of Bristol tells us that we are 55th out of 366 districts in the university's deprivation index. Our SSA is declining from £9·1 million this year to £8·4 million from April. That is a 7·1 per cent. reduction.
  A similar story can be told in respect of all the local authorities in my neck of the woods. There is a 11·5 per cent. reduction in Blackburn, a 9·6 per cent. reduction in Burnley and an 8·6 per cent. reduction in Hyndburn. However, Lancaster's SSA is to increase by 11·7 per cent. Now we know why the hon. Member for Lancaster (Dame E. Kellett-Bowman) was gyrating at the beginning of the Secretary of State's speech.
  People in Pendle do not understand why our SSA is dropping from £106 per head to £98 while it is rising in Bath—with all the deprivation there—from £102 per head

  1115
  to £106. That is an increase of 4·5 per cent. On the social index, to which other hon. Members have referred, Pendle is ranked 92 while Bath is ranked 72. Bournemouth is ranked 40, but Bournemouth is receiving an SSA per head of £114. I do not know how the figures are calculated. A basket of measures are used which are not an accurate reflection of deprivation. We must change that process.
  Pendle has the second-highest Asian heritage community in the county. The changes to the ethnic definition impact adversely against my local authority. The factors must include reference to social class. In Bournemouth, 19·9 per cent. of people are skilled manuals while 27 per cent. are skilled manuals in Pendle. Twenty per cent. are class 4 in Pendle while 14 per cent. are class 5 while 4·5 per cent. are class 5 in Bournemouth. The construction of the social and economic indexes must be placed under the microscope once more.
  I welcome the Secretary of State's assurance today that he will examine the SSA reduction grant. He said that the grant may not be a one-year one off and we may have to return to it. My authority will receive £726,000 next year, but if the grant vaporises the year after that, the impact on our council tax payers would be severe indeed.
  In addition, our transitional relief has been cut by 70 per cent. It has collapsed from £1 million to £300,000. That will have an absolutely cataclysmic effect in Pendle where we have so many of what were previously low-rated properties. No one in band A to band C properties will receive any help from the transitional relief scheme and 77 per cent. of the properties in my constituency fall within bands A and B.
  I will finish now because I know that my hon. Friend the Member for Newham, North-West wishes to speak. However, the settlement is bad for north-east Lancashire and it is bad for the country. It is another of the sleights of hand that we have come to expect from the Government.
  9.14 pm
  Mr. Tony Banks: I am grateful to my hon. Friend the Member for Pendle (Mr. Prentice) for giving me six or seven minutes to cast a few pearls before the Conservative Benches.
  My hon. Friend ought not to worry too much about the fact that all of this does not make sense. I do not think that anyone—even Ministers—understands how the system works. When one allows civil servants to come up with formulae that are punched into computers, all the discrepancies and all the injustices are churned out. We could have spent the entire night demonstrating the inconsistencies and the unfairness in the system. This is the price that we are paying for a Government determined to centralise everything and unwilling to allow local authorities elected by local people to raise their own funds to meet their own needs. Only we—I refer to people on all sides—really know where the shoe hurts, and it should be possible to deal with the matter through local accountability and local democracy. But local accountability and local democracy are being dismantled—destroyed, indeed—by the Government, as also happened under their immediate predecessors.
  The Parliamentary Under-Secretary of State met a deputation from the London borough of Newham and, as my hon. Friend the Member for Newham, North-East (Mr.
  1116
  Leighton) indicated, we put the case to the Minister. It is difficult to know what more we could have said. We came on behalf of a united community—a community represented or supported by local businesses, through the chamber of commerce, the Newham Recorder, the local Conservative party and the local Liberal party—and we put the case to the Minister, but he did not give us any satisfaction. He was polite. I was fascinated by the great fat Waterman pen that he was using, and even more fascinated by his big, fat gold cufflinks, but in the end I was not pleased at the fact that he gave us nothing. There was no fat reward from the cerebral Minister. I suppose we ought at least to be grateful that he listened to us before throwing us out of his office.
  We in Newham have appalling conditions brought about by circumstances well beyond our control. I hope that, even at this late stage, the Minister will look more carefully at our needs if the urban conditions index being developed by his Department in conjunction with Manchester university is accepted and puts Newham at number one—a position that we do not want to be in—in the league of deprived local authority areas in the country, and I hope that he will be far more sympathetic next time Newham Members go with representatives of the local authority to see him.
  I appreciate the fact that Opposition Members now seem to understand the problems in London as a whole and I address my remarks essentially to my own colleagues when I say that Members of Parliament, especially those representing constituencies outside London, regard the capital in terms of its centre. They work in Westminster and go to their flats in Dolphin square or wherever else they can scrounge a bed for the night—all well above board, of course, as I know that there is no hanky-panky from Opposition Members. Non-London Members do not see just how bad the situation is in places like Southwark, Haringey, Islington and Newham. They are showing more understanding, but it is still far from complete. Even in Tory-controlled Brent, the problems are just as bad as those elsewhere.
  Today, there are 30,500 families in temporary accommodation. That represents 62 per cent. of all homeless families in England. London has nearly 500,000 unemployed people—the largest concentration of unemployment in the United Kingdom. Of all refugees, 90 per cent. ultimately settle in London, putting enormous strains on the services of our boroughs, whether Tory, Labour or Liberal.
  I know that my non-London hon. Friends have some understanding of London's problems. We are dealing not just with the Westminster area. My hon. Friend the Member for Brent, East (Mr. Livingstone) once talked about the bars and brothels of Westminster, causing considerable offence to those who know where neither the bars nor the brothels are and who, despite assiduous questioning, have not been able to find out. I do not know whether people were offended because no one had told them or because that is not what Opposition Members do. At any rate, it must be understood that the capital city has enormous problems.
  I know that the standard spending assessments with regard to highway maintenance in London have been increased, but they are still woefully inadequate. Have hon. Members—Conservative or Labour—seen the chaos on London's streets at the moment? People are calling it "Polo City" because in the middle of every street there is

  1117
  a bloody great hole. It is appalling. There are almost more cones on the streets of London than there are people walking around. Why are Ministers not able to co-ordinate the way that undertakings are simply digging up the roads willy-nilly? It is probably easier to get out of Sarajevo than the east end of London at present. Someone is working on the Rotherhithe tunnel, so they have decided to work on the highway that links to it, and they have coned off the A13, the Commercial road. People can see this happening all over the place. Albert bridge is closed and Lambeth bridge is about to close.
  Who the hell is co-ordinating all this? The answer is no one. But someone should be doing something about it. If Minsiters had to travel in rush hour in London, whether on a bus or in a private vehicle, they would do something about it. However, they live in their ivory towers with chauffeur-driven cars to take them from one reception to another at most convenient hours, where they drink champagne, eat caviar and show no regard whatever for the people of London.
  9.20 pm
  Mr. Doug Henderson: As someone who gets caught on the bridges of London when coming to the House in the morning, I can: not but agree with all the remarks of my hon. Friend the Member for Newham, North-West (Mr. Banks).
  Does not this debate demonstrate again to the British people that the Government have lost their commitment to improving our public services? The Government will be shown to have misled the British people about council tax levels. They are both unwilling and unable to dissociate themselves from malpractice and corruption in Tory-controlled boroughs. They are torn apart internally by their own contradictions. They are devoid of new ideas and direction. As will be shown in May and June this year, the Conservative party has lost the trust of the British people.
  We have had a good debate today. Hon. Members on both sides of the House have expressed strong views about both the system of financing local government and the amount of finance that is available to councils. In a speech of the highest quality, my hon. Friend the Member for Blackburn (Mr. Straw) made a number of important points, the central one being that, even with all the reviews that have taken place, standard spending assessments are not being used for their original purpose. They were originally intended to distribute the amount of local government grant. However, they are now being used to limit the amount of local authority resources, and that offends any sense of democracy.
  Another important point that my hon. Friend made was that there is little use in introducing the capping system because it does not control the level of expenditure. Councils that face a cap inevitably spend up to the capping limit. Therefore, examining the matter from an aggregate point of view, there is little saving. The impact of the capping regulations on constituencies was expressed forcefully by my hon. Friends the Members for Denton and Reddish (Mr. Bennett), for Lancashire, West (Mr. Pickthall) and for Newham, North-West.
  My hon. Friend the Member for Newham, North-East (Mr. Leighton) gave considerable emphasis to the potential cuts in his constituency arising from this settlement and to the threat to important local authority public services such as swimming pools and libraries. Although the
  1118
  Government agree with his local authority that more money should be spent on education, money is being diverted from the education budget to meet the council's statutory obligations to the homeless. That is a ridiculous situation. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) said that in his local authority there would be cuts in the discretionary grants available for education because of the impact of the settlement.
  Tory Members made some points with which I think my hon. Friends agree. The hon. Member for Brentwood and Ongar (Mr. Pickles) was pleased that the level of unemployment was a more important factor in the calculation of SSAs. It was not a matter of north and south —it was something that could affect the whole of the country. Many of my hon. Friends agree with that and, indeed, my hon. Friend the Member for Barnsley, Central said so. The hon. Member for Isle of Wight (Mr. Field) believed that there should be more openness and transparency in the SSA system. I think that few of my hon. Friends would disagree with that.
  The hon. Member for Ludlow (Mr. Gill) said that he supported subsidiarity. There is considerable support for that among my hon. Friends. I am not sure whether my hon. Friends agree with the rest of the hon. Gentleman's speech, but I always say that we should be satisfied with the little that is good. My hon. Friend the Member for Lancashire, West said, after the hon. Member for Ludlow left the Chamber, that he could not address the hon. Gentleman directly, as he seemed to have gone for a pie and a pint.
  I cannot address the hon. Member for Wellingborough (Sir P. Fry) as he is not in his place. As the hon. Gentleman was wearing a dinner suit before he left the Chamber, we can only assume that he is having his pie and pint in more salubrious surroundings. I use dinner suits only for official occasions.
  The hon. Member for Ludlow said that teachers had been made redundant in his constituency. If the hon. Gentleman had been in his place now, I would have been able to say that my hon. Friends and I agree that that is damaging to his community.
  The Secretary of State made a lengthy speech and I must congratulate him on being generous in giving way. I cannot extend those congratulations to the generosity of his responses, but I can say that the right hon. Gentleman did try. It was noticeable that he made little mention of the impact of the overall settlement and what it would mean for local authorities throughout. Perhaps that is not surprising, as the House will appreciate the difficulties that the Department of the Environment has in persuading the Treasury each year of the efficacy of its submission on the financial settlement.
  Successive Secretaries of State have trooped along to the Chancellor to make their case. Some have been known to flag up the occasional victory, but that is not the case this year. I have sympathy for the right hon. Gentleman. Not only has he been spurned by the Prime Minister on the local government review, he has now been spurned by the Chancellor on the financial settlement. The only flag flying this year at the Department of the Environment is a white flag.
  It is interesting to compare the approach of the Secretary of State with that of his predecessor. I remind the House that the previous Secretary of State for the Environment, the right hon. and learned Member for Folkestone and

  1119
  Hythe (Mr. Howard), wrote to the Chief Secretary in May 1993. I am fortunate enough to have a copy of that letter,
  which stated:
  "You asked me to let you have my initial views on the forthcoming Settlement, as a preliminary to this year's Survey discussions … In aggregate, it suggests that an increase of 5·2 per cent. in TSS for 1994–95 is needed in order to protect local authority services."
  The same correspondence contained the Treasury's response, which shows that a level of settlement of around 3·5 per cent. is as far as it was prepared to go.
  The right hon. and learned Gentleman showed some skill as a negotiator. He knew when he was beaten and he was prepared to recommend that level of settlement. However, where are we now? In a statement to the House, the present Secretary of State said:
  "my proposal provides for a 2·3 per cent. increase in local authority spending year on year."—[Official Report, 2 December 1993; Vol. 233, column 1173.]
  The settlement that has been accepted by the right hon. Gentleman is less than the Treasury deemed was necessary last May.
  In the correspondence between the right hon. And learned Member for Folkestone and Hythe and the Treasury, the right hon. and learned Gentleman gave a dire warning of the consequences of the settlement falling below 3·5 per cent. He said in the same letter:
  "local government should not be singled out for specially harsh treatment … A TSS settlement for next year which was lower in cash terms than local authority budgets in the current year would, in my view, be impossible to defend."
  Is not that exactly what the Government are asking the House to support tonight? Is not that what is contained in the settlement?
  That is why the Secretary of State and his hon. Friends have been so quiet on the overall impact on local government services of the settlement. Are not we being asked to defend the indefensible? Does the right hon. Gentleman understand that he is asking the House to vote through measures that will lead to a 1·2 per cent. cut in local authority resources? Does he understand that those calculations are based on a local authority pay bill freeze and that, if cuts in services are to be avoided, substantial council tax increases could result? If the Secretary of State understands all that, is not his advocacy of this year's settlement abject surrender to the Treasury?
  Perhaps the Secretary of State should listen to the Minister for Local Government and Planning, who seems to be developing a section on the needs of local authorities of all colours. The Minister wrote to all English Members of Parliament on 2 December saying:
  "The Revenue Support Grant Settlement for 1994–95 is necessarily challenging … I recognise that a number of authorities will be disappointed with the outcome."
  It is clear from the debate this evening that more than a small number of authorities are disappointed with the outcome.
  Mr. Gummer: Does the hon. Gentleman agree that it is widely thought by people in local government circles that the settlement is considerably better than they feared and something that they can work with? I refer him to the comments in most of the local government newspapers and magazines, which say clearly that people thought that it was going to be a darn sight worse. In those circumstances, could not the hon. Gentleman be grudgingly generous to us rather than so universal an opponent?
  Mr. Hendersonf: People throughout the local authority world believe that this is a very bad settlement. They expected a dreadful settlement. Once the impact of the pay increase is felt, they will probably revert to their original assessment of the settlement. That takes me rather neatly on to the matter of local authority pay. I am indebted to the right hon. Gentleman for leading me in that direction.
  I am surprised at the apparent complacency of the Government, especially in the light of further statements by the Treasury today on pay. The Treasury says in its announcements that it assumes that public sector pay bills will still be frozen. Yet, at the same time, sources in the Government say that substantial increases will be acknowledged for certain groups of workers. A figure of 4 per cent. has sometimes been mentioned for the police.
  Today the Secretary of State for the Environment said that a teachers' settlement of 2·9 per cent. would be permissible. Is not there a contradiction between the two positions? First, the original financial statement announced in December last year assumed a pay bill freeze, with increases in pay coming only from productivity agreements. Then the settlement compels local authorities to increase the level of remuneration for those categories of workers. Is not there a contradiction, as my hon. Friends the Members for St. Helens, North (Mr. Evans) and for Pendle (Mr. Prentice) suggested? If the settlements become a reality, will they not blow a gaping hole in the assumptions on which the financial statement is based?
  Is there still an expectation that the pay increases can be funded by productivity? If so, do the Government accept that redundancies of police officers and teachers are necessary to pay for the increases? If the Government do not believe that, how else do they think that productivity improvements of the order necessary to finance the pay increases can be achieved? Police and teachers will be made redundant just when the Government are saying that their main priority is to protect the community, fight crime and improve education.
  The Government have to look again at how effective the settlement can be. Do they seriously expect that productivity gains can be achieved? My hon. Friend the Member for Newham, South (Mr. Spearing) referred to the trouble and pressure that had been put on loyal local authority workers such as school cleaners. If the Secretary of State continues with the settlement, is he prepared to ask school cleaners, home helps and swimming pool attendants to accept a pay cut or to take redundancy to finance an increase for a teacher or a policeman? That would be unacceptable and unjust, and it should be discarded.
  The reason for our difficulty is that the country is in an economic mess. The Government have accepted and, indeed, celebrated a low-capacity economy with high levels of unemployment. The impact of a vicious stop-go cycle, which the Government's economic mismanagement has created and aggravated, means that the economy cannot meet public expenditure obligations because so much money is wasted on financing unemployment. We raise insufficient tax revenue because of under-employed resources. Is not the settlement the price that we have to pay? We cannot meet essential expenditure on improving education, training and capital projects, which could help the recovery and secure our future.
  The settlement is not only about the level of grant and council tax. It is also about the assessment of the needs of communities. There can have been no doubt that the previous system was flawed—it calculated Huntingdon as

  1121
  more deprived than Chester-le-Street and Cambridge as more deprived than Hartlepool. The new system has some improvements. The inclusion of an economic index that includes unemployment and morbidity factors is one improvement—that argument has been advanced by some of my hon. Friends—but there are still many concerns. The reduction in the additional-needs index is one, as that undervalues the link between deprivation and educational under-achievement.
  My hon. Friend the Member for Blackburn was right to say that, even with the improvements in the SSA system, there are still many shortcomings in the all-ages social index, which claims that Hove is a region of greater need than Liverpool, and that Runnymede is a region of greater need than Wolverhampton. Anyone who travels in those regions knows that that is not the case.
  Many councils have suffered substantial losses from adjustments in the SSA. The arrangements for lessening the impact are called "dampening". When I first heard that phrase introduced by the Association of Metropolitan Authorities, I wondered what it meant. I thought that it was a rare new initiative by the Prime Minister to restructure his Cabinet, but it is the Department of Environment's term for assisting councils that have suffered from a change in their SSA. Those councils that have marginally benefited from the abatement this year will want to know how long the abatement will continue and whether it will be applicable next year.
  The Government claim that the system is fair, but it is no coincidence that the revised system shows that the shire districts have fared best. The Secretary of State may have thought that he was doing himself a political favour when he ensured the achievement of that result, but if last year's county council election results are anything to go by, he is working from an old text book. It did him no good last year and it will not do him any good this year.
  The Minister for Local Government and Planning has also taken a special interest in the SSA system. He said in an interview with the Local Government Chronicle that the system is so sophisticated that he could work out the SSA for Leningrad. Many authorities in this country think that he has worked out the SSA for Leningrad. In this age of perestroika, the system in St. Petersburg, even with all its shortcomings, is probably more democratic than the system in this country and the system that the Minister wants.
  We have the most centralised system of local government finance in the western world. That undemocratic system is based on the draconian practice of capping local authority budgets. Capping denies a local community the right to decide on the level of service that it wants and on how resources should be raised to pay for it. Capping has been condemned as inappropriate in a modern state if the balance of influence and democracy is to be retained between central and local government.
  In justification of the financial settlement, the Secretary of State said that the proposal
  "represents a package which the country can afford."—[Official Report, 2 December 1993; Vol. 233, c. 1176.]
  That is not a widely held view. The country cannot afford a package that ties down resource allocations exclusively to the statistical whims of officials in Marsham street. The country cannot afford its democracy to be undermined by the evils of capping; it cannot afford to accept a capital programme for local authorities that will not rebuild our crumbling schools, repair our leaking roofs or re-equip our
  1122
  aging transport systems and that leaves our roads in decay [Interruption.]—as well as those of the hon. Member for Harrow, West (Mr. Hughes)—and does nothing to renovate and build homes for rent.
  The country cannot afford a revenue settlement that undermines our teacher-pupil ratios, damages our fire-fighting capacity, threatens our ability to combat crime, puts the vulnerable more at risk and deprives us all of a sound and safe community. The country cannot afford its public services to be endangered any longer by this clapped-out Government. The House should reject the orders. I say to the Government what Oliver Cromwell said to the Long Parliament:
  "You have sat too long here … In the name of God, go!"
  9.40 pm
  The Minister for Local Government and Planning (Mr. David Curry): The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) began and ended with a peroration and there was nothing in the middle; it was like a meal which started with a soufflé and went straight on to the meringue.
  The Labour party would like to say that the system is rigged. Labour Members hint at that all the time and occasionally say so. They say that it is the invention of some demonic civil servant, but they should look at the figures and at what the Select Committee said. They know that they cannot sustain that case.
  Let me demonstrate—the local authorities with the highest spending assessments are almost uniformly Labour, with the odd sprinkling of Liberal Democrats. The top 10 authorities with the highest damping grants are predominantly Labour controlled.
  If I wanted to rig a system I am bright enough to be able to do so, but the system is not rigged, it is scrupulously fair. When I am asked where I use my judgment, I answer, "In as few places as possible." In every case where a choice was laid before me in which analysis had demonstrated a clear indicator, I took that indicator. It would have been convenient for me—representing North Yorkshire—to say that we do not want the area cost adjustment because we cannot sustain that.
  Mr. Gummer: We did not do so.
  Mr. Curry: No, we did not take that course because the evidence showed that the opposite was true and Opposition Members should make up their minds whether they like it or not, because they cannot face both ways simultaneously.
  The Select Committee made an interesting and helpful contribution to the debate and its report was studied. It began by saying that the discussion had been open and it was. Throughout, our intention had been to tell everyone —I tell the hon. Member for Newcastle upon Tyne, North the same—that we can argue about the amount of money available as that is perfectly legitimate and the stuff of political argument, but we ought not to argue about how we distribute the money. We have a common interest in trying to ensure that that is done in a way that is as up to date and fair as possible. Of course, we must make continued improvements and one cannot say that one has reached the definitive point—the system will evolve from year to year. However, I want the argument where it belongs rather than concentrating on the attribution of Machiavellian motives to a genuine attempt to deliver the best possible formula for redistribution.
  Mr. Kilfoyle: In that case, can the Minister explain why there was a further cut after the delegation from Liverpool met him? No one in the city of Liverpool understands why another £100,000 was taken from the support grant.
  Mr. Curry: I do not know whether Liverpool is one of the cities from which the overpayment of previous grant has been clawed back. If that is the case, it has had an interest-free loan for a couple of years and we ought to have had it back.
  Liverpool has some difficulties because of its relatively low ethnic population. Newcastle upon Tyne has a similar characteristic. There is a strong weight for ethnicity in the indicators.
  I know that the hon. Member for Coventry, North-East (Mr. Ainsworth) has intervened. Coventry wishes me to use a certain form of sampling to identify children who came from families on income support. We have sampled at 1 per cent. and we have recently changed to 5 per cent. sampling. We now have two quarters at 5 per cent. and two quarters at 1 per cent. sampling. Coventry would have benefited had we moved straight to 5 per cent. sampling. I did not do that, because I do not consider that we can base our sampling on only two quarters.
  Had I exercised the judgment for which people had asked, the consequence would have been a £2·5 million further cut for Liverpool. That shows how the indicators can work and their possible impact.
  Where I have to exercise a judgment, of course I am conscious of particular needs of communities.
  Mr. Robert Ainsworth: Is it not the case that Coventry has pointed out for two years now that the method of counting the children of claimants is absolutely wrong? The Minister's own officials accepted that it cannot be right, yet for two years he refused to do anything about it.
  Mr. Curry: That is not correct. Until recently, the available statistics have been based on a 1 per cent. sample. A 5 per cent. sample will be more accurate and a 50 per cent. sample will be more accurate still. We are now incorporating statistics based on 5 per cent. for two quarters and 1 per cent. for the other two quarters. Next year, the statistics will be based fully on a 5 per cent. sample and I have no doubt that Coventry will benefit. However, the swings and roundabouts of the system mean that Liverpool, because of its characteristics, may be penalised by that methodology. There cannot be winners all the way round.
  Several hon. Members mentioned area cost adjustment. The area cost adjustment is in the index because it is justified and because it stood up to analysis. However, I am not yet satisfied with parts of it, particularly the way in which area cost adjustment plays out towards the borders of the south-east region. Of course there are anomalies at borders. For example, one can find schools within a mile of each other, one each side of a village. We do not yet have the information to consider effectively how it should be tapered, but we will accumulate that. I have asked authorities to join us in carrying out further analysis on area cost adjustment.
  I am already committed to explore with the Department for Education the extent to which we can update the statistical information about children in school. It is collected in January now; therefore, it is 15 months behind the statistics. If we collect it in September we shall bring it much more up-to-date. I want the most up-to-date
  1124
  statistics available. That will give us a more contemporary account and make the figures more relevant. It does not mean that the previous system was not fair; it means that we shall be using more up-to-date figures where they stand up to analysis.
  I should like to say a word about London because there have been some suggestions that we should take it out of the system. I welcome the explanation from my hon. Friend the Member for the Isle of Wight (Mr. Field) of what the Select Committee had in mind when it made those points in its report. The Select Committee asked me to declare where there is a judgment to be made.
  If we were to take London separately, I would have to make an enormous judgment before even beginning the process of how much money to take out of the system to dedicate to London. That would be a political judgment which I do not want to make.
  I should prefer a universally applied system that seeks genuinely to define where councils have to spend money. That would be much better than having a London index, another for the north-east and another for Merseyside, which also has special problems. Before we know where we are, we would have fragmented the system, and it would no longer have the integrity of universal application.
  Mr. Robert B. Jones: I understand the problems that would occur if London is separated out and no arrangements are made scientifically to determine the distribution between London and the rest of the country. My hon. Friend would need a formula for distributing between London and the rest of the country. That does not undermine the case that if we vary any part of the London distribution, we shall end up with huge swings in the rest of non-metropolitan Britain and that is the real problem.
  Mr. Curry: I take my hon. Friend's point. As with all the Select Committee's recommendations, we are willing to examine the options. The Committee identified a number of aspects that, in its view, should be investigated further; it is only fair to add that the Committee itself found it difficult to come up with positive alternatives.
  Work will be necessary on major issues such as the police and the fire authorities this year, as well as on the problem of sparse education provision. The five matters that I have mentioned—along with the counting of pupil numbers and the area cost adjustment—constitute a significant menu. I do not intend to engage in the sort of radical review that has just taken place; people need stability, and they cannot cope if the system is tossed in the air every year. We must, however, ensure that there is a constant process of modernisation.
  A number of Newham Members spoke. It was suggested, for instance, that the capital financing SSA should be based on the actual pre-1990 debt, rather than the notional debte. That, however, would penalise authorities that had used capital receipts to repay the debt, and reward those that had spent those receipts. The system is currently based on the principle of notional amounts, and I think it better for that arrangement to continue.
  Newham's SSA for 1994–95 was £1,143 per head, way above the average for the outer London boroughs: it was the fifth highest in London. Newham also receives £13·3 million of reduction grant. I understood what the hon. Member for Newham, North-West (Mr. Banks) said about homelessness, and I am willing to give a detailed

  1125
  explanation of the way in which the homelessness indicators are calculated. That would, I think, be more helpful than an abbreviated explanation now.
  This year, we have introduced indicators relating to unemployment and morbidity, or ill health. I pay tribute to the Webber Craig authorities, which have pressed for such indicators for some years. They convinced me: the case stood up to analysis, and then to further analysis. However, certain people cannot congratulate us on introducing economic indicators, and then complain about adverse effects on other authorities.
  My hon. Friend the Member for Wellingborough (Sir P. Fry) made two points, which I think I have answered. I am sure that he will subsequently wish to raise the question of what I understand to be between 12,000 and 13,000 surplus school places in Northamptonshire: he suggested that there was a debate to be had with the county council.
  The hon. Member for Newbury (Mr. Rendel) made a speech that I can only describe as sub-charismatic. He supplied his own excuse, suggesting—if I understood him aright—that Madam Speaker had said that it would help the House if he did not speak for too long. If that is true, it is one of the rare occasions in recent parliamentary history of a mercy killing. This was not a dance of the seven veils—the Liberal Democrats usually have seven policies to correspond with the broad economic regions of the country. Here was not even a single veil, but a gossamer thread. Boiled down, Liberal Democrat policy amounted to adjusting the area cost adjustment for West Berkshire. That is what will be laid before the people of Britain: "We shall adjust the area cost adjustment for West Berkshire, and that will solve our problems." I am grateful for brevity at least.
  The hon. Member for Islington, North (Mr. Corbyn) said that although the housing benefit case-load figures had been adjusted to take account of dwellings owned by another authority, adjustments had been made only for authorities that had made representations. We have made such an adjustment, in response to the strength of arguments advanced during consultation; we did not have enough information to make an accurate adjustment for all authorities, and we therefore produced estimates for the authorities that were most affected. We have, however, said that the issue will be discussed with local authority associations with a view to gleaning better figures for 1995–96.
  Mr. Corbyn rose—
  Mr. Curry: No, I shall not give way because the hon. Gentleman was not listening to the greater part of my remarks.
  I now wish to respond to the hon. Member for St. Helens, North (Mr. Evans) who compared St. Helens with Westminster. The truth is that parts of Westminster are socially deprived. A feature of much of the housing in the north of England is that it is more solid than that in parts of the south so housing conditions are sometimes better in the north. Westminster is fourth on the revised social index and St. Helens is 241st. However, if the economic indexes are included, the figures are turned around and St. Helens becomes 39th whereas Westminster is 83rd. If one takes into account the number of households sharing housing and the number of householders living in rented flats, overcrowding, ethnicity and homelessness, it is clear that there is a very good case for considering Westminster as
  1126
  socially deprived. If that is what the system reveals, we abide by it because we must have an objective system. I am not going to tweak it here, twist it there and bend it the other way.
  I shall,of course, respond to the invitation issued by my hon. Friend the Member for St. Ives (Mr. Harris) and write to him about the Isles of Scilly. As he knows, the Isles of Scilly have an especially high SSA per head. It is £1,231 which is almost double the national average, but I am perfectly willing to discuss specific issues with him in detail.
  The hon. Member for Lancashire, West (Mr. Pickthall) mentioned education for the under-fives. The provision of such education is not a statutory duty and it would not be right to base the SSA on the number of places for the under-fives because that would lead local authorities to write their own cheques—
  Mr. Deputy Speaker: Order. I am having great difficulty hearing the Minister. Members of all parties are chatting away. I should be grateful if the Hosue would settle down and listen to what the Minister has to say.
  Mr. Curry: The hon. Member for Blackburn (Mr. Straw), who opened the debate for the Opposition, committed himself to two things on Labour's behalf. We can say that he committed himself because he made his commitments in the House and, according to the dictum of the hon. Member for Dunfermline, East (Mr. Brown), they count as pledges, unlike off-the-cuff remarks which I understand constitute the other category of pledges made by the Labour party.
  The hon. Member for Blackburn made two promises. First, he said that he would abolish capping. He did not say over what time scale or for whom. Would it be done all at once in the first year? He was not quite sure whether it was linked to the introduction of elections by a third, a third, a third. I know that the hon. Member for Dunfermline, East has made that connection. He wants to have that control of a third, a third, a third and he would intervene in the election cycle to obtain it. In any event, the hon. Member for Blackburn would abolish capping. In other words, there would be a series of very large tax increases under Labour. All council tax payers will wish to know that that is what would happen.
  Mr. Straw rose—
  Mr. Curry: I have three minutes left. I shall give way when I have dealt with the second pledge.
  The hon. Gentleman's second pledge was to abolish compulsory competitive tendering. Does the House seriously believe that, given the choice between putting services out to tender and building town hall bureaucracies, Labour authorities would opt for CCT? We should soon see local authority employment going through the roof and passing the 2 million mark.
  Mr. Straw: I have two questions for the Minister. First, will he explain where the completely bogus claim that the abolition of capping and CCT would cost £800 million came from? Secondly, why is he rejecting the policy of not having capping and not even counting local authorities' self-financed expenditure which the Prime Minister proposed in a White Paper when he was Chief Secretary? It is still our policy, although he has changed his mind.
  Mr. Curry: Even for someone as mathematically challenged as the hon. Gentleman, the idea that one can liberate capping without tax increases is incomprehensible. I do not think that council tax payers will agree with him. He should consider the impeccably Social Democrat Governments in Scandinavia—in Denmark—and in Holland, where local authorities are being brought under tighter control because local authority expenditure is part of public expenditure.
  We know what the Labour party would do in Government. We will find that Labour's ten commandments are tax, tax, tax, tax, tax and tax again. The taxes will not be collected and the rents will not be collected and the council tax payer will suffer. That is Labour's policy. The hon. Member for Blackburn is the Wilfred Pickles of local Government. "Give 'em the money, Mabel" is his policy —"Give 'em the money and the council tax payer will pay." The council tax payers had better beware if that is what they get.
  I commend the reports to the House.
  Question put.
  The House divided: Ayes 304, Noes 261.

  Division No. 107]

  [10 pm

  AYES

  Ainsworth, Peter (East Surrey)

  Cash, William

  Aitken, Jonathan

  Channon, Rt Hon Paul

  Alexander, Richard

  Churchill, Mr

  Alison, Rt Hon Michael (Selby)

  Clappison, James

  Allason, Rupert (Torbay)

  Clark, Dr Michael (Rochford)

  Amess, David

  Clarke, Rt Hon Kenneth (Ruclif)

  Arbuthnot, James

  Clifton-Brown, Geoffrey

  Arnold, Jacques (Gravesham)

  Coe, Sebastian

  Arnold, Sir Thomas (Hazel Grv)

  Colvin, Michael

  Ashby, David

  Congdon, David

  Aspinwall, Jack

  Conway, Derek

  Atkins, Robert

  Coombs, Anthony (Wyre For'st)

  Atkinson, David (Bour'mouth E)

  Coombs, Simon (Swindon)

  Atkinson, Peter (Hexham)

  Cope, Rt Hon Sir John

  Baker, Rt Hon K. (Mole Valley)

  Cormack, Patrick

  Baker, Nicholas (Dorset North)

  Couchman, James

  Baldry, Tony

  Cran, James

  Banks, Matthew (Southport)

  Currie, Mrs Edwina (S D'by'ire)

  Banks, Robert (Harrogate)

  Curry, David (Skipton & Ripon)

  Bates, Michael

  Davies, Quentin (Stamford)

  Batiste, Spencer

  Davis, David (Boothferry)

  Beggs, Roy

  Day, Stephen

  Bellingham, Henry

  Deva, Nirj Joseph

  Bendall, Vivian

  Devlin, Tim

  Beresford, Sir Paul

  Dickens, Geoffrey

  Biffen, Rt Hon John

  Dicks, Terry

  Blackburn, Dr John G.

  Dorrell, Stephen

  Body, Sir Richard

  Douglas-Hamilton, Lord James

  Bonsor, Sir Nicholas

  Dover, Den

  Booth, Hartley

  Duncan, Alan

  Boswell, Tim

  Duncan-Smith, Iain

  Bottomley, Peter (Eltham)

  Dunn, Bob

  Bottomley, Rt Hon Virginia

  Durant, Sir Anthony

  Bowden, Andrew

  Dykes, Hugh

  Boyson, Rt Hon Sir Rhodes

  Eggar, Tim

  Brandreth, Gyles

  Elletson, Harold

  Brazier, Julian

  Emery, Rt Hon Sir Peter

  Bright, Graham

  Evans, David (Welwyn Hatfield)

  Brooke, Rt Hon Peter

  Evans, Jonathan (Brecon)

  Brown, M. (Brigg & Cl'thorpes)

  Evans, Nigel (Ribble Valley)

  Browning, Mrs. Angela

  Evans, Roger (Monmouth)

  Bruce, Ian (S Dorset)

  Evennett, David

  Burns, Simon

  Faber, David

  Burt, Alistair

  Fabricant, Michael

  Butler, Peter

  Fairbairn, Sir Nicholas

  Butterfill, John

  Field, Barry (Isle of Wight)

  Carlisle, John (Luton North)

  Forman, Nigel

  Carlisle, Kenneth (Lincoln)

  Forsyth, Michael (Stirling)

  Carrington, Matthew

  Forth, Eric

  Carttiss, Michael

  Fowler, Rt Hon Sir Norman

  1128

  Fox, Dr Liam (Woodspring)

  Lyell, Rt Hon Sir Nicholas

  Fox, Sir Marcus (Shipley)

  MacGregor, Rt Hon John

  Freeman, Rt Hon Roger

  MacKay, Andrew

  French, Douglas

  Maclean, David

  Fry, Sir Peter

  McLoughlin, Patrick

  Gale, Roger

  McNair-Wilson, Sir Patrick

  Gallie, Phil

  Madel, Sir David

  Gardiner, Sir George

  Maitland, Lady Olga

  Garel-Jones, Rt Hon Tristan

  Malone, Gerald

  Garnier, Edward

  Mans, Keith

  Gill, Christopher

  Marland, Paul

  Gillan, Cheryl

  Marshall, John (Hendon S)

  Goodson-Wickes, Dr Charles

  Marshall, Sir Michael (Arundel)

  Gorman, Mrs Teresa

  Martin, David (Portsmouth S)

  Gorst, John

  Mawhinney, Rt Hon Dr Brian

  Grant, Sir A. (Cambs SW)

  Mayhew, Rt Hon Sir Patrick

  Greenway, Harry (Ealing N)

  Merchant, Piers

  Greenway, John (Ryedale)

  Mills, Iain

  Griffiths, Peter (Portsmouth, N)

  Mitchell, Andrew (Gedling)

  Gummer, Rt Hon John Selwyn

  Mitchell, Sir David (Hants NW)

  Hague, William

  Moate, Sir Roger

  Hamilton, Rt Hon Sir Archie

  Monro, Sir Hector

  Hamilton, Neil (Tatton)

  Moss, Malcolm

  Hampson, Dr Keith

  Nelson, Anthony

  Hannam, Sir John

  Neubert, Sir Michael

  Hargreaves, Andrew

  Newton, Rt Hon Tony

  Harris, David

  Nicholls, Patrick

  Haselhurst, Alan

  Nicholson, David (Taunton)

  Hawkins, Nick

  Nicholson, Emma (Devon West)

  Hawksley, Warren

  Onslow, Rt Hon Sir Cranley

  Hayes, Jerry

  Oppenheim, Phillip

  Heald, Oliver

  Ottaway, Richard

  Heathcoat-Amory, David

  Page, Richard

  Hendry, Charles

  Paice, James

  Heseltine, Rt Hon Michael

  Patnick, Irvine

  Higgins, Rt Hon Sir Terence L.

  Patten, Rt Hon John

  Hill, James (Southampton Test)

  Pattie, Rt Hon Sir Geoffrey

  Hogg, Rt Hon Douglas (G'tham)

  Pawsey, James

  Horam, John

  Pickles, Eric

  Hordern, Rt Hon Sir Peter

  Porter, Barry (Wirral S)

  Howard, Rt Hon Michael

  Porter, David (Waveney)

  Howarth, Alan (Strat'rd-on-A)

  Portillo, Rt Hon Michael

  Howell, Rt Hon David (G'dford)

  Powell, William (Corby)

  Howell, Sir Ralph (N Norfolk)

  Rathbone, Tim

  Hughes Robert G. (Harrow W)

  Redwood, Rt Hon John

  Hunt, Rt Hon David (Wirral W)

  Renton, Rt Hon Tim

  Hunt, Sir John (Ravensbourne)

  Richards, Rod

  Hunter, Andrew

  Riddick, Graham

  Hurd, Rt Hon Douglas

  Rifkind, Rt Hon. Malcolm

  Jack, Michael

  Robathan, Andrew

  Jenkin, Bernard

  Roberts, Rt Hon Sir Wyn

  Johnson Smith, Sir Geoffrey

  Robertson, Raymond (Ab'd'n S)

  Jones, Gwilym (Cardiff N)

  Robinson, Mark (Somerton)

  Jones, Robert B. (W Hertfdshr)

  Roe, Mrs Marion (Broxbourne)

  Jopling, Rt Hon Michael

  Rowe, Andrew (Mid Kent)

  Kellett-Bowman, Dame Elaine

  Rumbold, Rt Hon Dame Angela

  Key, Robert

  Ryder, Rt Hon Richard

  Kilfedder, Sir James

  Sackville, Tom

  King, Rt Hon Tom

  Scott, Rt Hon Nicholas

  Kirkhope, Timothy

  Shaw, David (Dover)

  Knapman, Roger

  Shaw, Sir Giles (Pudsey)

  Knight, Mrs Angela (Erewash)

  Shephard, Rt Hon Gillian

  Knight, Greg (Derby N)

  Shepherd, Colin (Hereford)

  Knight, Dame Jill (Bir'm E'st'n)

  Shepherd, Richard (Aldridge)

  Knox, Sir David

  Shersby, Michael

  Kynoch, George (Kincardine)

  Sims, Roger

  Lait, Mrs Jacqui

  Skeet, Sir Trevor

  Lamont, Rt Hon Norman

  Smith, Tim (Beaconsfield)

  Lang, Rt Hon Ian

  Soames, Nicholas

  Lawrence, Sir Ivan

  Speed, Sir Keith

  Legg, Barry

  Spencer, Sir Derek

  Leigh, Edward

  Spicer, Sir James (W Dorset)

  Lennox-Boyd, Mark

  Spicer, Michael (S Worcs)

  Lester, Jim (Broxtowe)

  Spink, Dr Robert

  Lidington, David

  Spring, Richard

  Lightbown, David

  Sproat, Iain

  Lilley, Rt Hon Peter

  Squire, Robin (Hornchurch)

  Lloyd, Rt Hon Peter (Fareham)

  Stanley, Rt Hon Sir John

  Lord, Michael

  Steen, Anthony

  Luff, Peter

  Stephen, Michael

  1129

  Stern, Michael

  Walker, Bill (N Tayside)

  Stewart, Allan

  Waller, Gary

  Streeter, Gary

  Ward, John

  Sumberg, David

  Wardle, Charles (Bexhill)

  Sykes, John

  Waterson, Nigel

  Tapsell, Sir Peter

  Watts, John

  Taylor, Ian (Esher)

  Wells, Bowen

  Taylor, John M. (Solihull)

  Wheeler, Rt Hon Sir John

  Taylor, Sir Teddy (Southend, E)

  Whitney, Ray

  Temple-Morris, Peter

  Whittingdale, John

  Thomason, Roy

  Widdecombe, Ann

  Thompson, Sir Donald (C'er V)

  Wiggin, Sir Jerry

  Thompson, Patrick (Norwich N)

  Wilkinson, John

  Thornton, Sir Malcolm

  Willetts, David

  Townend, John (Bridlington)

  Wilshire, David

  Townsend, Cyril D. (Bexl'yh'th)

  Winterton, Mrs Ann (Congleton)

  Tracey, Richard

  Winterton, Nicholas (Macc'f'ld)

  Trend, Michael

  Wolfson, Mark

  Trimble, David

  Yeo, Tim

  Twinn, Dr Ian

  Young, Rt Hon Sir George

  Vaughan, Sir Gerard

  Viggers, Peter

  Tellers for the Ayes:

  Waldegrave, Rt Hon William

  Mr Sydney Chapman and Mr. Timothy Wood.

  Walden, George

  NOES

  Abbott, Ms Diane

  Cox, Tom

  Adams, Mrs Irene

  Cryer, Bob

  Ainger, Nick

  Cummings, John

  Ainsworth, Robert (Cov'try NE)

  Cunliffe, Lawrence

  Allen, Graham

  Cunningham, Jim (Covy SE)

  Anderson, Donald (Swansea E)

  Cunningham, Rt Hon Dr John

  Anderson, Ms Janet (Ros'dale)

  Dalyell, Tam

  Armstrong, Hilary

  Darling, Alistair

  Ashton, Joe

  Davidson, Ian

  Banks, Tony (Newham NW)

  Davies, Rt Hon Denzil (Llanelli)

  Barnes, Harry

  Davies, Ron (Caerphilly)

  Barron, Kevin

  Davis, Terry (B'ham, H'dge H'l)

  Battle, John

  Dewar, Donald

  Bayley, Hugh

  Dixon, Don

  Beckett, Rt Hon Margaret

  Dobson, Frank

  Beith, Rt Hon A. J.

  Donohoe, Brian H.

  Bell, Stuart

  Dowd, Jim

  Benn, Rt Hon Tony

  Dunnachie, Jimmy

  Bennett, Andrew F.

  Dunwoody, Mrs Gwyneth

  Benton, Joe

  Eagle, Ms Angela

  Bermingham, Gerald

  Eastham, Ken

  Berry, Dr. Roger

  Enright, Derek

  Betts, Clive

  Etherington, Bill

  Blair, Tony

  Evans, John (St Helens N)

  Boateng, Paul

  Fatchett, Derek

  Boyes, Roland

  Faulds, Andrew

  Bradley, Keith

  Field, Frank (Birkenhead)

  Bray, Dr Jeremy

  Fisher, Mark

  Brown, Gordon (Dunfermline E)

  Flynn, Paul

  Brown, N. (N'c'tle upon Tyne E)

  Foster, Rt Hon Derek

  Burden, Richard

  Foster, Don (Bath)

  Byers, Stephen

  Foulkes, George

  Caborn, Richard

  Fraser, John

  Callaghan, Jim

  Fyfe, Maria

  Campbell, Mrs Anne (C'bridge)

  Galloway, George

  Campbell, Ronnie (Blyth V)

  Gapes, Mike

  Campbell-Savours, D. N.

  George, Bruce

  Canavan, Dennis

  Gerrard, Neil

  Cann, Jamie

  Gilbert, Rt Hon Dr John

  Chisholm, Malcolm

  Godman, Dr Norman A.

  Clapham, Michael

  Godsiff, Roger

  Clark, Dr David (South Shields)

  Golding, Mrs Llin

  Clarke, Tom (Monklands W)

  Gordon, Mildred

  Clelland, David

  Gould, Bryan

  Clwyd, Mrs Ann

  Graham, Thomas

  Coffey, Ann

  Grant, Bernie (Tottenham)

  Cohen, Harry

  Griffiths, Nigel (Edinburgh S)

  Connarty, Michael

  Griffiths, Win (Bridgend)

  Cook, Frank (Stockton N)

  Grocott, Bruce

  Cook, Robin (Livingston)

  Gunnell, John

  Corbett, Robin

  Hain, Peter

  Corbyn, Jeremy

  Hall, Mike

  Corston, Ms Jean

  Hanson, David

  Cousins, Jim

  Hardy, Peter

  1130

  Harman, Ms Harriet

  Murphy, Paul

  Harvey, Nick

  O'Brien, Michael (N W'kshire)

  Hattersley, Rt Hon Roy

  O'Brien, William (Normanton)

  Henderson, Doug

  O'Hara, Edward

  Heppell, John

  Olner, William

  Hill, Keith (Streatham)

  O'Neill, Martin

  Hinchliffe, David

  Orme, Rt Hon Stanley

  Hoey, Kate

  Paisley, Rev Ian

  Hogg, Norman (Cumbernauld)

  Parry, Robert

  Home Robertson, John

  Pendry, Tom

  Hood, Jimmy

  Pickthall, Colin

  Hoon, Geoffrey

  Pike, Peter L.

  Howarth, George (Knowsley N)

  Pope, Greg

  Howells, Dr. Kim (Pontypridd)

  Powell, Ray (Ogmore)

  Hoyle, Doug

  Prentice, Ms Bridget (Lew'm E)

  Hughes, Kevin (Doncaster N)

  Prentice, Gordon (Pendle)

  Hughes, Robert (Aberdeen N)

  Primarolo, Dawn

  Hughes, Roy (Newport E)

  Purchase, Ken

  Hutton, John

  Quin, Ms Joyce

  Illsley, Eric

  Radice, Giles

  Ingram, Adam

  Randall, Stuart

  Jackson, Glenda (H'stead)

  Raynsford, Nick

  Jackson, Helen (Shef'ld, H)

  Redmond, Martin

  Jamieson, David

  Reid, Dr John

  Jones, Barry (Alyn and D'side)

  Rendel, David

  Jones, Lynne (B'ham S O)

  Robertson, George (Hamilton)

  Jones, Martyn (Clwyd, SW)

  Robinson, Geoffrey (Co'try NW)

  Jones, Nigel (Cheltenham)

  Roche, Mrs. Barbara

  Jowell, Tessa

  Rogers, Allan

  Kaufman, Rt Hon Gerald

  Rooker, Jeff

  Keen, Alan

  Rooney, Terry

  Kennedy, Jane (Lpool Brdgn)

  Ross, Ernie (Dundee W)

  Khabra, Piara S.

  Rowlands, Ted

  Kilfoyle, Peter

  Ruddock, Joan

  Kirkwood, Archy

  Sedgemore, Brian

  Leighton, Ron

  Sheerman, Barry

  Lestor, Joan (Eccles)

  Sheldon, Rt Hon Robert

  Lewis, Terry

  Shore, Rt Hon Peter

  Litherland, Robert

  Short, Clare

  Livingstone, Ken

  Simpson, Alan

  Lloyd, Tony (Stretford)

  Skinner, Dennis

  Loyden, Eddie

  Smith, Andrew (Oxford E)

  Lynne, Ms Liz

  Smith, C. (Isl'ton S & F'sbury)

  McAllion, John

  Smith, Rt Hon John (M'kl'ds E)

  McAvoy, Thomas

  Smith, Llew (Blaenau Gwent)

  Macdonald, Calum

  Snape, Peter

  McFall, John

  Soley, Clive

  McKelvey, William

  Spearing, Nigel

  Mackinlay, Andrew

  Squire, Rachel (Dunfermline W)

  McLeish, Henry

  Steinberg, Gerry

  Maclennan, Robert

  Stevenson, George

  McMaster, Gordon

  Stott, Roger

  McNamara, Kevin

  Straw, Jack

  McWilliam, John

  Taylor, Mrs Ann (Dewsbury)

  Madden, Max

  Taylor, Matthew (Truro)

  Maddock, Mrs Diana

  Thompson, Jack (Wansbeck)

  Mahon, Alice

  Tipping, Paddy

  Mandelson, Peter

  Turner, Dennis

  Marek, Dr John

  Tyler, Paul

  Marshall, David (Shettleston)

  Walker, Rt Hon Sir Harold

  Marshall, Jim (Leicester, S)

  Walley, Joan

  Martin, Michael J. (Springburn)

  Wardell, Gareth (Gower)

  Martlew, Eric

  Wareing, Robert N

  Meacher, Michael

  Watson, Mike

  Meale, Alan

  Wicks, Malcolm

  Michael, Alun

  Williams, Rt Hon Alan (Sw'n W)

  Michie, Bill (Sheffield Heeley)

  Williams, Alan W (Carmarthen)

  Milburn, Alan

  Wilson, Brian

  Miller, Andrew

  Winnick, David

  Mitchell, Austin (Gt Grimsby)

  Wise, Audrey

  Moonie, Dr Lewis

  Worthington, Tony

  Morgan, Rhodri

  Wray, Jimmy

  Morley, Elliot

  Wright, Dr Tony

  Morris, Rt Hon A. (Wy'nshawe)

  Young, David (Bolton SE)

  Morris, Estelle (B'ham Yardley)

  Morris, Rt Hon J. (Aberavon)

  Tellers for the Noes:

  Mowlam, Marjorie

  Mr. John Spellar and Mr. Jon Owen Jones.

  Mudie, George

  Mullin, Chris

  Question accordingly agreed to.
  Resolved,
  That the Local Government Finance Report (England) 1994–95 (House of Commons Paper No. 179), which was laid before this House on 27th January, be approved.
  Resolved,
  That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1994–95 (House of Commons Paper No. 181), which was laid before this House on 27th January, be approved.—[Mr. Lightbown.]
  Resolved,
  That the Special Grant Report (No. 9) (House of Commons Paper No. 180), which was laid before this House on 27th January, be approved.—[Mr. Lightbown.]

  South Crofty Tin Mine
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]
  10.15 pm
  Mr. Matthew Taylor: This is my third Adjournment debate on the subject of tin mining. My first, in 1988, started at 2.26 am. The second, in 1991, started at 1.22 am. This one is at a more reasonable hour, and we may get a better attendance than we have had previously for this subject. I notice that the three Adjournment debates come at almost exactly three-year intervals. The object of this debate and of the all-party pressure for further support for what is now Cornwall's last tin mine is to ensure that there is still an industry to debate in another three years—when I hope, if there is an Adjournment debate, it will be to congratulate the mine on record profits.
  I have no doubt that during this debate, the Minister will argue that, over the years, the Government have invested £23 million in Canon Consolidated. That is true, and it is the best reason why Government support should not be cut off now. However, let us remember how we got here.
  When the International Tin Council crashed in October 1985, it plunged the tin industry into crisis. When the tin price fell as stock-piled tin was released on to the market, mines worldwide were threatened, not least our own deep mines in Cornwall. Mines worldwide continue to operate at below the break-even level. Ours are not the only mines threatened by the present low prices.
  The uprising of support in Cornwall was spontaneous. The miners took their case to London. The support of my much-missed predecessor David Penhaligon is still well remembered. Here in Parliament, the Select Committee on Trade and Industry investigated the tin crisis. Its report in March 1986 contained a number of conclusions, of which the most important, contained in the final line of the summary of conclusions, was that it believed that the Cornish tin industry was worth saving. I believe that that view is as correct now as it ever was.
  Moreover, the work force more than ever deserve saving. They have met every target for productivity and cost cutting that was set. They have taken wage cuts and they have even worked without reward at times. Twice, however, the Government have let them down. In February 1991, the Government reneged on a commitment to invest the final £1·6 million of the £25 million originally promised. That was despite the fact that the company had met every target that the Department of Trade and industry had set. Indeed, it had far exceeded the cost reductions originally demanded. The result was the closure of the Wheal Jane mine in my constituency. It is entirely due to the efforts of the management and work force that the South Crofty mine and the Wheal Jane plant are still working.
  I was fortunate enough to win the Adournment debate at that time. I hope the Minister has read it; it contains some points that are relevant now. First, then as now, the costs of support were far less than the costs of closure. I said then:
  "I refuse to accept that it saved the Treasury money in any respect. It may save the Department of Trade and Industry money, but it simply costs the Department of Social Security and other Departments money."—[Official Report, 6 March 1991; Vol. 187, c. 432.]

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  The company now employs almost 200 fewer people in what is still one of the worst unemployment black spots in the country. The jobs have just not been replaced.
  Taking into account the costs and benefits and the loss of tax payment to the Treasury, that alone costs about £1·8 million a year—more than the DTI saved overall. The pollution disaster that followed is costing many millions of pounds more. The decision in 1991 broke a promise and wasted taxpayers' money.
  Now that we have reached 1994, the Minister may like to comment once again on the costs of possible closure. We know what the thoughts of the Minister were immediately before refusing the company the £200,000 it believed it needed to keep going. We know that he believed the decision, because the leaked letter from him to another Minister used the words
  "effectively close the last tin mine in Cornwall".
  The Minister believed that he was closing the mine. Not surprisingly, news that he was planning that on the day that the announcement was due, produced the reaction that the Minister predicted in his letter as people sought to change his mind. Presumably the Prime Minister and other senior Ministers thought that that was a sensible decision, since we know that they were consulted.
  I raise that matter because I have a specific question for the Minister. Given that the sum asked for amounted to £800 per employee, it was clearly less than even the short-term cost of the redundancies that the Minister predicted. Taking into acount the knock-on effect on job losses in supplying companies, the Government were being asked only for the equivalent of £400 per job at stake. Do the Government seek a cross-departmental cost-benefit analysis for decisions such as that?
  In 1991, I asked the Minister at the DTI the same question, and I was told that the DTI's job was to manage its own budget. We know that the decision cost the Government far more than the DTI saved. In that case, it seems that the Minister decided to take the same risk. I do not understand why, and I think that the House deserves an explanation.
  In 1991, the former Conservative Member of Parliament for Falmouth and Camborne, David Mudd, made the same point in the Truro Packet when he said:
  "They have committed what in my opinion is the bleakest act of betrayal in the history of industry in Cornwall … The amount involved, £1·6 million, works out at a miserly £3,800 for each of the 420 jobs forfeited. The effect of those skilled jobs on the Cornish economy and on Cornwall's unemployment, which already stands at 13·2 per cent., is too horrendous to visualise."
  Mr. Mudd made the same point then that I am making now, and the question still has not been answered.
  Once again, there is also an environmental impact. While the South Crofty mine is less likely to cause the scale of pollution that arose at Wheal Jane, the Minister's leaked letter suggested that there was room for concern. Has there been an environmental impact study this time on the risks of closure? Has the potential of the environmental costs been assessed?
  Since the continuing Wheal Jane clean-up depends on the tailings at the processing plant, what is the impact on the National Rivers Authority clean-up programme there? I asked the Minister yesterday, and he was not even aware that there was an impact on the NRA clean-up programme at the Wheal Jane plant. Yet today, I contacted the NRA and it confirmed the impact. It said:
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  "If South Crofty closes and the tailing supply is cut off, the NRA's operation at Wheal Jane would continue, but there would be a cost implication caused by the loss of tailings material."
  Has no one in the DTI thought to work that out? Who will make the dam safe when it is no longer used by the NRA? Who will meet the bill? There will be no company for that operation to do it, and the cost will presumably fall on the NRA as a result of the Government's decision.
  I raised similar points about costs in the Adjournment debate in 1991. Then as now, I invited the then hon. Member for Falmouth and Camborne, Mr. David Mudd, to take part. He opened his comments by saying of the points that I made:
  "I endorse his every word and sentiment."—[Official Report, 6 March 1991; Vol. 187, c. 434.]
  He could not accept the Government's willingness to sacrifice jobs then to save so little. We stood together for the mines and for the work force.
  This time, the DTI's calculation of "savings" is even more ludicrous than last time, as figures that I gave in my opening remarks more than illustrate. Fortunately, the Minister may yet be proved wrong; we may yet have a chance to save the mine and the jobs. I know that the management and the work force will do all they can to achieve that.
  The day was saved by the one thing happening which the Department appeared to predict would not happen, and that was the increase in the price of tin since the company asked for the £200,000. As a result, the crisis point has been postponed. However, it has not gone. As we all know only too well, the company is still losing money, and new sources of funding are still required.
  The company remains on a knife edge. The Government still have the mine's future in their hands. We now have time to work to persuade the Department to offer that help, and, we hope, time for the company to find new sources of investment.
  The Minister will be aware that hon. Members from Cornwall from both sides of the House are in the Chamber today. I hope that he will recognise the united concern for the mine among people in Cornwall, which is reflected in the case that I have made today. That is why I have invited, as I did before, the hon. Member for Falmouth and Camborne to participate in the debate. The mine is in his constituency while the processing plant is in my constituency.
  The Minister has said no to financial aid. I hope, for the reasons that I have already outlined, that he will reconsider. Although the issue has been raised over many years by the company and by hon. Members, it seems that the Department is finally looking at ways to remove the tremendous burden of Government debt that hangs over the company. That is crucial, because, if the company is not to receive Government investment, it must have private investment to survive for more than months. Who will invest, given that balance sheet? Who will invest if the first call on profits in future will be the Government? Who will give the mine a chance if the Government will not?
  The mine's future rests with the Minister. The miners and Cornwall hold their breath. The Minister told me yesterday that he hoped for a decision by the end of this month. Many in Cornwall will wonder why there should be a delay. After all, if nothing is done, even the Minister does not hold out much hope of the mine staying open. However, if it closes, the Government loans will be lost anyway. By writing them off now, the DTI would be at

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  least no worse off than it would be if the mine were left to close. At best, the mine would be given a real chance of survival. Why the uncertainty?
  At the DTI yesterday, I was told that the Department was worried that it might be held to have acted illegally if it made funds available; that the Public Accounts Committee might be awkward and embarrassing if loans are written off; and—it is rather ironic that the DTI should worry about this—that the company might make it work and actually turn a profit.
  I have already referred to my 1991 speech on this subject. Let me refer the Minister to the speech made by Mr. David Mudd, the former Member for Falmouth and Camborne, in that debate. He referred to the same claims and worries that have been transferred to me. He said:
  For reasons that have still not been explained to my satisfaction or that of many other people, two tin mines, more than 400 jobs, countless small enterprises and the communities that lie between Camborne, Redruth and Truro are under a death threat because, if I am correct, the DTI is scuttling away from what it fears could have been an embarrassing squeeze between the Treasury and the Public Accounts Committee.—[Official Report, 6 March 1991; Vol. 187, c. 435.]
  There we have it once again. If that is the case, I hope that Ministers will overcome their fears and that he will address that fear when he replies, so that we can be clear what he believes is happening.
  There are jobs and a traditional industry to be saved. The councils in Cornwall, particularly the county council, are negotiating with the mine to discover whether there are ways in which they can help by buying land around the mine for purposes in which they are already engaged—for example, economic development, the tramways project and other similar projects.
  However, anything that the county is allowed to put in cannot meet the needs of the mine for very long. The Minister can help to save the mine, irrespective of what may have been decided just a week or two ago. The opportunity is there now, because the miners are working hard in the mine, because the management and the people of Cornwall are doing all they can to help, and because politicians on both sides of the House from our part of the country will do what we can to keep the mine open. I hope that the Minister will be able to give some hope to those people who are looking for a response, in the hope that their jobs will be saved.
  10.29 pm
  Mr. Sebastian Coe: I am grateful to the hon. Member for Truro (Mr. Taylor) for his courtesy in allowing me to make a brief contribution to the debate. I also recognise that he has a genuine concern for tailings dam in his constituency, as I do with the nub of the debate: the future of South Crofty in the Falmouth-Camborne division.
  South Crofty is the last working tin mine in the United Kingdom. It is one of only two remaining mines in Europe —there is a similar one in Portugal. The hon. Member for Truro has described the lead-up to the events, particularly the 1985–86 crisis, as well giving a few asides, some of which lacked a little accuracy—I am sure that there could be a debate over that.
  We seem to be talking about previous public money that has been invested in saving jobs and the mine as wasted money, but it is not. I fervently believe that that money has
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  laid the foundations for a commercially viable operation. At the heart of today's debate is the volatility of the international market and of the international price for tin. That is the agenda that management and Department of Trade and Industry officials have set themselves.
  As the hon. Member for Truro said, the main issue on that agenda involves loans. The issue does not merely consist of writing off previous debt: it also involves existing commercial contracts. Writing off Government loans in this case would mean writing off other loans from previous tripartite agreements. Those subjects are not to be debated tonight, but they require detailed discussions. I recognise that Department officials and management are tackling the problems.
  Why do we seek for the loans to be written off? Simply because the price of tin is so volatile. There is no forecaster at the London metal exchange or in the commodities market who is prepared or able to put his finger on whether the price is likely to continue to rise. The price has risen £300 in the past week, but no one is able to say whether it will continue to rise or, as the market finds another level, fall back.
  The importance of the removal of those loans is that it would allow Carnon Consolidated to develop third-party commercial relationships. They could bolster the industry and constitute the foundation of a commercial relationship to see the industry through the volatility that will certainly exist in the market for the next year.
  The mine is a viable business. It has already been said that management, work force and trade unions have all worked extremely hard to reduce overheads and operating costs. It is one of the most economic mines in the world. I recognise the volatility in the international market—Malaysia, China and Brazil are suffering similar problems —but when the price rises, as it will, I want to ensure that we maintain not only a commercial operation, but the strong psychological links that mining has for many of my constituents and on a Cornwall countywide basis.
  The agenda that has been set by management and is being met as quickly as possible by Department of Trade and Industry officials should not be left hanging in the air. A decision has to be made quickly. If the management view is crystallised and it believes that public funding is officially at an end and loans can, at the very least, be reduced or, at best, be taken off the balance sheet, we must ensure that the industry can stand on its own two feet. We must ensure that it has the support of the work force, management and unions and develops fresh relationships in new pastures. We must maintain full-time, meaningful employment in the Falmouth-Camborne district.
  10.34 pm
  The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton): I must first apologise for the absence of my right hon. Friend the Minister for Industry, who is in attendance upon the Council of Ministers of the European Community. However, it is not entirely inappropriate that I should answer this debate, as my parents-in-law are constituents of my hon. Friend the Member for St. Ives (Mr. Harris), who is present this evening and in whose constituency I was married.
  I am a frequent visitor to Cornwall and I know the area extremely well. I am aware of the difficulties that the tin mining industry in Cornwall has been going through in

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  recent years, and I have the greatest possible sympathy with those who are currently suffering the turmoil that the changes in international markets for tin have caused.
  Of course I understand the concern that has been expressed by the hon. Member for Truro (Mr. Taylor) on behalf of those who work in the constituency of my hon. Friend the Member for Falmouth and Camborne (Mr. Coe). I am aware of the importance of this mine to the local community. The concern is shared by all my colleagues in the Department of Trade and Industry. I understand also the problems that inevitably arise in close-knit communities when events such as these supervene and cause the difficulties that the tin mining industry in Cornwall has endured in recent years. I know that at the mine and the treatment plant there are workers from all three constituencies—those of my hon. Friends and that of the hon. Member for Truro. It is understandable that all three of them should be here and taking such a keen interest in the debate.
  I was very disappointed at the rather negative approach of the hon. Member for Truro, which contrasted with the approach of my hon. Friend the Member for Falmouth and Camborne. I refer in particular to the emphasis that the hon. Gentleman laid on the confidential letter which had been leaked by someone unknown and to which much reference has been made. If the hon. Gentleman were seriously interested in ensuring the survival of this commercial enterprise, he should not have placed such emphasis on gloomy prognostications that were never intended to be made public.
  Mr. Paul Tyler: Will the Minister give way?
  Mr. Hamilton: No. I am sorry, but time is very limited.
  I hope that, on reflection and in the light of local comment, the hon. Member realises that his comments and the demonstration that was staged outside South Crofty by him and other members of his party, for reasons that may not be too obscure, have been neither helpful nor wise. In fact, it is appalling to play politics with people's jobs, as he has done, and to betray confidences.
  I gather that this was also against the wishes of management and the trade unions, and that it has been the subject of much local comment. I have probably said enough about it.
  Mr. Matthew Taylor: Will the Minister give way?
  Mr. Hamilton: The hon. Gentleman has had an opportunity to make his speech. I am now making mine, and I want to answer the debate. I shall not give way.
  Mr. Taylor: On a point of order, Mr. Deputy Speaker. It is very unusual for a Minister to refuse to give way to a Member who has raised a subject on the Adjournment. However, more relevant is the fact that the Minister has made a personal attack on me. Surely that is not acceptable under the rules of the House.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthowe): The hon. Gentleman is fully aware of the fact that it is for the Minister to decide whether to give way.
  Mr. Hamilton: I am not making a personal attack on the hon. Gentleman; I am expressing great regret at the consequences of his actions in respect of those whose interests he purports to represent in this debate.
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  Regrettably, the gradual exhaustion of Cornish tin and the discovery of new deposits across the world—often in alluvial deposits rather than higher-cost deep hard-rock mines—has seen a decline in the industry, so that today, whereas Cornwall was once supreme, Brazil, China, Indonesia and Malaysia now dominate.
  Even as recently as the mid-1980s, there were three functioning tin mines in Cornwall—at South Crofty, Wheal Jane and Geevor. Regrettably, the last two have now closed. As the last working mine, South Crofty remains as the inheritor of the long tradition of tin mining in the county.
  The importance of tin mining to the Cornish economy has always been recognised by the Government. This recognition can be highlighted by the assistance given to tin mining projects in Cornwall over the years. I regret the hon. Gentleman's remarks, which were intended to give the impression that, over the years, the Government had failed to give proper recognition of tin mining in Cornwall.
  South Crofty is a case in point. It is worth spending a few minutes on the history of DTI support for South Crofty. In 1986, assistance was offered under section 8 of the Industrial Development Act 1982 to Carnon Consolidated Ltd, a subsidiary of RTZ Corporation which then owned two mines in Cornwall—Wheal Jane and South Crofty.
  Assistance was offered in the form of an interest-free loan of up to £15 million, together with Government guarantees of commercial loans of up to £10 million. That finance was to assist RTZ in undertaking a £30 million capital development project over the years until 1991, with the object of reducing costs at the mines, and without it the company's future would have been in doubt. The commercial loan and the Government loan were to be repaid from the profits generated by Carnon Consolidated if the project was fully successful.
  During 1987–88, Carnon Consolidated Ltd again faced serious difficulties because of the severely depressed tin price. As my hon. Friend said, that is the problem today. Agreement was reached in March 1988 for RTZ to sell Canon Consolidated to a new company, Canon Holdings Ltd, owned by the management and employees. RTZ made an interest-free loan of £10 million.
  For their part, the Government agreed to convert their guarantee of £10 million commercial loans under the 1986 assistance into an interest-free loan to Cannon Holdings Ltd, in addition to their original £15 million interest-free loan, which remained in place. This finance, together with RTZ's finance, was to help to secure the continuation of tin mining and employment in Cornwall and enable the main elements of the modernisation programme begun in 1986 to be completed. As before, the loans were to be repaid from profits generated by the company if the project was fully successful.
  The form and amount of the assistance reflected the risks inherent in embarking on the project in the market circumstances prevailing at that time, the serious consequences for west Cornwall if the mines closed—640 jobs were then secured by Government assistance—and the difficulties in the wake of the collapse of the International Tin Council to which the hon. Member for Truro referred.
  During the period 1986 to 1990, the Department of Trade and Industry advanced loan instalments to the value of £23·4 million to Canon out of the total of £25 million which had been offered—a significant sum relative to the

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  size of the company. However, in 1990, because of the continuing very low price of tin, the Department formed the view that the project was in jeopardy, and no further drawings of the loans were permitted.
  Under the terms of our offer letter, we would have been within our rights to ask for our loans to be repaid immediately. The fact that we have not done so fully reflects our desire to help the company as far as possible.
  At this point I pay due credit to the management and work force at South Crofty, who have made strenuous efforts recently to improve productivity and reduce the costs of production. Those involved in the management buy-out in 1988 prevented the closure of the mine then and have kept it going since. The company has been successful in reducing its break-even figure significantly since Government assistance was first given to it. Nevertheless, there is no escaping the fact that it is unrealistic to expect the company to be able to reduce its production costs much lower than the current level.
  The ultimate success of tin mining in Cornwall—and, indeed, anywhere in the world—is predicated upon two factors which are outside the control of any mining company. First, tin is a globally traded commodity, the price for which is set by the London metal exchange and in Malaysia. As with all commodities, the price fluctuates on a daily, or even hourly, basis.
  Because of its use as a raw material for industry, the tin market, like other metals and commodities, moves in response to the forces of supply and demand, and the associated economic situation in the main producing and consuming countries. Prices are also affected by speculative activity. As a consequence, prices are notoriously difficult to predict with any certainty.
  The second key factor is prevailing exchange rates. Because tin is priced in United States dollars, the dollar-sterling exchange rate is also a vital factor for tin mining in the United Kingdom. A rise in the tin price can
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  be negated by a change in the exchange rate. Exchange rates are similarly difficult to forecast, so tin mining has a double dose of uncertainty to contend with.
  The tin price has yet to recover from the tin crisis of 1986 when the price dropped from over £9,000 per tonne to just over £4,000 per tonne. Although there was a brief rally in 1989, when the price climbed above £5,000 per tonne, prices have remained around £3,500 per tonne, and last year the price reached a 20-year low.
  Mr. Tyler: Will the hon. Gentleman give way on that point?
  Mr. Hamilton: The hon. Gentleman must know that I have only seconds to go as a result of a spurious point of order which delayed my response to the debate.
  At the end of 1993, the directors of the company approached my Department with a request for new Government funding for the mine. After considerable thought, we regretfully had to conclude that we could not properly advance any further public money to the company.
  Although the company believes that the tin price will rise significantly, it is by no means certain when that will happen—or, indeed, whether it will happen at all. The Government cannot get into a position where they are spending taxpayers' money on a continuing basis—a point to which the hon. Member for Truro did not allude—to fund the running of the mine until such time, whenever and if ever that might be, as the tin price and exchange rate factors meant that the mine no longer operated at a loss. It is not proper to continue to risk taxpayers' money on the assumption that the price of tin will increase in this manner.
  Looking to the future, I am pleased to see that the company is still trading. I note that the directors believe that the mine still has a future, and that they are continuing to strive to ensure its survival.
  The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at fifteen minutes to Eleven o'clock.