Revenue Support Grant

HC Deb 18 May 1994 vol 243 cc930-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew Mitchell.]

9.57 pm

Mr. John Evans (St. Helens, North)

I congratulate you, Madam Speaker, the Ministers and my hon. Friends on the Opposition Front Bench on the speedy way in which you cleared the important business on the Bill so that I could start my even more important business on the Adjournment. I refer, of course, to the subject of the rate support grant settlement, particularly as it affects my constituency and the City of Westminster.

The Minister is well aware that I am extremely grateful to have this opportunity to speak, once again, on this subject. During the past four years, I have spoken on innumerable occasions and asked innumerable questions, both written and oral, on the rate support grant settlements. I asked a further question about it today.

I was moved to ask for the Adjournment debate because of an answer I received from the Prime Minister to an oral question. I asked the right hon. Gentleman: Is he aware of the fact that if Westminster city council had received the same rate support grant per head of population as the borough of St. Helens it would have been forced to charge £1,019, instead of £245, for a band A property? Will the Prime Minister explain to my constituents how a rate support grant settlement that throws up such huge disparities is not politically corrupt? I shall not bore the House with the Prime Minister's entire reply. It is sufficient to say that towards the end of the exchanges on the question he spoke of some of the reasons why Westminster is so efficient and some of the reasons why the council deserves to be re-elected."—[Official Report, 3 May 1994; Vol. 242, c. 591.] The Prime Minister's answer demonstrated that Her Majesty's Government were still attempting to brazen out the rigging of the grant support system in favour especially of Westminster city council and of the London borough of Wandsworth, which are often described as Tory local government flagships.

I think that all of us were also aware of some of the allegations that were surfacing about what was or was not to be broadcast in the BBC "Panorama" programme about the affairs of the city of Westminster. Indeed, I think that all of us who watched the "Panorama" programme on Monday night agree that it portrayed a shocking story of graft and corruption at the very heart of this country—the city of Westminster—and it was corruption on a scale which, I believe, is without precedent in Great Britain.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew Mitchell.]

Mr. Evans

Anyone who watched that programme recognises that Her Majesty's Government strong-armed the BBC into keeping the programme off the air during the period of the local government elections. The BBC should be condemned for bowing the knee to the threats and intimidation to which it must have been subject. That was a programme about local government in Britain in the 1990s, which everyone had a right to see, and it should have been shown for people to watch.

The votes of the people who saw the programme would have been influenced because they would have recognised, Westminster, but that it was obvious that Ministers, and in one or two cases Conservative Members, had gone along with what had happened in that borough. Although I note, and will accept, that Members of Parliament have said that they had no knowledge of what was going on in the city of Westminster, it is interesting that, as far as I am aware, none has condemned anything that took place in that borough.

I shall concentrate on the difference in treatment of the city of Westminster and of my constituency and the borough that I represent—St. Helens. They are boroughs with similar populations and similar duties and responsibilities to their electorate. Apart from the huge discrepancies in the grants that they receive, their performance differs.

The Prime Minister, in his answer on 3 May, praised Westminster for its efficiency. If that was correct, one would have assumed that when the district auditor reported earlier this year on the accounts of Westminster city council he would be able to praise the borough. Far from that, the district auditor condemned, in terms which I have never seen before, the activities of the council and, as all of us understand it, a number of councillors in the borough and a number of the officers of the borough are facing surcharges approaching £21 million. The Evening Standard last night suggested that, following further investigations, the likely bill for the irregularities is approaching £55 million. We shall all be interested to know the outcome.

St. Helens is a borough which was hard done by by the Government in the past three or four years. The district auditor's report for St. Helens highly praised the borough and all that it had done in the past year. In his annual report, District Auditor Frank Kerkham gives special mention to the Council's 'sound and business like' management. Among services most praised was the way the Authority collects and monitors Council Tax collections. He says: '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.' This represents a good performance given that the Authority has had to introduce and collect the Council Tax in tandem with collecting residual community charge. He went on to praise the borough in a number of other ways. Thus a borough that had been desperately strapped for support grant from the Government was praised for its efficiency by the district auditor.

Because revenue support grant is distributed according to the standard spending assessment formulae, this year Westminster received £2,622 per primary school pupil whereas St. Helens received £1,851—a difference of £770. Does it cost that much more to educate a primary school child in Westminster? In secondary education, the position is even worse. Westminster receives a grant per pupil of £3,677, whereas St. Helens receives £2,590 per pupil—a difference of more than £1,000. Why should St. Helens school children be regarded as so much cheaper to educate than children in Westminster?

Mr. William O'Brien (Normanton)

I appreciate the opportunity to support my hon. Friend in his Adjournment debate. The comparison that he makes between the boroughs of St. Helens and Westminster is identical to the comparison between Wakefield district council and Westminster. Will my hon. Friend mention the other authorities in the Webber Craig group, which is a group of authorities that includes St. Helens and Wakefield?

My hon. Friend mentioned SSAs. In March 1994, the Secretary of State issued a report that said: The Government has consistently taken the view that SSA is an appropriate benchmark against which to consider whether spending decisions of an authority have resulted in a budget which is excessive. Neither St. Helens nor Wakefield has spent excessively. The figures for education in Westminster are evidence of excesses. If there was to be capping, that is where it should have been.

Mr. Evans

I am grateful to my hon. Friend for drawing to the attention of the House the fact that his authority, like another five authorities that are grouped in what is known as the Webber Craig group, which are well known to the Minister, suffers from similar problems.

The position with social services is just as bad as that with education. Westminster receives more than £18 million more for its social services than St. Helens. The position was graphically described in the St. Helens Star on 6 January 1994 when it said: St Helens received a massive £18 million less a year than Westminster to spend on these vital services. That's £994 less to spend on each of our elderly people. For every elderly person living in the Borough, the Council receives just £131 compared to Westminster's £257—almost double what St Helens receives. That shows how an authority at one end of the country receives substantially more to look after its elderly citizens than a borough at the other end of the country.

St. Helens has had a raw deal ever since SSAs were first established. Because of how they were calculated, St. Helens has had to cut no less than £20 million from its budget in the past three years. The council has had to close a library, an elderly persons' home, a family centre, a day nursery and a day centre and increase charges for school meals, meals on wheels and home helps. Regrettably, the cuts have been inflicted on the elderly and the very young—the most defenceless people in the community.

I want to put to the Minister some of the questions that constituents have asked me on many occasions. In the borough of St. Helens there is considerable resentment about how people are treated. I pay tribute to the local newspapers, the St. Helens Star and the St. Helens Reporter, which have regularly featured these issues so that citizens may understand precisely what is going on.

How can it be fair that an authority such as the one in Westminster, with a population only 4 per cent. higher, receives 70 per cent. more in terms of SSAs and 116 per cent. more in revenue support grant than my council? The sums of money involved are huge. My constituents, who know that their council is efficient, would have to be charged twice the council tax that people in Westminster have to pay. Obviously they are extremely angry about this.

The Government's SSA of £220 million for Westminster is supposed to reflect the council's need to provide services at a standard level. Does not the fact that Westminster spends £3 million less mean that it is failing to provide services at that level? Is not revenue support grant distributed according to SSAs? If Westminster is spending less than the SSA, it must be receiving rate support grant in respect of expenditure that it is not incurring. Surely that cannot be justified.

If the Prime Minister argues, as he did in a parliamentary answer to me on 3 May, that Westminster has achieved efficiency savings—he pointed out that £11 million had been saved as a result of compulsory competitive tendering: the equivalent of £110 in council tax—why is the council still receiving rate support grant as if it had not achieved those savings? Should not its SSA be reduced to reflect them?

The Prime Minister's reference, in his reply to me, to the loss of SSA in Wandsworth was irrelevant. I had not mentioned Wandsworth; I had referred simply to Westminster and St. Helens. It is true that Wandsworth lost standard spending assessment, but it was given £26 million in SSA reduction grant to cushion the effect. Westminster received a reduction grant of £7 million. Both authorities benefited because of the change in SSA methodology. There was no such cushion when, in 1991, St. Helens was capped. We lost £6 million, on the basis of the national average, as a result of the switch from what was known as grant-related expenditure assessment—GREA—to SSAs. There was no preferential treatment for St. Helens on that occasion.

I am quite happy to put on record the fact that we in St. Helens and the other Webber Craig authorities are grateful for some of the changes in SSA calculations this year. I should like to make it clear that they have been beneficial. We recognise that the inclusion of the long-term unemployed—a measure for which we fought for a long time—has been advantageous, and we give credit to Ministers for listening to the arguments that we put forward in meetings last year and for going part of the way towards meeting our case.

In answer to my question 7 today, the Minister of State indicated that discussions with the local authority associations about revision of the SSAs were continuing. I and, I am sure, my colleagues in the Webber Craig authorities warmly welcome those discussions and trust that they will be brought to a happy conclusion.

I should like to ask the Minister to consider the inclusion of two or three items. We believe that account should be taken of the fact that the provision of nursery education ought to be based on the actual number of children rather than on proxy figures. After all, we know exactly how many under-fives in St. Helens are being educated. Could not the actual, not the proxy, figures be used? The construction of the additional educational needs index should also be reconsidered, as it is based on three rather broad proxy figures: children of lone parents, children of benefit claimants and children of ethnic origin.?

I suggest that the numbers of statemented children could be considered in this context—they are statemented, after all, so as to receive the special education that they so badly need. I also suggest that the assessment of the number of children at risk should be based on actual numbers, not on proxies. St. Helens, like most other authorities, knows exactly how many children are on its at-risk register.

As I said the last time I spoke in a debate on this subject —indeed, I have often said it—local government finance is a complex, mysterious and arcane subject, and I suspect that only local authority finance executives understand it. The rest of us have to work very hard—I suspect that the Minister sometimes has to work even harder—to keep up with the jargon and the changing patterns involved in mastering this complex subject.

I should point out, however, that local government finance affects every person in the land. After all, it used to be reflected in people's rates; then in the community charge; now in the council tax. It is thus important that we try to get it right. I thank the Minister of State and the Under-Secretary for listening to the authorities and trying to produce a fairer system. They can rest assured that if they produce figures which are fairer, and which therefore benefit our hard-pressed constituents, we will be grateful.

10.16 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry)

It will help the House if I briefly set out the general principles and mechanisms of the local government finance settlement before turning to the points about St. Helens made by the hon. Member for St. Helens, North (Mr. Evans). I hope that both the St. Helens Star and the St. Helens Reporter will give my comments extensive coverage.

Government support for local authority spending this year will be £34.3 billion, a large sum of money representing an increase of 1.7 per cent. on the amount spent in the previous year. That is fair settlement, consistent with our determination to maintain a firm grip on public spending, of which local government accounts for about a quarter. Clearly, the total amount of money available for local government spending has to be distributed to the various local authorities in the fairest possible way—there is no argument about that.

That is done by means of the revenue support grant, which is distributed to local authorities by reference to standard spending assessments. SSAs are an objective, statistically based measure of the amount that an authority needs to spend to deliver a standard level of service. In other words, having regard to different populations and different needs, each local authority should be treated—and as far as the Government are concerned, will be treated—equally.

Our aim is to ensure that the available resources are divided fairly, so that each authority is placed on an equal footing. Of course, that is not an easy task. In evidence to the Environment Select Committee, the local authority associations said: 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. But we do try extremely hard. The Audit Commission observed 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. Last year, we carried out a thorough review of the calculation of the standard spending assessment which incorporated an in-depth look at all the points that the hon. Gentleman raised relating to St. Helens. The review was prompted by the need to incorporate new data on social conditions from the 1991 census, but we also took the opportunity to carry out a root and branch review of the SSA formula more generally.

The review was carried out in close co-operation with the local authority associations. We made the underlying data freely available to the associations and provided exemplifications of any option which the associations wished to consider. I and ministerial colleagues also met delegations from more than 30 individual local authorities to hear their views and discuss their ideas.

The Environment Select Committee has recently produced a report on SSAs. One of the Committee's first conclusions in that report is this: We welcome the openness with which this year's SSA review has been carried out, and we trust the approach will continue in future years. So do we.

One of the Committee's final conclusions is: We recognise that the changes to the SSA methodology this year have led to some commonsense improvement in the 1994–95 proposals. I hope that we will continue to earn the commendation of independent experts and the Select Committee for the fact that our proposals for SSAs are arrived at through open and co-operative discussion and are both common sense and fair.

Mr. William O'Brien

Will the Minister give way?

Mr. Baldry

No.

Just because we aim to ensure a fair distribution does not mean that everyone will be happy with the result. I totally refute any suggestion that the distribution system is somehow rigged in a party political way. If anyone cares to look at the figures, they will see that a large number of the local authorities that have gained this year as a result of recent SSA changes are Labour-controlled authorities.

In his evidence to the Select Committee, Mr. Tony Travers, who is generally recognised as an objective and informed academic in this area, said:

A number of commentators have accused SSAs of being politically rigged … Yet there is no evidence of such political intervention". The review of SSAs last year was thorough and wide ranging and 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 do not plan such a wide-ranging review this year. Of course, that does not mean that there will be no changes. We will always continue to discuss the SSA methodology with local authority associations and with individual authorities which wish to make a contribution.

St. Helens was one of the authorities that benefited from the review of SSAs. It got more money this year than it would have done under the old formula—although I recognise that it was not as much as some other authorities, nor evidently as much as the hon. Gentleman would have liked.

St. Helens SSA went up by just over 3 per cent.—more than the average for metropolitan districts of 1.3 per cent.—and under the capping rules St. Helens can set a budget some 5 per cent. above SSA. If one compares what St. Helens actually spent last year with what it can spend this year—comparing like with like—that is a permitted increase of 1.7 per cent. It is an increase and in no way a cut.

St. Helens education SSA increased by 3.1 per cent.; its personal social services SSA increased by 5.7 per cent. and its all other services block SSA increased by almost 11 per cent. As a result of the introduction of an index measuring economic circumstances, for which St. Helens and others in the Webber Craig group of local authorities have campaigned, it did extremely well.

St. Helens will also benefit from committed spending under the single regeneration budget of £11.4 million in 1994–95 and a share of the £1 billion objective 1 programme money for Merseyside. The Department of Transport has also been able to provide an extra £6.6 million of borrowing approvals to help finance the additional costs of the M62 link road—again in response to a case put by St. Helens in which Environment Ministers took a close interest.

I am disappointed by the hon. Gentleman's comparison with Westminster. I think it is cheap stuff; I think it is poor stuff. It is belittling and it is not worthy of the hon. Gentleman.

The measures used to arrive at the standard spending assessment for Westminster are exactly the same measures as are used for every other authority. They give a higher SSA per head than in St. Helens simply because that is what the statistics show. But the statistics also show that 23 out of the 32 London boroughs get more per head than St. Helens, irrespective of political control.

The SSA review this year reduced Westminster's SSA by 1.6 per cent.—a greater reduction than the average for inner London boroughs. Total external support per head for Westminster—made up of revenue support grant, redistributed business rates and SSA reduction grant—is below the average for inner London boroughs. The low level of council tax in Westminster is, in large measure, simply a reflection of the excellent budgeting by Westminster council, which set a budget some 11.6 per cent. below SSA.

I hope that the hon. Gentleman will study the SSA grants for the London boroughs this year. Having done so, I hope that he will take back any scintilla of a suggestion that they have been politically rigged. Conservative-controlled Kensington and Chelsea has had a reduction in its SSA grant this year of 8.3 per cent. In Conservative-controlled Wandsworth, there has been a reduction in SSA of 10.6 per cent. Conservative-controlled Brent has seen a reduction in its SSA of 8.5 per cent. Ealing, which, at the time that the SSA was set, was Conservative controlled, has seen a reduction in SSA of 3.8 per cent. Redbridge, which, at the time that the SSA was set, was also Conservative-controlled, has seen an SSA reduction of 1 per cent.

The hon. Gentleman could then look at some of the Labour-controlled boroughs in London. Greenwich has had an increase of 7.6 per cent. in its SSA grant. The SSA grant for Barking and Dagenham has increased by 11.8 per cent. The grant for Hillingdon has increased by 7.7 per cent., and so on. It is complete nonsense to suggest that any of the SSAs are politically rigged in any way. They are set objectively using the best possible criteria after lengthy and extensive discussions with the local authority associations.

Mr. Evans

Will the Minister spend one minute explaining to the people of St. Helens why Westminster receives £1,000 more per child for secondary education as compared with St. Helens?

Mr. Baldry

If the hon. Gentleman reads Hansard tomorrow, marks out the word "Westminster" and puts in its place practically any other London borough, he could make exactly the same speech again replacing the word "Westminster" with "Greenwich", "Lambeth", "Newham" or "Islington". That is simply because that is what the statistics demonstrate in terms of need and in terms of the formula that has been worked out openly and objectively with the local authority associations.

I am delighted that St. Helens has welcomed the review of the SSAs and, in particular, the inclusion of health and economic indicators. The work that we have done this year with the Webber Craig group of authorities clearly demonstrates our preparedness and determination to make the system as fair as possible.

Expert independent commentators agree that the process by which we decide the distribution of resources between authorities is as open and as fair as practicable without creating a system that is impossibly complex. The formula is exhaustively discussed with local authority representatives and the data come from statistical returns which are common to all local authority areas.

I appreciate that the hon. Gentleman would like to see St. Helens do better from the system. Many hon. Members would like their areas to do better. Of course, we shall continue to strive to balance these conflicting demands as fairly and reasonably as possible. In a system such as this there may always be scope for further improvements.

As I have made clear, we are always happy to consider with the local authority associations any proposals for improvements. But the improvements will be objective and they will apply to every local authority, irrespective of political complexion. If St. Helens wishes to press further for specific changes to the SSAs, it needs first to seek to persuade other local authorities to put a case to us in the discussions that are already under way. As always, any case that is put forward will be discussed openly with a view to arriving at an approach that is fair to all authorities.

In the meantime, I am sure that St. Helens council wants to make the best use of the £105 million of grant that has been made available to it this year, in addition to the money that it has—

The motion having been made at Ten o'clock and the debate having continued for half an hour, MADAM SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.