HC Deb 25 May 1994 vol 244 cc390-409 7.19 pm
The Minister for Local Government and Planning (Mr. David Curry)

I beg to move,

That the draft Council Tax Limitation (Sheffield City Council) (Maximum Amount) Order 1994, which was laid before this House on 23rd May, be approved. On 7 April, the Secretary of State took his capping decisions, adopting principles that broadly gave effect to the provisional criteria that had been set out in the preceding autumn's Budget setting. Sheffield decided to challenge the proposed cap and suggested an alternative. The authority wished to retain its. original budget and submitted a substantial paper setting out its reasons in support of a higher cap.

I met a delegation from Sheffield to hear its case. My hon. Friend the Member for Sheffield, Hallam (Mr. Patnick) and the hon. Member for Sheffield, Attercliffe (Mr. Betts) were present at that meeting. We had a constructive discussion and invited Sheffield to respond to further questions—which it did. Before taking his decisions, the Secretary of State carefully considered all the points, including those made and demanded at the meeting.

Sheffield faces difficult decisions, in part because of some budgeting decisions in earlier years that left it with substantial inherited commitments and, in particular, a steep increase in financing costs. Whatever the cost, we have to consider an authority's current circumstances and the case that it presents in support of a higher cap must be considered on its merits. In reaching our decisions, we must take the world as it is and not as we had hoped it would turn out to be.

I am conscious of the fact that Sheffield has to face increased financing payments that are required for the leisure facilities associated with the world student games following a rescheduling of borrowing. No one wishes to see authorities lurching from one crisis to the next. If Sheffield is to succeed in establishing a more secure budgetary position in the longer term, it will need to push ahead strongly with its plans for improved efficiency and better financial management. Sheffield has signalled its intention to pursue further the programme of action that will be needed to put its affairs on a more even footing in the longer term. That will remain essential.

In the light of those and other factors, we must consider the impact that a particular combination of circumstances that faces Sheffield in 1994–95 might have for the provision of local authority services in the city. Having carefully examined all the available information on factors that are relevant to budget setting, our judgment in the circumstances in which the authority finds itself for 1994–95 is that some relaxation in the proposed cap would be justified. Accordingly, we have decided that the final cap for Sheffield should be £381.65 million, a relaxation of £3 million on the amount originally proposed. It is for Sheffield to determine the services to which it wishes to devote the additional resources for which provision is made in the cap.

The final cap represents a reduction on the budget originally set by the authority. None the less, Sheffield will be able to increase its overall budget by 2.6 per cent. compared with the equivalent figure for 1993–94. Two-adult band D council tax in the city will be about £18 lower than in the previous year.

If the House approves the order, we shall serve a statutory notice on Sheffield formally setting its cap. Within 21 days thereafter, the authority must reduce its budget in line with the cap and set new lower council taxes. It is for Sheffield to decide how to live within its cap. However, we are satisfied that the final cap for Sheffield is reasonable, achievable and appropriate in all the circumstances of the city. I commend the order to the House.

7.22 pm
Mr. Keith Vaz (Leicester, East)

We are discussing a very important measure which will affect the lives of everyone who lives in Sheffield. I am delighted to see so many hon. Members who represent the city of Sheffield here for the debate. They include my hon. Friends the Members for Sheffield, Attercliffe (Mr. Betts), for Sheffield, Central (Mr. Caborn), for Sheffield, Heeley (Mr. Michie), for Sheffield, Hillsborough (Mrs. Jackson) and for Sheffield, Brightside (Mr. Blunkett).

In last year's debate, the Minister said that local authority spending was £1,000 a head. This year, Sheffield city council proposed to spend just £723 a head. Although that is a massive reduction over last year's level, the Government decided that it was too high. How can that possibly be so? The present round of capping comes at a time when the total budget for local authorities has been cut by 1.2 per cent. since last year.

The Labour party is unequivocally opposed to the idea of capping, for the reasons that my hon. Friend the Member for Blackburn (Mr. Straw) spelt out in the debate on 2 February. However, Sheffield's unfortunate situation is nothing more than the tip of the iceberg. Capping was meant to be a temporary measure with a limited use, but the reality is that, in setting budgets, every council now has to undertake the painful process of capping itself. That is done by the Government announcing the levels that they are willing to accept, and, unless a council wants to suffer the direct intervention of the Department of the Environment, it must set its budget within those defined limits. Effectively, that means that each year services have to be cut by local councillors themselves to avoid the bizarre process of direct Government intervention in the setting and regulating of local budgets.

The Government have almost entirely taken control of local authority budgets, to the extent that we now live in the most centralised system in Europe. That is contrary to the view expressed by the Conservative party in its propaganda for the European elections in which it pretends that it is Labour that wants such a system. The Conservative party is determined to turn local government into little more than its agent, forcing it to undertake the unpleasant tasks of central Government and to take the blame for cuts that are due to Conservative party mismanagement.

Since the Government came to power, they have forced through 195 Acts altering the powers of local authorities. That is more than one Act a month since 9 May 1979. Why has this sustained attack continued? It has continued not for democracy or for the good of the populace but so that Tory paymasters can be given seats on quangos and joint boards.

Quangos now control nearly as much spending as local authorities, but, while councillors are rightly open to public scrutiny and surcharge and possible criminal proceedings, members of quangos are free from even the most basic scrutiny. In the past when irregularities have been found, more often than not the culprit is rewarded with a gong and paid off. The governing ethos of some quangos and board members is "squander and defraud". For every £60 that is wasted by central Government and quangos, local government loses just £1.

The total by which Sheffield city council asked to exceed its new capping limit was £2.5 million. That is less than the amount that the Government have spent this year on mobile phones and pagers. But the money was not to be frittered away: it was to protect vital front-line services. In education, for instance, there will be 400 more pupils for Sheffield council to educate, but, because of the imposed cuts, there will be 80 fewer teachers. Average class sizes are already over 29 in core subjects.

A third of schools will have to cut spending on special needs facilities, even though there is a growing demand. The district auditor has expressed concern at the effect on development and control of cuts in those areas.

Environmental health spending has had to be cut to such an extent that the council is struggling to achieve its statutory duty level. Sheffield suffers from particular problems caused by the construction of the supertram and the way in which that is treated in the standard spending assessment system. The costs associated with the development of that innovative transport programme have not been recognised in the capping limit.

This year, Sheffield suffered a further cut in its budget through the cancelling of the urban programme and the capital receipts holiday. Sheffield succeeded in raising £19.3 million in extra capital receipts during the holiday period between November 1992 and December 1993. But even that was £5.4 million less than it had received through the urban programme. Sheffield city council made a bid for its budget to be maintained at the level at which the council set it. That level was not excessive, merely a rate that would keep the council tax the same as last year.

I congratulate the Minister on his good grace in accepting that the Government's capping limit was wrong and I congratulate the Government on their decision to increase it. However, if the budget cap is to be increased, it should surely be at the level suggested by the council. The fact that that is not the case leads us to wonder whether the Government are merely playing politics and indulging in a face-saving exercise at the expense of people's services in Sheffield.

The city of Sheffield has suffered extremely badly because of the decline in manufacturing. It lost more jobs in 18 months than the total that we shall lose because of the closure of the coal mines. The city had to cope with that calamity virtually without the help of central Government.

Instead of sitting back and resigning itself to its fate, the city has surged forward and set in place a regeneration partnership with the training and enterprise council, the development corporation, the chamber of commerce, the private sector, universities and the health authority. The survival of that partnership, which is a prime example of exactly what the Government are urging local authorities to do, is threatened because the other partners doubt whether the city council can deliver its side of the partnership because of budgetary constraints.

Yesterday morning, I spoke to the leader of Sheffield city council, Councillor Mike Bower—

Mr. Irvine Patnick (Lords Commissioner of the Treasury)

He is in the Strangers' Gallery.

Mr. Vaz

As the hon. Member for Sheffield, Hallam (Mr. Patnick) rightly points out, he is watching this debate.

Mike Bower has already received telephone calls from ordinary people in Sheffield with messages such as this: We do not want our council tax decreased. You keep the money and save the money on re-billing. We want the services. That may sound unbelievable, but the council tax cut that the Government are forcing on Sheffield amounts to a reduction of only £17.15 for a band D property. The Minister will not like being reminded that the average council tax bill in Labour authorities is £40 less than in Conservative authorities. The sum of £17 does not make a substantial difference. The forced cut is accompanied by the re-billing costs of between £100,000 and £140,000. Those funds must be found from the existing budget and the result will be even more cuts.

Those facts are not new to the Minister, but, as some of the representations that he has received from Sheffield show, the list is far more exhaustive than we have time for this evening and I shall not repeat it entirely. None the less, fully aware of those facts, on the recommendation of the Minister, the Secretary of State is cutting Sheffield's budget by £2.5 million. It seems absurd that Sheffield should have a further £2.5 million torn from its budget when the pay award for teachers alone will cost the city an additional £2.8 million.

The Minister has studied the Sheffield budget and, as he told the House, has met delegations from the city. Will he now tell the House and the people of Sheffield where he proposes that the necessary cuts be made? Which services provided by Sheffield city council are surplus to requirements? The Minister will probably reply that it is not for him to dictate how local budgets are allocated. That is precisely our point. It is not for him, the Department of the Environment or central Government to decide how local budgets are set or spent. It is entirely up to the councillors, who operate under the mandate that they receive from local people, to respond to local needs, and they should be left to set their own budgets.

The reaction of the Liberal Democrat party in Sheffield displayed what the Labour party has highlighted for years —it has no policies and no conscience. Locally, the Liberal Democrat party campaigns saying that it cares for local people and local politics. In Sheffield, those scavengers of British politics insisted that the city council did not bother disputing the cap but just accepted the Government's imposed budget.

However, the appropriately named Liberal Democrat leader, Mr. Moore—although he requires less for Sheffield —was quoted in the Yorkshire Post yesterday as saying: We are not out of the woods yet by any means. One would think that the words "egg on his face" were invented personally for that gentleman.

If the people of Sheffield had a Liberal Democrat council today—a horrifying prospect—they would be £3 million worse off. That means that ££3 million worth of services to local people would have been cut because of the attitude of the Liberal Democrat party. The Liberals are beginning to be exposed locally and nationally for what they really are. They care for neither people nor policies; they care only for power for power's sake.

On 5 May, the Conservative party was shown what people feel about its fabrications and failures locally and nationally. The Government and their discredited policies are no longer wanted. Labour is the largest single party at local level because it delivers what it promises. The Labour leadership in Sheffield sets realistic aims and knows how to deliver the services cheaply and efficiently. The Conservative party did not win a single seat in the local elections in Sheffield. The message that local people have sent it is that it is neither wanted nor trusted. That is not surprising when we consider the underhand way in which local authorities are being treated. The Conservative party has been exposed as the "do anything, say anything to get into power" party.

Today, Sheffield city council becomes the latest casualty of the secret war being waged against democracy and representation. Local needs are being superseded because of the Government's failure nationally. [Interruption.] The Minister may laugh, but that is the reality in Sheffield. Instead of supporting the civic entrepreneurs of Sheffield and other major towns and cities, helping to make them the best in Britain and able to compete with the best in the world, the Conservative Government are setting about their destruction.

The past 15 years have seen a catalogue of interference by the Government. Year after year, good, effective councils such as Sheffield have been made to suffer increasingly, leaving the people of those cities desperately short of resources and services. How can the difficulties experienced by Sheffield and other cities be squared with the corruption in Westminster and the massive handouts received by Wandsworth from central Government? I remind the Minister that Wandsworth receives 11.6 per cent. of the total non-needs related grant for the whole country, yet it has a population of just 0.5 per cent. that of the whole country. In 1993–94, Wandsworth received 25 per cent. of the council tax transitional relief set aside for each of the 33 London boroughs. Regardless of the gerrymandering that has been occurring for the past 15 years and despite the Government's obvious favouritism for its own councils, Labour councils cost less and provide more.

The leaders of Sheffield city council, past and present, and their excellent Members of Parliament—my hon. Friends the Members for Brightside, for Attercliffe, for Sheffield, Central, for Heeley and for Hillsborough—have fought hard to protect the services which people in Sheffield want. Yet, this year, regardless of local needs, the Government are imposing a stiff cut in funding. That great and dynamic city is now faced with the stark reality of being made to pay for the bankrupt policies of the Government at a cost to those who elect the council.

Even at this late stage, I urge the Minister to listen to the representations that he will hear this evening from the hon. Members who represent the people of Sheffield, and to take heed of what the city council has requested by increasing the cap limit by a further £2.5 million.

7.37 pm
Mr. Bill Michie (Sheffield, Heeley)

First, I welcome the news that at least £3 million will be handed back to Sheffield where it rightly belongs. I also welcome the speech of my hon. Friend the Member for Leicester, East (Mr. Vaz) and his glowing report of how Sheffield council, in difficult times, has literally picked itself up by the bootstraps. It has stood on its own feet because few of the resources required have been forthcoming from central Government.

The point has been made about the demise of the manufacturing industry and how Sheffield has taken tremendous risks in developing sports facilities. It has taken the criticism and blame for that, but, ultimately, it has changed the whole of the east end area, which otherwise would to this day have remained almost derelict.

I suppose that we should be grateful for the extra £3 million. It will certainly be welcomed in Sheffield and will be well spent. Although the increase is small, it will be regarded as a good housekeeping certificate for Labour-controlled Sheffield city council.

Mrs. Helen Jackson (Sheffield, Hillsborough)

I am grateful to my hon. Friend for giving way. He has spoken about important issues and small projects. The sum of £3 million will be worth while when the council is working out what cuts it need not make. Like me, my hon. Friend will want to ensure that the money is spent on education and other crucial areas which affect people's lives. For example, perhaps we can look forward to the provision of public toilets in Hillsborough which, until now, has not had those sorts of basic facilities.

Mr. Michie

I thank my hon. Friend. We could catalogue a great many worthy projects, and my hon. Friend has outlined one or two. There will be a sigh of relief that the £3 million is coming back to Sheffield.

Mrs. Jackson

Certainly for people shopping in Hillsborough.

Mr. Michie

No pun intended, Madam Deputy Speaker. There will be a sigh of relief, not just because some toilets may be opened. Many libraries in Sheffield, which provide an essential service, may be safe for another year and, we hope, for ever.

Before my hon. Friend's intervention, I made the point that Sheffield city council will be seen as a good housekeeping authority. That message will be clear to the people of Sheffield. There is another clear message for the people of Sheffield which was referred to by my hon. Friend the Member for Leicester, East: it will be clear that the Liberal opposition party in Sheffield was wrong again.

The problem in Sheffield, like that in many other local authorities—I hope that Liberal Democrat Members are listening; if they are, it will be the first time since I have been here—is that, when the squeeze is applied by central Government, the electorate is bound to say that some responsibility must lie with the Conservative Government. But the Liberals go around peddling their wares and convincing the people that it is the fault not just of the central Government, but of the Labour-controlled local authority.

The Labour authority and the central Government are doing what they believe to be right and, without any philosophy or policies of their own, the Liberals come up through the middle. They are getting jam simply by accusing other people of making mistakes. I have always said that anyone who has never made a mistake has never made anything. I assume that that is why the Liberals claim to have never made a mistake.

Mr. Richard Caborn (Sheffield, Central)

Does my hon. Friend recall the challenge that was thrown down by the leader of the Sheffield city council, who is a very honest man? As they say in Yorkshire, he put his money where his mouth is—Conservative Members suggest his "gob", but I am not that crude—wagered £100 and invited anyone to find a deliberate lie or mistake in any of the literature released for the local election campaign. The local Conservative members also put up £100 and the matter was to be adjudicated by the legal department of the Sheffield university.

The Liberal party was the only party in Sheffield which was not prepared to wager £100 on the honesty of its election material—its propaganda. Does not that underline the point made by my hon. Friend that the Liberals peddle one thing in one area and another thing somewhere else? They have been caught out time and again for being "economical with the truth".

Mr. Michie

I appreciate the point that my hon. Friend has made. I do not want to spend too much time talking about what will, we hope, be the demise of the Liberal party in Sheffield. The Liberals gained seats in the election by peddling that sort of rubbish, but now they have been found wanting. Labour's Front-Bench spokesman, my hon. Friend the Member for Leicester, East, said as much. The hon. Member for Bath (Mr. Foster) has returned to the Chamber with some homework or another brief from somewhere.

At the end of the day, the Sheffield local authority has been proved right in taking the risk of coming back to the Government to ask for the money. The Liberals put out a leaflet saying that it was a dead loss; they told the people of Sheffield that the cause was hopeless. As far as I am concerned, the only thing that is hopeless in Sheffield is the Liberal Democrat opposition on the city council.

I do not wish to detain the House for too long, but I want to tell hon. Members about the letters that Members of Parliament from Sheffield have received outlining all sorts of concerns in that area. There are some macro-economic problems in the area, such as the supertram project. But it is a project which will put Sheffield on the map for the next 10, 20, 30 or 50 years as an example of what can be done even in difficult circumstances.

Most hon. Members from the Sheffield area, and certainly the local councillors, have received letters from parents who are concerned about the cuts in secondary education spending this year. There will be more than 400 additional students and about 80 fewer teachers. More than 75 per cent. of year 7 students will be in larger classes for English, maths and science, with an average class size of more than 29 students. Almost 70 per cent. of schools are planning total cuts of more than £100,000 in repairs and maintenance. A third of schools are planning cuts in special needs areas, even though they have more students. More than half of all schools are planning cuts of more than £160,000 or 13 per cent.—in classroom resources. There will also be dramatic cuts in management teams in many schools at a time when there is far more work to do. We are sure that that is happening in primary schools also.

Not just education, but other front-line services have also been affected. People that I talk to in my surgeries and the people from the city council tell me about the problems and pressures that family and community services face in Sheffield. The Government talk about care in the community, with pressure on hospitals to get people out of hospital beds and back into the community. At the same time, social workers are over-stretched and overwhelmed by the amount of work that they are expected to do with dwindling resources.

I am not talking about over-spending. This is reality of demand that is there for all to see. The Government talk about training; starting that training means making sure that people have decent homes, decent social services and decent education. That is where the training of tomorrow's new technocrats will start. We ignore that fact at our peril. All these services are presently over-stretched.

Our slogan in the last election campaign was "A Fair Deal for Sheffield". We are not asking for special privileges; we are asking to be at least on par with most of the other local authorities. We dare not ask for the sorts of facilities that Wandsworth and Westminster might receive. Of course, it would be very nice—we could have a rate-free holiday for the next four or five years and still increase services.

I received from the House of Commons Library today a breakdown of the amounts of revenue support grant per head paid to Sheffield as compared with Wandsworth and Westminster in 1994–95. The amount of RSG per head payable to Sheffield this year is £372, compared with £507 to Wandsworth and £760 to Westminster. The two London boroughs, but not Sheffield, will also receive a standard spending assessment reduction grant in 1994–95 which will bring their total grant entitlements to £606 per head for Wandsworth and £797 per head for Westminster. By no stretch of the imagination could that be called a fair deal. In no way, shape or form can anyone claim that Wandsworth and Westminster are in dire need of more help from central Government than places such as Sheffield.

All we are asking for is a fair deal. Given a fair deal, we shall make sure—as we shall anyway, whether or not we get trodden on—that Sheffield will overcome the difficulties that it has faced over the past 10 or 15 years and will remain, as it always has been in the past, a proud and prosperous city.

7.49 pm
Mr. David Rendel (Newbury)

I was delighted to hear the attacks on the Liberal Democrats from the Labour Benches. I hope that we get some from the Conservative Benches as well. It shows we are winning conclusively when we are attacked by the other two parties in such ferocious terms.

My concerns about the order are to some extent in line with those of the Labour party and centre on the reasons behind the process of capping introduced by the Conservative Government.

I shall start by commenting on what has happened in Sheffield this year in the budget-setting process.

Mrs. Helen Jackson

I am grateful to the hon. Gentleman for giving way. Before he goes any further, does he agree with what he has heard from the Minister today—that it was totally reasonable that the council expenditure should now be increased by 2.6 per cent. and that it was totally misguided of his party in Sheffield, in the face of thousands of Sheffielders signing the "Fair Deal for Sheffield" petition urging the council to go for redetermination, to oppose that very sensible cause so strenuously?

Mr. Rendel

If the hon. Lady had allowed me to continue without intervening before I had started my speech, she would have realised that I was about to answer her point.

It was clear at the time of the budget-setting debate in March in Sheffield that it was possible to produce a budget in line with the original capping limit set by the Government, and, indeed, such a budget was proposed by the Liberal Democrat group at the time. Since then, we have had a further election. It might be worth while for Labour Members to ponder on the results of the election before they accuse the people of Sheffield of having agreed with them rather than us about the budget that was set by the Labour-controlled council.

It is important to note, however, that as a result of the whole process of redetermination, the council's costs in Sheffield have risen considerably. The council will need more money in order simply to pay those costs. Our estimate of the cost simply of re-billing is higher than that given in the debate by the Labour party spokesman. Our estimate is more like £300,000. If we add to that the officers' time, the councillors' time and all the extra administration involved in resetting the budget, it is clear that a large proportion of the extra money that Sheffield will be allowed to spend will be entirely wasted on administration. The council is already spending money unnecessarily on administration, as we showed in our budget speech in the Sheffield council budget debate at the time.

Mr. Caborn

Will the hon. Gentleman tell us where he got those figures? The figures given by the Labour Front-Bench spokesman and by my hon. Friend the Member for Sheffield, Heeley (Mr. Michie) have come from the city treasurer and the chief executive. Is the hon. Gentleman calling them liars?

Mr. Rendel

Those figures were given in the Liberal Democrat manifesto before the election. I understand that it was confirmed at the time of the budget that those figures were correct and that they were agreed by the officers of Sheffield city council at the time. If Labour Members are quoting the Sheffield city council officers, I do not see why I should not quote them as well.

The addition of all the extra costs, including the costs of administration that, quite unnecessarily, were included in the original budget, has proved that Sheffield will now have to spend a great deal more. Unfortunately, that means that the extra money will not in practice be used to increase the real services to the people of Sheffield, and that is the problem that the people of Sheffield face. The problem with the whole process involves capping.

Mrs. Helen Jackson

I am grateful to the hon. Gentleman. I am, however, puzzled by his arithmetic. As far as I can judge, even on his inflated figures of £300,000, £3 million minus £300,000 leaves £2.7 million? Is that right?

Mr. Caborn

Give or take a few.

Mrs. Jackson

Is the hon. Gentleman arguing that £2.7 million was a total waste of time?

Mr. Rendel

The hon. Lady was not listening. I said that it was only part of the total costs involved in the redetermination process; it was merely the cost of re-billing. I shall now proceed, as the interruptions are wasting the time of the House.

The real problem involves the capping procedures. Capping procedures have now produced the ridiculous outcome that no fewer than 36 of the 39 county councils listed in the Local Government Chronicle have set their budgets this year precisely at the capping limit. Only three are below it and the only two more than 1 per cent. below the capping limit are Hampshire and West Sussex, which are both now run by the Liberal Democrats. That shows that the whole process of setting budgets has been taken over by central Government. That is now the problem for local government.

The Government have, to a large extent, deformed local democracy. I and my party believe that the people should be allowed to choose the rate at which their local authority taxes are set. The people should be allowed to choose the level of services in their local authorities.

There are, however, some signs that local democracy is beginning to work in Sheffield. Sheffield has become known as the Lambeth of the north. It is wasteful, inefficient and ineffective. It is a council of which the Labour party has every reason to be ashamed. The results of the election on 5 May this year were that the Liberal Democrats gained all three seats that the Tories were defending.

Listening to the Labour party spokesman dealing with that issue a moment ago, one would have thought that Labour had succeeded in winning seats from the Tories. He was telling the Tories how much they were hated by the people of Sheffield and he was right, but in their hatred the people of Sheffield did not choose to turn to the Labour party. When they threw out the Tory councillors, they chose to turn to the Liberal Democrats. Moreover, the Labour party lost no fewer than eight seats to the Liberal Democrats in that contest.

The people of Sheffield have been described today in the House as having voted for the party that is the scavenger of local government. Labour Members would do well to consider their words before they insult the people of Sheffield in that way. Anyone would have thought from the speeches made in the House today that the Labour party, not the Liberal Democrats, had won the local elections in Sheffield.

May I remind the House that the percentages, of votes given to the Labour party and the Liberal Democrats this year were almost identical? If that continues for many more years, needless to say the Liberal Democrats will take over the council in Sheffield and that will be to the people's benefit.

If only the Government would leave the people of Sheffield to decide for themselves what they should spend and if only they would leave Sheffield city council to decide what it should spend, the people would have chosen and I believe that in future the people will choose a Liberal Democrat budget.

7.58 pm
Mr. Clive Betts (Sheffield, Attercliffe)

I begin by saying that by not voting against the order we are in no way implying that we approve of the capping procedures or the principle of capping. There is a straightforward choice— whether or not to accept an order which increases the spending ability of Sheffield council by £3 million above the current limit. On that basis, we recognise that the Minister has gone some way towards accepting the case put forward by the council for an increase in its spending limit through the redetermination process.

We welcome the Minister's proposals, so far as they go, but we have some difficulty in understanding why the Government have decided to increase the limit by only £3 million rather than by the figure for which we asked. The extra £2 million would have been extremely useful in helping to protect essential services in the city. Why did the Government come up with the figure of £3 million? When I went with a council delegation to meet the Minister a few weeks ago, the council forcefully made the point that even £5 million would not solve all its problems, but it would maintain the council tax at its current level and keep many essential services intact.

It is difficult to understand why the Government have chosen to go only part way towards recognising the council's case. Seemingly, they picked the figure of £3 million out of the air—after all, the matter cannot be that scientific. We do not understand why the Government are forcing a re-billing exercise on the council just to save people £10 a year on the average council tax bill. No one has written to me saying that the Sheffield council tax is too high and should be reduced, but many have written saying that they want their services protected and extra money spent on them and I am sure that my hon. Friends have received similar letters.

Nevertheless, with my council colleagues and officers of the council who attended the meetings with the Ministet, I recognise that he listened to us, asked questions and raised all the appropriate issues. We thank him for that and for the provision of the additional £3 million. Sometimes when I hear Ministers referring to meetings that I have attended I wonder whether we were even in the same room, but in this case the Minister's description of our meetings was fair and accurate. He has also been helpful behind the scenes in considering the rescheduling of the debt on the city's sports facilities and we thank him for his assistance on that.

We have to make the point clearly that the £3 million which has been added to the money that the council can spend means not more money to spend, but less money to be cut from its budget, and the £2 million that the council still has to find is on top of the £27 million of cuts that it is already making in this year's budget.

Despite that, the order is a recognition of three things. The first is that the Government initially set the spending level too low: they got it wrong and were forcing the council to make too large a cut in expenditure on local services.

Secondly, the order is a recognition that when the Government increased the standard spending assessment level in the autumn, they produced a grant increase for the city of £12.5 million but allowed it to spend only £6 million of that. We acknowledge that in the SSA process the Minister recognised the campaign on behalf of our city and other authorities that the SSA process treated us unfairly.

The nonsense is that the capping regime is linked not only to SSAs but to year-on-year expenditure. We thought it extremely unfair that, having acknowledged that in the past our SSA had been too low, the Government increased it in the statement last autumn but then used the budget year-on-year increases to fix the cap for the current financial year. Those increases were related to last year's budget, which in turn was related to last year's SSA, so this year's increase in SSA was not properly reflected in the council's ability to spend.

At least today's order goes some way towards recognising that the whole process of capping, which tries to work through the SSA system and the year-on-year budget increases, is a nonsense, especially when there are changes to the SSA. That point was made forcefully in the council's submission.

Thirdly, the order is a recognition of the fact that the council's campaign has been successful. It was an extremely effective and well argued campaign. My hon. Friend the Member for Sheffield, Heeley (Mr. Michie) referred to the excellent petition—known as the "fair deal for Sheffield" petition—which was signed by thousands of local people, who should be given credit for their part in our success. We should also recognise the very professional job done by my colleagues in the Labour group on the city council and also that of the council officers who put the information together.

Although the formal process somewhat defeated the Conservative group on the council in terms of giving absolute support, we recognise that in the past councillor David Heslop, the leader of the Conservative group, came with a delegation to meet the Minister. The hon. Member for Sheffield, Hallam (Mr. Patnick) has also given his support and we are aware of his work behind the scenes. We acknowledge that support and wish to put it on the record.

I regret that the same cannot be said for the Liberal Democrats. It is worth putting their attitude clearly on the record: "party political" are the only words that can be used to describe their approach. They saw the possibility of short-term gain and tried to bamboozle people in Sheffield into believing that somehow the campaign was a gamble which was bound to fail and that nothing would come out of it for the city or for the services that it provides. They sold our city short and they should be ashamed of themselves.

I am waiting for the next "Focus" leaflet to be circulated in Sheffield. How will the Liberal Democrats explain the £3 million which the city will now get and which it would not have got if they had been in control of the council? Indeed, I wonder how we can possibly be here discussing redetermination to give the city £3 million pounds when apparently it had already been decided not to do that. Liberal Democrat leaflets which dropped through letter boxes at the recent elections actually said: The Labour Council's gamble that the government would bail them out of their financial mess has failed. Now your services will be slashed again. The biggest losers will be Sheffield schools. Almost £3 million more will be taken from the schools' budget. That was nonsense. As a result of this order and the redetermination process, schools' budgets will be protected and there will be no further reductions in their budgets.

Those leaflets were put out by two Liberal Democrat candidates. They did not say that the process was only part way through because, although the Government had turned down our application at the initial stage, the council had the right to appeal; they said that we had failed. Quite frankly, the two people responsible for those leaflets being put through letter boxes lied their way on to Sheffield city council.

Mr. Caborn

Rather than describing Sheffield as the Lambeth of the north, as some have called it, would it not be more accurate to say that if the Liberal Democrats controlled the council it would be the Tower Hamlets of the north?

Mr. Betts

As my hon. Friend says, it is difficult to identify anything that the Liberal Democrats stand for and we never hear any positive proposal from them. We can be certain only that if the time ever came when they had to put forward proposals and were responsible for carrying them out, they would disagree among themselves on what the proposals should be. So far, all that we see from them is how they disagree with every other party on the city council.

Mr. Rendel

Will the hon. Gentleman confirm that as many people voted for the Liberal Democrat proposals in this year's budget as voted for the Labour proposals?

Mr. Betts

I confirm that arithmetically the hon. Gentleman is correct. However, I can also confirm that the lies and pretence from the Liberal Democrats and their lack of a clear policy statement deceived some people. I will give the hon. Gentleman one more piece of evidence of that. During the council elections, his colleagues in Sheffield persistently issued the statement that the city council's deferred purchase schemes were responsible for increasing the city's debt and for its current problems. No one would have guessed that the same Liberal Democrat party voted for those very same schemes. It supported the first tranche on 26 November 1985; it supported the second tranche on 21 March 1986; and it supported the third and final tranche on 25 March 1986. Every bit of the deferred purchase was supported by the Liberals, who then used the current problems of the city's budget and tried to blame them on decisions taken in the past for which they had voted in the council chamber. That is a disgrace.

What we are also dealing with today is a recognition, after years of campaigning and trying to get across an understanding of the city's real position, that we had a real case to make. Sheffield is used to a high level of services. People have come to expect them, and there is nothing wrong with that. During the 1970s and 1980s, people outside the city as well as those in it recognised that its education system was first rate. Class sizes were low and people in Sheffield had a good education. Our social services were good. There was a large number of home helps for the population, a large number of old people's homes looking after people in the proper way, and an excellent and well funded library service. Of local authorities, we were among the top two spenders on the arts. We had excellent parks and open spaces. The city was renowned for its good standard of local services.

In the early 1980s, central Government tried, by withdrawal of the rate support grant as it then was, to force the council to cut services. But the council—my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) was leader of the council at the time, and several of my hon. Friends who are here today were members—put up the rates by 40 per cent. and 30 per cent. in two successive years, and people continued to vote Labour, as they did in many other cities and authorities throughout the country. They exercised their democratic right to say, "We believe that the local council is right to protect local services."

By 1985, the Government had decided that, as their reduction of the rate support grant would not bring about the reductions in expenditure, they would introduce the capping legislation, and slowly began to exert pressure on the council.

Initially, we produced the deferred purchase arrangements and other ways in which we could sustain services, but ultimately the process of continual attrition by central Government caught up with us.

Mrs. Helen Jackson

Before my hon. Friend moves off the point about the standard of services in Sheffield, would he like to add class sizes to the list of excellent standards, and recognise the immense concern that is felt by parents throughout the city at present about the ever-increasing class sizes forced on the council and the education service by the squeeze on school budgets?

Mr. Betts

My hon. Friend is absolutely correct. I was at a meeting the other day with head teachers in my constituency. Every one of them had class sizes of more than 30, and some had up to 38. We have reception class sizes of more than 30. It cannot be right in this day and age to prejudice the future of our young children by such increases. It is a real problem, even though Sheffield is still spending above its SSA on education: we are still spending more than the Government's guidelines.

But Sheffield is not a high spender any more. We are not talking about £3 million more for an authority with a record. The idea that somehow we are the Lambeth of the north is nonsense in terms of management of the authority, as I shall illustrate. It is also nonsense in terms of how much the authority spends per head of population. The SSA for Sheffield is £700 per head. The metropolitan average is £743. As my hon. Friend the Member for Heeley said, if we had the average we would have £22 million more in SSA and grant. Even the original capped budget for the city is £713 per head—8 per cent. below the metropolitan average.

We are not talking about a city with high council taxes. When Sheffield levied its council tax, it was still £18 below the metropolitan average for the average tax and £3 below for band D. It will be even lower if the order is passed today. Its capped budget was only 1.9 per cent. above its SSA. The vast majority of metropolitan authorities are allowed to spend at a higher level above their SSA than the amount that the Government are allowing for Sheffield.

No one should get the idea that somehow Sheffield has recognised its problems late and is suddenly making quick and ill-thought-out cuts in its budget. The process has been going on since 1987. Very large cuts are taking huge chunks out of our services—£108 million in the past three years alone. Some 5,000 jobs have gone in the city council since 1990, and 7,500 since 1987. The council has not simply cut services: it has looked very hard to find ways to improve efficiency. The disgraceful comments of the hon. Member for Newbury (Mr. Rendel), who clearly did not know what he was talking about—he has probably never been to Sheffield and does not understand our city—does not appreciate that the council made £25 million in efficiency savings in the past three years. Last year, Sheffield was voted by people in local government as one of the 12 best-managed local authorities in the country.

Mr. Rendel

Perhaps the hon. Gentleman will allow me to answer the point by pointing out that, in practice, the budget proposed by the Liberal Democrats this year showed a great cut in administrative costs and bureaucracy and an increase in spending on education.

Mr. Betts

That is a fascinating bit of information—again, I presume, gleaned from one of the "Focus" leaflets that the hon. Gentleman has been believing when in fact they should carry a health warning. What he said is not true. Sheffield has a very low level of expenditure for central administration, treasury personnel and other departments. It has a record for achieving savings. Let us consider the reductions in the number in the past few years. Since 1990, while the reduction in service departments was 15 per cent., in central departments it was 20 per cent., which shows where the council has targeted its efficiency savings.

As for the Liberal budget, it is difficult to believe that with £5 million less than the Labour group, because the Liberals did not support redetermination, they could have put more into education. In fact, the city treasurer's own figures show that the Liberals propose to spend £2 million less on education in the council budget process this year than the Labour group. That is another of the lies and deceptions put out by the Liberals in Sheffield to try to mislead people.

Sheffield is an efficient council. I quote from the redetermination document and from the district auditor, who said in his last management letter: the real message emerging from the reviews (value for money) is that the Council and its employees have worked hard to protect the quality of services in the face of sustained budgetary pressures. Indeed, contrary to what might be expected, I have encountered a resilience and determination to protect core services and evidence of some innovative and forward looking developments. That seems to me to be a very clear statement. I would sooner believe the district auditor, who lives in Sheffield and works there on a daily basis, than the hon. Member for Newbury, who has been passed second-hand and rather wrong information about the real situation in our city.

In the end, efficiency savings can go only so far. We can catalogue a whole list that the council has been through and the various reviews that it has undertaken, but, as my hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) said, in the end core services have been affected. Class sizes have increased, home help charges have been introduced, library opening times have been cut, social services are under pressure, and services such as grass cutting, street cleaning and highway maintenance have all had to suffer because those are the things that the council spends the vast majority of its money on. Let us not try to deceive the public. No party could have made those cuts without hitting core services. To pretend otherwise is to deceive oneself, which is what the Liberals want to do, but more importantly also to deceive the people of Sheffield. Frankly, our people deserve better than that.

The whole process that we have gone through has occasionally been highlighted by one or two grand comparisons. The Prime Minister recently compared Sheffield with the Seychelles. In some ways we were rather flattered by that comparison. If the Prime Minister cannot tell the difference between Sheffield and the Seychelles, that may be one of the reasons why he has problems being Prime Minister.

In terms of debt, Sheffield's revenue budget spend on its past borrowings is 9.3 per cent., which is just about the metropolitan average—surprise, surprise. Then there is the mainstream debt—the money that is borrowed to build and maintain roads, to build schools, housing and libraries, and old people's homes. When the question was put to the city treasurer at the redetermination meeting about whether it could be reduced—the council has some balances through capital receipts, which it cannot spend and use at present —he pointed out that to pay off the debt rather than keep the balances would cost the council money because the debt that we have was entered into at such favourable rates that the amount that we spend on financing it is less than the Treasury can currently obtain from investing the balances. The officials were apparently satisfied with that explanation.

We have, of course, entered into other arrangements —the phrase "off the balance sheet" is sometimes used to describe such arrangements—on an innovative basis, to try to improve services in our city. We have built more than 2,000 homes through the housing partnership scheme. I stand by that: when the number of homeless families being rehoused is running at up to 2,000 a year, waiting lists are growing and people are desperate for housing, it cannot be wrong to build 2,000 new homes.

Similarly, we entered into the deferred purchase arrangements for the simple reason that we wanted to protect our services from cuts. As I have said, the Liberal Democrats voted with us on all the arrangements at the time; even the Conservative group on the council supported the first £25 million, so it is hardly cleared of responsibility for that decision either.

We entered into the arrangements for new sports and arts facilities in the city. Again, there is a slight difference between my recollection and that of the Liberal Democrats. Labour voted in the city council for spending on all those facilities; the likely yearly cost of paying back the borrowings was clearly laid out in reports from the city treasurer—I shall deal shortly with one of the difficulties that were encountered subsequently—and all the groups on the council voted for the funding and building of those facilities. We were supported by the Conservative opposition, and by Liberal council members.

No one would know that from reading any of the leaflets put out by the Liberals in the local elections—but, of course, the Liberals changed their minds. Halfway through the building of the facilities, they decided that they did not want them and had not really supported them after all. If a Liberal council—as described a few moments ago, in his wildest dreams, by the hon. Member for Newbury—actually existed in Sheffield, we should have the most expensive building site on record. It would be full of half-built facilities that the Liberals had voted to start before changing their minds and failing to support them —again, because they had decided that they could gain some short-term popularity by claiming that they had not voted for the expenditure in the first place. They could then say that Labour was responsible for the increase in class sizes and home help charges, having built facilities that the Liberals had not supported in the first place. That is hypocrisy of the first order; it is time that the Liberals stood up and explained why they have misled people about that issue as well.

I hope that the Minister will eventually deal with one issue related to the SSA—the funding of capital. There is a problem in the methodology. An Audit Commission report produced by Price Waterhouse pointed out that fundamental difficulties were involved in trying to explain how the Government allocated finance for capital through the SSA system. If its recommendations had been followed, Sheffield would have had an extra £13 million to spend, which would have paid off the borrowings on the games facilities on a yearly basis. That is an interesting figure.

There were problems with those games facilities. The difficulties relating to Hammersmith and Fulham caused the financial markets to react against local authority borrowing at the time. We eventually did a deal for 10 years rather than the original 21, which meant that the council had to find an extra £12 million a year. No political party had supported that in its initial plans. The city treasurer is trying to renegotiate the debt and return to the original terms, and I thank the Minister for the part that he has played in trying to reassure the banks and improve the position.

The supertram scheme, however, is one issue on which the Minister has not been able to reassure us. The present position is nonsensical. Eight million pounds now goes through the books of south Yorkshire's local authorities in revenue support grant and is passed on to the supertram project. Because of the problem with the way in which the cap is calculated—on a year-on-year spending basis—South Yorkshire council, although it need not find the money involved, has other spending displaced because of it. That lowers the level of other services that it provides. I hope that, at some point, the Minister will consider the issue of that disregard.

My hon. Friend the Member for Leicester, East (Mr. Vaz) kindly drew attention from the Front Bench to the problems that Sheffield has experienced in the past. Let me put Sheffield's budget, and its problems over the past 10 years, in the context of the enormous problems experienced by the city as a whole. It has experienced an industrial trauma; it has lost jobs on a massive scale; the heart of its industry has been ripped out. Over 40,000 jobs have been lost in the lower Don valley alone in the space of about five years. Unemployment rose from a figure below the average to 4 per cent. above it.

It is a credit to some of the measures that we have taken that unemployment in Sheffield is now only 2 per cent. above the national average. It is still far too high, but we have done something to recover the position in partnership with the private sector. Many projects have been launched. I have mentioned the housing partnership scheme and the building of new sports facilities; others are combined heat and power, supertram, Sheffcare—an innovative new scheme to look after elderly people in homes—the establishment of the Sheffield economic regeneration committee by my hon. Friend the Member for Hillsborough when she was a member of the city council and the creation of the liaison group. The current council leader, Mike Bower, established that group, working alongside the development corporation. We did not support the setting up of the corporation, but we agreed to establish a working relationship with it for the benefit of the city.

It is probably no surprise, therefore, that in its redetermination bid the city had the support of the chambers of commerce and trade in Sheffield. They recognised the strong case that we advanced, and the city's willingness to work in partnership.

Mr. Caborn

It had more support from them than from the Liberal party.

Mr. Betts

Indeed. Apparently, the Liberals were the only people who did not support us—or, rather, did not support their city—when it came to the crunch.

We hope that the Minister will examine some of the anomalies that we see in legislation, especially on the capital side. Despite the changes that have been made this year, he still has some way to go. We should not be having this debate tonight; the decision whether Sheffield spends an extra £3 million or an extra million ought to be down to the people of Sheffield, through their elected local representatives. It ought not to be decided by a few Members of Parliament who are present tonight—some of whom represent Sheffield, although most do not. We should return to local democracy and accountability.

Ultimately, we are not even talking about extra money that the Government are going to give Sheffield. We are talking about how much of the people's own money should be spent in council tax. That really ought to be the council's decision. The Minister has shown himself to be a reasonably reasonable man—if that is an acceptable phrase—but he should think about the capping issue. The present position is completely undemocratic. I accept that the SSA system is difficult enough when it is used simply as a grant distribution system, but it is almost impossible to operate it fairly when it is used as a capping system.

People throughout local government in all political parties have argued that capping is unfair and undemocratic. I hope that at some point the Government will recognise that too, and will remove the system so that we need have no more debates like this one.

8.27 pm
Mr. Curry

This has been a good-natured, good-tempered debate. I acknowledge the presence of my hon. Friend the Member for Sheffield, Hallam (Mr. Patnick), who has made strong representations—although he cannot speak in the House because of his position. The hon. Member for Sheffield, Attercliffe (Mr. Betts) was generous enough to acknowledge the role that my hon. Friend had played; he also acknowledged the "Minister for Sheffield", the Parliamentary Under-Secretary of State for Employment, my hon. Friend the Member for Maidstone (Miss Widdecombe), who is a vociferous—I know that the House will not find that difficult to believe—advocate of the Sheffield cause.

Today I have dealt with two great Yorkshire cities. This morning I launched the world-class Leeds initiative in the city hall, at the invitation of the city council, in my capacity as "Minister for Leeds". I was delighted that the city council, which had clearly done well out of the SSA system, was able to offer a glass of champagne afterwards. At 9.45 am, however, that was generosity that even I felt unable to accept.

Yesterday I met representatives of the Sheffield and Rotherham chambers of commerce and industry. They explained the partnership schemes in which they were involved, and in particular their hopes to take part in one of the Business Links partnerships. I am therefore conscious of the partnership work being done in both those great Yorkshire cities.

As I listened to the arguments that raged—if that is the right word—between the hon. Member for Newbury (Mr. Rendel) and the rest, I wondered whether it was worth my staying at all. I could have taken an early train. The hon. Gentleman was clearly acting as a lightning conductor for the debate. Liberal Democrat councillors in Sheffield must be terrible people for their wickedness so rapidly to have become apparent. No doubt that argument will continue to rumble.

Mr. Rendel

Is the Minister prepared to agree that what I have said tonight—and perhaps the answer will be given firmly to the Labour party and of course to the Conservative party, too—will be justified if the Liberal Democrats' progress at next year's elections continues as it has this year?

Mr. Curry

I am a great believer, as football managers say—including that of Sheffield United, whose departure from the Premier league I regret—in taking each day as it comes.

The hon. Member for Leicester, East (Mr. Vaz) tried hard to be fierce but he did not quite pull it off. I shall not respond to his recapitulation on some of his familiar themes. He knows that I disagree with him. There is a wider debate to be held on those issues, as we both recognise, but it was a nice little cameo performance.

Everybody acknowledges that the procedure has been followed and it has led to a sensible result. We set a cap and lay down a procedure whereby a council has the option of redetermination. I suppose that I could have said, "This is all for the birds; we shall go through the routine but it will not make any difference." I do not do things in that way. I listened to the council and, as its leader will acknowledge —indeed, the hon. Member for Attercliffe had the grace to do so—at our meeting we asked serious and searching questions and asked the council whether it could provide answers that it might not be able to provide immediately. It did so efficiently. It was an effective presentation, which the procedure is designed to achieve. As a result, we reached a reasonable final settlement. In that sense, the war is over—perhaps we shall resume it next year—and I am delighted that that is so.

The hon. Member for Attercliffe raised various specific issues at which he wished me to look. We have had the argument about the supertram in the past. We are reviewing further elements of the SSA system, of which we have given a list to the local authority associations. There is nothing secret about it; the hon. Gentleman will be familiar with those issues. I shall pursue them with the openness, which I hope he will acknowledge, with which I pursued this year's review. The introduction of employment and health indicators this year acknowledged the pressure that the Webber Craig authorities in Sheffield in particular had brought to bear. They advanced a well-argued case, which we accepted, and it appeared in the SSA system.

The hon. Member for Attercliffe rightly said that it is not my job to decide how the council distributes its expenditure. He said that what we have done will enable the education budget to be safeguarded, and I welcome that.

Sheffield acknowledges that it has had its problems, but, as I said in opening, it is not my role to give a history course in how they might have arisen. We must deal with them as they exist. The council's "Agenda for Change" acknowledges that steps must be taken to improve the way in which it deals with its affairs, but few councils are not capable of achieving such changes. I welcome what is happening.

We have reached a reasonable settlement and it has been well received in the city. I acknowledge Labour Members' continuing concerns—I am a Yorkshire Member and have special responsibility for the Yorkshire cities of Leeds, Bradford and Batley. I am aware of the historical problems that those cities inherited, to which I am sympathetic. I shall take forward constructively the issues that must be taken forward, and we will willingly debate the issues more widely. I shall happily receive representations on issues that specifically appertain to Sheffield, as I have in the past.

Question put and agreed to.

Resolved, That the draft Council Tax Limitation (Sheffield City Council) (Maximum Amount) Order 1994, which was laid before this House on 23rd May, be approved.