HC Deb 15 February 1995 vol 254 cc993-4
16. Mrs. Angela Knight

To ask the Secretary of State for the Environment what proposals he has to review the area cost adjustment.

Mr. Curry

We will carry out research to improve the geographical basis of area cost adjustment. One possibility is to use travel-to-work areas as the basis for the adjustment.

Mrs. Knight

Is my hon. Friend aware that, whereas there is real understanding that some parts of the country face higher costs than others, there is also real concern about the method of distribution of the area cost adjustment? For example, it allocates more than £200 per child to the education SSA in Hertfordshire, yet it allocates nothing to Derbyshire. Will my hon. Friend address those disparities in his most welcome review?

Mr. Curry

As my hon. Friend knows, the area cost adjustment recognises the additional total labour costs in the south-east. The problem is that, as it is constructed at the moment, the south-east alone is eligible for it, and there are very good reasons for that.

However, I wish to examine whether we can change the basis of distributing the area cost adjustment by looking at travel-to-work areas, so that the whole country can be eligible for it. If that proves to be a more robust method, we will adopt it. If it does not, I am not prepared to make a change unless I am sure that it will be an improvement which I can defend as being totally impartial.

Mr. William O'Brien

When considering any changes to the system, will the Minister have regard to the authorities in the Webber Craig group, including Wakefield, which are at a disadvantage because of pupil-cost ratios? A few weeks ago I also raised with the Prime Minister the matter of cuts to the fire service in that area and the costs involved. Will the Minister lake seriously the representations from Wakefield and West Yorkshire about those issues?

Mr. Curry

The Webber Craig group of local authorities has been very effective in bringing forward ideas—for example, its idea of compensation for employment and health problems—which are now part of the distribution method.

Central to the question is the fact that, if local authorities believe that there are issues which must be addressed, we shall examine them, together with my own agenda of matters that I intend to review in the course of the year. The procedure is conducted with the co-operation of local authority associations, which enables us to arrive at a method which everyone subscribes to as being as fair and objective as possible.

Mr. Clifton-Brown

I recognise the need for the area cost adjustment, because some areas face higher costs than others, but can the Minister not find a better system of tapering out those areas of high cost? For example, Oxfordshire receives area cost adjustments whereas Gloucestershire does not receive anything. Would it not be fairer to taper it off gradually to nothing throughout the country?

Mr. Curry

It would be quite difficult to measure additional costs in the south-east if we went as far as Berwickshire to judge them. We have clearly improved the taper in the south-east and I am now satisfied that it works within the confines of that method. If we are to try to move to a nation-wide system we shall have to look for an alternative method, and in that context we are now considering travel-to-work areas. I hope that that will work, as it will enable me to use a system which I believe that all people will perceive as being fair, objective and universally applicable.