Local Government Finance

HC Deb 03 February 1997 vol 289 cc676-771 3.32 pm

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

I beg to move, That the Local Government Finance Report (England) 1997–98 (House of Commons Paper No. 203), which was laid before this House on 27th January, be approved.

Madam Speaker

I understand that with this, it will be convenient to discuss the following motions: That the Special Grant Report (No. 23) (House of Commons Paper No. 204), which was laid before this House on 27th January, be approved. That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1997–98 (House of Commons Paper No. 205), which was laid before this House on 27th January, be approved.

Mr. Gummer

On 27 November 1996, I issued my proposals for the 1997–98 local authority finance settlement for consultation. They included the provision for local authority spending, the level of central support for that spending and my proposals for calculating standard spending assessments. I also announced provisional capping criteria.

Since then, my colleagues and I have received written representations from 210 local authorities and have met delegations from 79 authorities. We have carefully considered all the points that were raised with us during consultation. Our final decisions in respect of grants and notional amounts are embodied in the reports before the House today.

As I made clear when announcing the provisional settlement, all public expenditure programmes have to be examined rigorously each year, and local government spending, accounting as it does for a quarter of all public expenditure, is no exception.

Bearing in mind the Government's objectives for the economy as a whole, I have looked hard both at the pressures on local government spending and at the scope for greater efficiency and effectiveness within local authorities. The days of rolling forward last year's budget and adding a wish list to that are long gone.

Mr. William O'Brien (Normanton)

When the Secretary of State considered the pressure on local authorities' resources, did he also considered the pressure on services? Because of the strictures of past years, the policy on funding local authorities is biting harder this year. Has the right hon. Gentleman considered the effect on services? Even libraries, schools and old people's homes are suffering because of the tightness of the budget provision. Will he give some assurances that he will undertake a review, as some authorities are having to impose restrictions on services, which are beyond the pale and not what they were set up to do? Will he give the provision of services some consideration?

Mr. Gummer

I always take into consideration what the hon. Gentleman says and I think that he will agree that I have dealt with a number of specific cases. I hope that he will take into consideration the words of the right hon. Member for Dunfermline, East (Mr. Brown), who said that if a Labour Government came to power, they would stick to the figures that we have in front of us and to the capping regime, not only for this year but for next. The hon. Gentleman has to accept that the pressures that we are discussing are now supported, at least nominally, by his party. I do not think that Labour would stick to them, of course, and I shall say something about that later. The hon. Gentleman should say what he has to say in the context of the fact that the Labour party is committed to supporting the figures that we have in front of us for this year and next.

Mr. Robert Jackson (Wantage)

As my right hon. Friend will recall, the Government kindly agreed that Oxfordshire faced particular problems last year and provided an extra £3.5 million in this year's settlement. It is my view and that of the Conservative group on Oxfordshire county council that the difficulties persist. I look to my right hon. Friend for an assurance that he will continue to look seriously into the case that is being put to him.

Mr. Gummer

As I have always told my hon. Friend, if new facts or a different way of looking at things emerge and the council wants to talk to me about them, I shall listen—my Ministers and I have always sought to listen. Last year, we had that situation—one does do that—but there are also difficult positions elsewhere.

Several hon. Members

rose—

Mr. Gummer

Perhaps I may get on to the meat of my speech.

Mr. Eric Illsley (Barnsley, Central)

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Mr. Gummer

I will move on a little, but I shall remember the hon. Gentleman and shall not miss him in a moment or two.

The announcement on 27 November proposed total standard spending for England for 1997–98 of £45.66 billion. During consultation, we adjusted that figure slightly to reflect accurately the funding arrangements for the nationwide introduction of nursery vouchers. The final TSS figure for England for 1997–98 will be £45.67 billion, which represents an increase of £1.13 billion—2.5 per cent.—over the adjusted 1996–97 figure.

At a time of low inflation, that is a substantial increase and it reflects the importance that the Government attach to the services that local authorities provide and, in particular, to education, law and order, the fire service and social services. We have provided for a 3.6 per cent. increase for education, a 3.4 per cent. increase for the police and a 4.2 per cent. increase for the fire service, as well as a £325 million special transitional grant for new community care responsibilities.

Sir Anthony Grant (South-West Cambridgeshire)

Is my right hon. Friend aware that, in spite of the extra £6 million for education in Cambridgeshire, the Lib-Lab coalition is proposing an across-the-board cut for schools of £8.8 million? Is not that yet another example, and an awful warning, of the dangers of Liberals getting into bed with Labour or vice versa?

Mr. Gummer

We have concentrated on education because we have good reason to believe that the majority of people feel that it should be a priority. That is as true in Cambridgeshire as elsewhere. If a local authority does not passport through the money, as is provided for, it will be for the electorate to ask it whether it shares their priorities. If it does not, they will no doubt know what to do when the county council elections come along on 1 May. I confidently expect that Cambridgeshire will be returned to sensible hands that will do the job properly.

Mr. Illsley

The Secretary of State said at the outset of his speech that the total amount of funding available had been agreed by Labour. Rather than talking about providing extra money for local government, will he consider a fairer distribution among the local authorities?

Mr. Gummer

We do that all the time, and we listen carefully to the views of the Labour-controlled associations of local authorities. From what I say later on, the hon. Gentleman will see that I have followed their views in some of the changes that we have made, and in the changes that we have not made. If he is referring to what John Humphrys the other morning called the "mathematics of the madhouse"—I refer of course to the mathematics of the hon. Member for Holborn and St. Pancras (Mr. Dobson)—I shall have a good deal to say about that later.

I think it only fair to give way to the hon. Member for Cambridge (Mrs. Campbell), whom I did not mean to ignore earlier.

Mrs. Anne Campbell (Cambridge)

I am most grateful to the Secretary of State. To return to the subject of Cambridgeshire for a moment, is he aware that the £6.5 million that has been allocated for Cambridgeshire's education has been swallowed up by £8.4 million in inflation and an extra £1.3 million merely to stand still, because of the extra children in the county? That is hardly a fair deal, when we already have class sizes approaching 40 in some of our primary schools.

Mr. Gummer

What an amazing admission from the hon. Lady. She means that Cambridgeshire is so perfect that it can make no savings at all. She does not mention any possibility of anybody running anything better. What public company could begin to argue, year on year, that the next year it had to do everything as it did it before, or could constantly talk only about extra money and extra means?

The hon. Lady must realise that she no longer has the confidence of her Front-Bench spokesmen, because her party is committed to no increase. If she wants any extra money, she must say from which councils she wants to take it. No doubt she will soon tell me which counties, districts or metropolitan councils she wants the money to come from. Otherwise, she is running against her party's policy, and I know that she is committed to the Trappist vow never to do that.

Mr. John Marshall (Hendon, South)

My right hon. Friend spoke earlier about the need for efficiency in spending public money. Is he aware that when the London borough of Barnet put its refuse collection contract out to tender, it refused to accept the lowest tender, and voted instead for an in-house contract that would cost the ratepayers an extra £500 million—I mean £500,000—over the life of the contract? Is he surprised at that and at the fact that the Lib-Lab pact has censured those of us who pointed out the cost?

Mr. Gummer

I noticed that Labour Members laughed at the figure of £500,000, as if that were not a large amount or one that really mattered. We know their attitude to mathematics. We are currently investigating the case, to determine whether it is in accordance with compulsory competitive tendering. It is no surprise that the Labour party is opposed to competitive tendering, as it knows perfectly well that it does not want the competition or to look after the ratepayers; it wants only to pay for the trade unions, in whose pocket it increasingly is.

Mr. David Rendel (Newbury)

Will the right hon. Gentleman give way?

Mr. Gummer

I have not given the Liberals an opportunity to speak. As only one of them is here to take such an opportunity, I shall give way.

Mr. Rendel

The Secretary of State argued at length that there are always opportunities for efficiency savings. Since the Conservative Government came to power in 1979, by how much has real central Government spending been cut?

Mr. Gummer

We have done a great deal of efficiency saving. I shall give one example. There has been an enormous reduction in the number of civil servants and an enormous extension of outside contracting in my Department. I am now happy to preside over a Department that does a great deal more at a very much lower cost than before. That is the result of efficiency savings—something to which the hon. Gentleman cannot point in Liberal-controlled Newbury. I shall have something to say about that later.

I must ensure that we are making equal comparisons. We need to compare the total standard spending for each year to be able to discern the difference. We cannot compare the total standard spending figure for the next financial year with what local authorities are spending this year. Each year, there is an additional spend that comes from what local authorities bring down from reserves and from the levies, fees and charges that they make. Those make a difference. This year, local authorities are budgeting some £2.5 billion more than this year's TSS. No doubt they will do that next year. We have to compare like with like.

The Labour party is committed to TSS being at the level given in the Red Book. If it wants the TSS to be at the level at which local authorities actually spend, they must tell the House where in the Budget the money will come from—or will this be another occasion on which Labour's Front-Bench spokesmen say something different in debate from what the right hon. Member for Dunfermline, East says? We shall no doubt find out when the hon. Member for Holborn and St. Pancras speaks.

Mr. Roy Thomason (Bromsgrove)

On budgeted expenditure, will my right hon. Friend confirm that he has received representations from Hereford and Worcester, as have other hon. Members, about the cost of local government reorganisation there? Will he confirm that money has been made available for that and that the county council's allegations that that money is grossly insufficient do not properly take into account commitments that the Government have made to give further moneys later in the year to meet redundancy payments? Are not, therefore, many of the county council's arguments specious and misleading?

Mr. Gummer

At the request of local government, we have a system that gives two tranches. Local government felt that it would be easier to account for the real cost of redundancies after reorganisation if it were done in that way. My hon. Friend is right. Anyone who has said the opposite in Hereford and Worcester can have done so only for party political reasons.

The total of aggregate external finance for England for 1997–98 will be £35.77 billion, as previously announced. That is an increase of some £530 million, or 1.5 per cent., on 1996–97. Within that total, revenue support grant will be £18.68 billion. That is slightly lower than the figure announced in the provisional settlement, largely because grant to provide transitional relief to council tax payers in reorganised authorities will be correspondingly higher.

The increase in aggregate external finance is less than the increase in total standard spending, reflecting the Government's belief that local taxpayers could meet slightly more of the cost of local services. However, the responsibility for council tax bills rests firmly with local authorities and not with the Government. The level of the council tax will depend on the decisions that they take, and I do not intend to speculate on what those decisions might be. However, I will say that, contrary to the claims made by the hon. Member for Holborn and St. Pancras, local authorities do not have to increase council tax bills next year if they want to maintain or improve services. That is not only my view, but one shared by many commentators and even by some Labour council leaders.

Councillor Mike Bower, the Labour leader of Sheffield city council, speaking to the Sheffield chamber of commerce, said: The Council probably has the capacity to make enormous improvements in the services it currently operates, with the resources it currently has". It is a shame that Councillor Bower's colleagues on the Opposition Front Bench will not accept that what he says is true. However, that is hardly surprising—after all, two of his predecessors from Sheffield sit on the Opposition Benches. One has pretensions to preside over Britain's education system and both have an almost unrivalled record as leaders of a spendthrift, wasteful authority. It is no wonder that Councillor Bower has so much elbow room to improve services at no extra cost. We must recognise that the record of the hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Sheffield, Brightside (Mr. Blunkett) is a warning of the true nature of new Labour.

Mr. Robert G. Hughes (Harrow, West)

I am sure that my right hon. Friend agrees that, regardless of party affiliations, a council leader's comments should be examined carefully. I hope that he shares my astonishment at the fact that the mention of Councillor Bower's name produced derision and laughter from the Opposition environment spokesman, the hon. Member for Leicester, East (Mr. Vaz), and other Opposition Members. That is an astonishing attack by Labour Members on a Labour city council leader.

Mr. Gummer

I understand the reason for that attack: Councillor Bower seems to have discovered that, over the years, two prominent members of the Labour party did not have the fingertip control of finances that the right hon. Member for Dunfermline, East claims that the Labour party has caught on to. Councillor Bower has let the cat out of the bag.

Mr. Tony Banks (Newham, North-West)

It is clear that leadership of Sheffield city council is a passport to becoming a Member of Parliament, so no doubt we shall eventually welcome Councillor Bower to this place.

Does the Secretary of State accept that certain local authority problems derive essentially from central Government decisions? I am thinking of the issue of refugees who are allowed into this country and who move to areas such as Newham. There are 15,000 refugees in Newham, which puts enormous pressure on local services. What are the Government doing to recognise that problem and what additional assistance will be made available to boroughs such as Newham?

Mr. Gummer

The hon. Gentleman knows that we are discussing with local authorities precisely how we should deliver on our commitments, and he will no doubt find that those commitments are honoured fully. Perhaps he will recognise in future that this problem, like many others, must be faced squarely. We cannot allow problems to continue to arise in the way that they do at present.

However, that is not a key issue for Sheffield—I have outlined its problems already. We shall take Newham's problems seriously, and I hope that we shall be able to solve them.

Sir Irvine Patrick (Sheffield, Hallam)

The situation in which Councillor Bower finds himself is not of his making. As my right hon. Friend correctly points out, it is the result of the actions of the hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Sheffield, Brightside (Mr. Blunkett). Council tax and rents were not collected. When I explained to the House the litany of mistakes in Sheffield, my comments were greeted with derision by the Opposition. Anyone who wants to see an example of Labour in power should look at Sheffield. We should also remember that Sheffield has had socialism for longer than Moscow had communism.

Mr. Gummer

My hon. Friend might also have said that all the things that the Opposition education spokesman wants in our education system could have been his when he was in Sheffield. However, there were no school uniforms, no standards and no comparisons then. The issues that matter so much now did not arise when the hon. Gentleman was in Sheffield. That is why most of us do not believe him when he speaks on education now. When he had the chance—it is the only chance that he will have—he did nothing to promote the very causes that he now takes so much to heart.

I hope that many other Labour and Liberal—

Mr. Peter Hardy (Wentworth)

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Mr. Robert Ainsworth (Coventry, North-East)

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Mr. Gummer

I must make progress. I shall give way shortly.

I hope that many other Labour and Liberal group leaders share Councillor Bower's attitude. At present, most councils are run by Labour or Liberal Democrat councillors, or a combination of the two. They will be the ones who take the decisions. If council tax bills increase, it will be because Labour and Liberal Democrat councillors choose to increase them. If services are cut, it will be because Labour and Liberal Democrat councillors choose to cut them. No one is forcing them to increase council tax bills or to cut services. What is more, the Labour party is committed to the proposition that they would not get any more money anyway. Whatever the hon. Member for Holborn and St. Pancras has to say on those matters, he is expressing his own opinions. The official opinion of the Labour party is that no more money will be forthcoming, not only this year, but next year.

Efficiency savings could be made, as the Audit Commission has shown. Labour and Liberal Democrat councils could collect more of the money owed to them. They could reduce their debt. If they do not or if they will not, they will be responsible for the cuts in services and the increases in council tax that will result.

Mr. Jerry Hayes (Harlow)

In the light of what my right hon. Friend has just said, is he surprised that the Opposition Front Bench is holding up Harlow council as a model Labour authority? That council has the second highest council tax in the country. It spent £28,000 on flowers and a flower bed outside the town hall. It blew all its reserves shortly before the previous general election because it believed that a Labour victory would produce a Government who would bail it out. If anyone wants to see the horrors of a Labour Government, let him or her come to Harlow.

Mr. Gummer

My hon. Friend is too kind to Harlow council. In 1994, it spent 34.2 per cent. over its standard spending assessment. It was 66.9 per cent. over that assessment in 1995–96. It is budgeted to spend 63.2 per cent. over its SS A in 1996–97. It is one of the worst councils in Britain. However, it is held up by the Leader of the Opposition as a model council. It is the sort of council that reflects what Labour would do in office—over-spend, over-tax and then over-spend and over-tax again. The task of clearing up the mess will then be passed on. That is what Harlow has done and what a Labour Government would do.

The attempts of the hon. Member for Holborn and St. Pancras to pin the blame on the Government for the high taxes and poor services of many Labour councils reveals a contempt for local democracy. It is about time that the hon. Gentleman started talking responsibly. He is—[Interruption.] Opposition Members do not like the word "responsibly" when it comes to the consequences of new Labour policies.

The standard spending assessments form the basis for the distribution of the revenue support grant. We seek to take account of the factors that affect the need for spending by each local authority. There are many such factors and there are continual pressures to refine the SSA formulae. There are also expressions of exasperation at the complexity that each refinement adds. In judging whether to change the SSA formulae, I wanted to be sure that changes really would produce a sounder assessment. No one would thank me for making changes one year, only to have to reverse them a year or two later in response to better evidence becoming available.

It is against that background that we have not adopted changes flowing from the review of the area cost adjustment and the major research on children's social services and residential services for the elderly. All the local authority associations argued that the results of last year's review of the area cost adjustment should not be implemented for 1997–98. They have agreed that further work should be done this year.

All of us recognise that the existing system is not satisfactory. People do not accept that it reflects properly the difference in the costs of employing people in different parts of the country. Both the Government and the local authority associations have tried to find better ways of addressing the issue, but have had to recognise how complex the problem is.

The most recent study gave us a great deal of valuable information without yet yielding a solution that we can incorporate into the SSA formula. We intend to press ahead with work to achieve a well-founded solution that can command broad support among local authorities. Once that is available, we shall want to incorporate it as rapidly as possible in the SSA calculation.

Mr. Tom King (Bridgwater)

I trust that all hon. Members recognise the duty on local authorities at all times to search for improvements in efficiency, and I warmly endorse what my right hon. Friend said in that respect. It is the duty of Government to ensure that grants are as fairly distributed as possible. The statement that my right hon. Friend has just made on the area cost adjustment will be particularly warmly welcomed in Somerset, where it is profoundly believed that the last attempt to review the matter was not satisfactory. We warmly welcome his promise that the work will be undertaken and that its results will be implemented as speedily as possible.

Mr. Gummer

I thank my right hon. Friend for his comments. I accept the fact that some people will be in favour of the changes and some against, so there will still be difficulties when I come to the House in a year's time. I am not sure whether I shall be able to carry out the work as quickly as that: it may take a bit longer, but I shall do my best.

Mr. Richard Tracey (Surbiton)

I underline what my right hon. Friend the Member for Bridgwater (Mr. King) said. There is an agreed stance on the inequities between outer London boroughs and inner London areas. That was brought to the Secretary of State's attention by all-party delegations from the outer London boroughs. I hope that further studies will be undertaken with some urgency, because they will bring some rewards under the new Conservative Government.

Mr. Gummer

An equally powerful, all-party group from the inner London boroughs could point to other aspects of the problem. I have always been open and willing to consider any difficulties, and I have always sought an agreed response. I shall do my best in my hon. Friend's case.

Sir Peter Fry (Wellingborough)

I am not sure whether I am more pleased by the Secretary of State's comment that he will be standing at the Dispatch Box next year, or by his promise that progress will be made on the area cost adjustment. Will he underline what he has just said? Is it his intention that progress really will be made next year? I understand the problems that he has had to deal with for next year, but will he assure us that progress will be made, so that the unfairnesses that affect certain counties can, at last, at least begin to be reduced?

Mr. Gummer

I accept that it is widely felt that the present system does not reflect the situation as it really is. Local government organisations believe that this is not the right basis on which to move to a permanent change. I said that I shall do my best to ensure that we make a change as soon as possible—I hope that it will be next year. My hon. Friend must accept that that is the strongest assurance that I can give. We want a system that is acceptable to all, but it must have stability. He was the first to point out that we do not want a yo-yo position, whereby one cannot compare one year with another. I shall do my best to provide stability and to achieve the change that is necessitated by the extra work.

Mr. Robert Ainsworth

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Mr. D. N. Campbell-Savours (Workington)

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Mr. Gummer

It is only fair that I give way to the hon. Member for Coventry, North-East (Mr. Ainsworth), because he has asked me several times.

Mr. Ainsworth

The Secretary of State says that he has been working on the issue for some time, and that he does not want to make any changes that are not complete in their effect, but surely he can do something about the most blatant consequences of the current grant system. For instance, he says that tax should reflect the efficiency of councils—but Westminster spends £214 per claimant on dealing with benefit administration, and has one of the lowest council taxes in the country. There is no excuse for discrepancies of that kind, is there?

Mr. Gummer

I shall have quite a lot to say about Westminster in a moment. If the hon. Gentleman will wait until then, he will find out what I have done. I hope that he noted that I took considerable pains, and encountered considerable difficulty, to meet Coventry city council's need for a particular way of looking at its problems in relation to the assessment of those receiving benefit. I also hope that he agrees that we try to meet requirements wherever that is possible.

Mr. Campbell-Savours

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Mr. Nigel Spearing (Newham, South)

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Mr. David Sumberg (Bury, South)

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Mr. Gummer

I shall be happy to give way in a moment, but I must get one more paragraph in first.

During the period of consultation on our proposals, we have received representations from individual local authorities and from local authority associations, all of which we have considered carefully. Some of the representations concerned the accuracy of the data used in the calculation of the SSAs. We have examined each of the concerns, and have made corrections where necessary. As in previous years, we shall seek to discuss with representatives of local government possible ways in which the SSAs might be improved in the future.

No doubt the hon. Member for Holborn and St. Pancras will repeat his allegations about the SSA methodology in his speech. He has never quoted any significant expert opinion supporting his case—although that comes as no surprise, given that the last time we discussed those issues, he boasted that he never felt compelled to agree with experts."—[Official Report, 1 April 1996; Vol. 275. c. 56.] Fortunately, the experts do not feel compelled to agree with the hon. Gentleman.

A report by the independent Audit Commission concluded that the SSA system was a more sophisticated system for equalising needs than any overseas system examined in this study and … an improvement on its predecessor in many respects". It will be remembered that its predecessor was the system so often lauded by the hon. Member for Holborn and St. Pancras. Another study, by Rita Hale of the Chartered Institute of Public Finance and Accountancy and Tony Travers of the London school of economics, found that no overseas country appears to have a full grant system which goes so far in its attempt to achieve full equalisation". If the hon. Gentleman wishes to continue his line of argument, he needs to answer two simple questions. First, if—as he alleges—the Government rig the system in favour of Westminster city council, why were the previous Labour Government more generous to Westminster, relative to most other authorities, than the present Government; and why, when Labour Members asked for the figures and they were put in the Library, did they discover that they were wrong and I was right? They do not refer to those figures any more.

Mr. Frank Dobson (Holborn and St. Pancras)

The fact is that—as one of the junior Ministers pointed out in a letter to my hon. Friend the Member for North-West Durham (Ms Armstrong)—things have changed so much that the Government cannot say whether Westminster received more or less.

Mr. Gummer

The hon. Gentleman does not notice the truth. Westminster received proportionately more under Labour: in comparison with what other authorities received, it received more. That is a fact; that is the fact that Labour Members criticise; that is the fact that my figures in the Library prove. The hon. Gentleman's whole case is shot below the waterline, and he knows it.

That was pointed out to the hon. Gentleman this very Friday by John Humphrys—not a well-known supporter of the Conservative party. Mr. Humphrys described the hon. Gentleman's mathematics as the "mathematics of the madhouse". That is what he said when the hon. Gentleman could not answer any of his questions except by returning to the subject of Westminster.

The second question is this. Why, in every local authority finance settlement since the SSA system was introduced, has Westminster done worse than the inner London average, while Camden and other councils receive more and more? Would the hon. Gentleman like to explain that? Again, his case is shot below the waterline.

As I said in November, I shall continue to pay a special grant to compensate authorities that have lost more than 2 per cent. of their SSA as a result of SSA methodology changes. That is a fair arrangement that recognises the special problem of a sudden drop in SSA, although also recognising the need to phase out such support, so that grant can be redistributed according to improved measures of need. The Special Grant Report (No. 23) will establish the grant for 1997–98 and some £65 million will be distributed to local authorities next year.

I also propose to damp council tax increases that are a direct result of reorganisation and come above a £52 threshold at band D—that is £1 a week—for authorities reorganised this year and last year. That threshold is lower than that on which we consulted and takes account of representations that were made to us by authorities. The scheme will result in the payment of grant worth £14.53 million and will benefit council tax payers in North Lincolnshire, Redcar and Cleveland, Rutland, Dorset and Bedfordshire. It builds on the scheme that has operated this year. I shall lay regulations to implement the scheme before the House tomorrow.

This morning, I received a letter from the chairman of the Association of Metropolitan Authorities, Sir Jeremy Beecham, objecting to one tenth of 1 per cent. of revenue support grant being used in that way. One tenth of 1 per cent.—so much for brotherly love. The Labour leader of the Local Government Association says no, not a penny more to help Labour North Lincolnshire, not a penny more to help Labour Redcar and Cleveland and not a penny more for independent Rutland or Liberal Democrat Dorset, let alone all-party Bedfordshire, despite the particular difficulties of their council tax payers. So much for the egalitarian Labour party and for those who want to share the burdens. They do not want us to give a penny more, even it amounts to only one tenth of 1 per cent.

Sir Peter Emery (Honiton)

Will my right hon. Friend take into account the fact that, although Devon county council cannot run a whelk stall, in the past two years, it has twice been given more than the average increase for its SSA, but has run its reserves down lower than is sensible, and lower than they have ever been? It suggests that it will give up educational discretionary grants because it cannot afford them, although the money would have been available if it had spent the budget properly.

Will my right hon. Friend take into account the fact that there is a real problem with Torquay and Plymouth leaving the Devon region? That involves educational factors and affects many local schools in villages. Torbay, Torquay and Plymouth are of course compact. Will he please consider those matters when he comes to the decision on the SSA for Devon as a single county?

Mr. Gummer

We shall certainly have to consider all the ramifications. That is why we have offered, for example, immediate help in two tranches to those that are reorganised. We shall of course have to consider the SSAs. That is true for special credit approvals as well, so my right hon. Friend is absolutely right to put that point to me.

Mr. Hugh Bayley (York)

The Secretary of State will recall that, when the City of York was established as a unitary authority, people in the outlying areas that were absorbed into York received an assurance from the Government that their services and, in particular, their schools would be funded at the same level as the county council's, yet the SSA for City of York council has increased by less than the national average—by 1.1 per cent. compared with a 1.5 per cent. national average—and North Yorkshire county council's SSA has been increased by 2.4 per cent.

The Secretary of State will know that the Minister for Local Government, Housing and Urban Regeneration kindly received a deputation from myself, the hon. Member for Ryedale (Mr. Greenway), and councillors from all parties on City of York council, who believe that the SSA settlement was both unfair to York and broke the Government's pledge to treat York in the same way as the county council from which it was taken: in the final SSA figures, York's SSA has been reduced rather than increased. Will the Secretary of State comment on the position? What hope can he hold out that York will be treated as generously and in the same way as North Yorkshire county council?

Mr. Gummer

The disaggregation between the City of York and North Yorkshire county council was done by mutual agreement—both sides agreed to the disaggregation. Of course, it is right to say that in future we may look again at the way in which various figures are put together. However, the hon. Gentleman should not make the figures for this year the subject of disagreement between us, as there was agreement between the two local authorities involved. It was one area that did not have the fierce arguments that almost cause the need for someone outside to broker an agreement.

I am aware that we have received a delegation and we shall be considering certain aspects that it put forward. However, the hon. Gentleman should accept that for this year the disaggregation was agreed between the two authorities and was not imposed from outside.

Mr. Spearing

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Mr. Gummer

I must get on with my speech, but I shall give way to the hon. Gentleman later.

I am also specifying a base budget in the relevant notional amounts report for local authorities that are being reorganised, are subject to a boundary change, or whose budgets are affected by changes in funding arrangements for nursery vouchers or national parks. That will allow me to make a fair comparison between years for capping purposes.

Finally, I come to my proposed capping criteria. I have listened carefully to the strong arguments put to me to relax the provisional criteria that I announced in November. [Interruption.] I shall again take interventions from hon. Members. If that makes a little longer the time that the hon. Member for Holborn and St. Pancras will have to contain himself, it will not harm the House, as his contributions are universally and uniformly silly—as they are when he speaks from a seated position. If I am helping hon. Members by putting off the evil moment when the hon. Gentleman opens his mouth, I am sure that they will cheer me on.

As I said, I have listened carefully to the strong arguments put to me to relax the provisional criteria that I announced in November—[Interruption.]—arguments that Nottingham council would support. I am sorry that the hon. Member for Nottingham, North (Mr. Allen) is bored by his council. Both Nottingham and Nottinghamshire councils had their usual complaints, to which we listened with our usual courtesy—something that the hon. Gentleman has never extended either to them or to me.

I have decided to maintain the criteria. Our economy is one of the most competitive and successful in Europe. We have achieved that success by taking tough decisions to control public spending. Local government accounts for about a quarter of public spending, so the Government clearly need to keep it in check. The provisional capping criteria do just that. Copies of a table giving provisional cap limits for each authority will be available from the Vote Office after I sit down.

Final capping decisions will, as always, be taken after local authorities have set their budgets. I shall ensure that final caps are reasonable, achievable and appropriate to local circumstances.

Mr. Hardy

Will the right hon. Gentleman give way?

Mr. Gummer

Yes. Then, to be fair, I shall give way to the hon. Member for Newham, South (Mr. Spearing).

Mr. Hardy

From time to time in his speech, the right hon. Gentleman has tried to build divisions between different types of local authorities—for example, when he referred to Sir Jeremy Beecham. Does he agree that the vast majority of local authorities want a sensible relaxation in the capping level? He should look carefully at the possibility of relaxing the capping level, to allow local authorities to take from capital receipts their contribution to single regeneration budget repayments and capital challenge costs, so that they can contribute to the repair and essential maintenance of buildings that are beginning to fall apart because of neglect.

Mr. Gummer

I remind the hon. Gentleman that we recently made some changes along those lines. However, we understand that, in general, the capping arrangements are now to be supported by the Labour party. If he believes that there should be a change in the arrangements, I suggest that he first speaks to the right hon. Member for Dunfermline, East. He has said that, far from what was said last November, there would be no question of any relaxation, were there ever to be a Labour Government. He has said that capping arrangements would remain as they are, at least for the foreseeable future. So the hon. Gentleman must first convince the right hon. Member for Dunfermline, East, and then he can perhaps come to me.

Mr. Hardy

What about capital receipts?

Mr. Gummer

The hon. Gentleman should consider what the Labour party suggests on capital receipts. It now suggests that it could do a fiddle on capital receipts and move them outside controls, as a way in which it could get round its promise not to increase capital expenditure. However, Labour Front Benchers have not told anyone that, if they were to do so, authorities in many parts of the country that might think that they were to receive capital receipts would not, and many others that were not determined to require receipts for housing would receive them.

Under Labour's new fudge, Newcastle, Birmingham, Hackney and Southwark, which have no capital receipts, would not be able to build any new homes, whereas Newbury, Basingstoke, Malvern Hills and West Dorset would be able to build almost as many council houses as they wanted. That is what would happen under Labour's capital receipts system. Not only is it a fudge that no one else in the world would accept, but it increases demands on the Government and would not help the very areas that Labour claims would be helped. Capital receipts would go to the leafy areas and not to areas with the greatest need. Yet again, the Labour party—although not the hon. Member for Wentworth (Mr. Hardy)—has shot itself in the foot by trying to fudge and to slide in something.

Several hon. Members

rose—

Mr. Gummer

I must try to continue, although I promised the hon. Member for Newham, South that he could intervene, and I keep my promises.

Mr. Spearing

Having heard Conservative Members' remarks in this debate, will the Secretary of State acknowledge that, two years ago, I led a deputation from Newham, when he acknowledged that Newham was an outer London borough with inner London needs? As my hon. Friend the Member for Newham, North-West (Mr. Banks) pointed out, one of those needs is connected with the social costs of 15,000 refugees. The Secretary of State has acknowledged that that is a national problem. However, there is a need for equity. Should not those additional costs be a national matter and not be laid upon residents in the areas to which refugees naturally tend to go? Is not the truth that he has done nothing yet about the matter?

Mr. Gummer

It is of course true that it is a national matter, but it has a local dimension; it is a mixture—[Interruption.] We have said that there would be special grants to help the localities most in need, and I have reaffirmed that. When we have completed the discussions, we shall ensure that the hon. Gentleman's local authority—like others, not least those in London—receives those grants as soon as possible. I say the same to the hon. Member for Newham, North-West (Mr. Banks), who is speaking from a sedentary position.

Mr. Rendel

rose—

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

Will my right hon. Friend give way?

Mr. Gummer

In a moment—I shall try to, but I must continue.

Having set out the Government's proposals in such detail, I should reply properly to a point made, sometimes sotto voce, by the Opposition. Fewer than three months ago, in reply to my oral statement on the settlement, the hon. Member for Holborn and St. Pancras said that our proposals for local government spending were inadequate, and that they made no allowance for inflation, the cost of pay increases or the cost of providing extra services for the growing number of old people and of children at school and that, consequently, local people will once again have to pay more and get less".—[Official Report, 27 November 1996; Vol. 286, c. 343.] Although the hon. Gentleman did not say by how much, it was clear from his remarks that he believed that both total standard spending and aggregate external finance should be higher.

Those comments are why Conservative Members, and—judging from their interventions—some Opposition Members too, were very surprised to hear the right hon. Member for Dunfermline, East say that a Labour Government would not reopen departmental spending allocations for the financial years 1997–98 and 1998–99. If the shadow Chancellor is to be believed, Opposition Front Benchers have changed their mind and decided that our spending plans are adequate after all. That is the inevitable result. Either the right hon. Gentleman is right now or he was right in November—on any reading of either statement, he could not be right on both occasions.

In the light of what the shadow Chancellor has said, I was looking forward to the Labour party supporting the Government in the Lobby tonight. I was therefore astonished to hear the hon. Member for Holborn and St. Pancras on the "Today" programme on Friday morning repeating his previous claims that the settlement was inadequate and promising that Labour would vote against it. He does not seem to have heard what the right hon. Member for Dunfermline, East said.

The hon. Gentleman cannot have it both ways—either Labour Members agree with the level of next year's settlement or they do not. If they do not—if they think that local authorities need more money—they must explain how much more and which taxes they would increase to pay for it. It is time for the hon. Member for Holborn and St. Pancras to come clean. Does he think that local government needs more money?

There is one way—I hear it whispered on the Opposition Benches—in which the hon. Member for Holborn and St. Pancras always tries to duck out of that challenge: by mentioning Westminster. During the "Today" programme interview last Friday morning, John Humphrys told the hon. Gentleman that his proposal was—I have said this before—the "mathematics of the madhouse".

Everything would be all right, says the hon. Gentleman, if Westminster did not get such a large grant. I have done the maths for the hon. Gentleman. Various people have suggested different amounts by which Westminster's grant should be reduced. I have taken a figure three times greater than any put forward by the Labour party and have calculated what would happen if, instead of Westminster receiving the higher grant that it used to have under Labour or the grant that it has under the Conservatives, we halved the grant. Nobody, not even the Labour party, has suggested that, but let us see what would happen. I am prepared to provide the figures for any part of the country. I shall give one or two examples.

Bury would get less than 0.5 per cent. more grant if Westminster's grant were halved—I repeat that nobody suggests that such drastic action is possible. Birmingham would get less than one third of 1 per cent. more grant. Bristol would get less than 0.5 per cent. more. Even if Westminster's grant were cut to a level that nobody has ever sanely suggested, there would be no significant effect on the figures elsewhere.

Constantly talking about Westminster is not a truthful argument. We know that it is nonsense, because Labour used to give proportionately more to Westminster. It is an excuse. Every time the hon. Member for Holborn and St. Pancras mentions Westminster, he is trying to avoid facing the real issues and the consequences of the public spending pledge made by the right hon. Member for Dunfermline, East.

Tonight we shall find out how much that pledge is worth. If the hon. Member for Holborn and St. Pancras, the right hon. Member for Dunfermline, East and the rest of the Labour party vote against the settlement tonight and continue to argue that the levels of total standard spending and aggregate external finance that we are proposing—levels that the shadow Chancellor has claimed to support—are inadequate, the electorate will be forced to conclude that new Labour's commitment to controlling public expenditure is a sham and that once again, as always, Labour is the party of higher taxes and higher spending. The £30 billion of extra public expenditure, with all the increase in taxes that that would require—an increase that the hon. Member for Oldham, West (Mr. Meacher) longs for—will prove to be an underestimate of tax-and-spend new Labour.

The matter is in the hands of the hon. Member for Holborn and St. Pancras tonight. We shall watch him. If he votes with us, we shall know that he is honourable. If he votes against us, we shall know that he is honourable, but in his own way—able to say both that he would keep to the rules and that he would spend and tax more.

I have dealt with the main issues covered by the three reports before the House. This settlement will help local authorities to meet the needs of their citizens in education and other key service areas but, at the same time, local authorities will need to continue to make every pound that they spend go further. I commend the settlement to the House.

4.29 pm

Mr. Frank Dobson (Holborn and St. Pancras)

The Secretary of State should perhaps be awarded a charter mark for making a speech that lasted less than an hour.

The vote at the end of the debate will set the level of the Government's grant to each local council. The total was set by the vote on the Budget; we voted against. Today's vote will decide how that grant is shared out between the councils.

Conservative Members will be voting for a settlement that will force through average council tax increases of 6 per cent., equal to £40 extra for every household, together with cuts in services to local people. Most Tory Members will vote for their own constituents to pay more and get less, and will express their satisfaction with that arrangement. They will then try to blame their local councils for both the tax increase and the cuts in services, but they will not succeed because everybody knows that the council tax increases are part of the Government's plans.

When the Chancellor of the Exchequer introduced his Budget in November, he did his best to direct attention at the 1p cut in the standard rate of income tax. He tried to distract attention from his plan to force council tax up by an average of 6 per cent. this coming year and his plan over the next three years to force council tax payers to cough up an extra £4 billion, equal to a 2p increase in the standard rate of income tax. He was up to his usual trick of publicly giving with one hand while furtively taking away with the other, but he was found out straight away. In his response as Leader of the Opposition immediately after the Chancellor had presented his Budget, my right hon. Friend the Member for Sedgefield (Mr. Blair) pointed out what the Chancellor was up to.

The facts are clear, not from Labour party propaganda, but from the documents that the Government are forced to publish on Budget day. Figures produced on Budget day by the Department of the Environment show that the Government are planning a 6 per cent. increase this year on the council tax, equal to £40 per household, and a £4 billion increase over three years, equal to £200 per household. Figures in the Red Book, published by the Government on the same day, confirmed that they were planning for a council tax rise of 7 per cent. on average; that higher figure includes Scotland and Wales as well as England. All that is part of the Government's long-term plan to make council tax payers contribute more towards the cost of their council services and it is no use them denying it.

Government officials have publicly stated that Ministers take the view that the Council Tax can take more of the strain", adding for good measure: The downside is that your taxes go up quite sharply". No Tory Member should have any illusions about why the council tax is going up. It is going up because the Treasury intends it to go up.

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)

The right hon. Member for Dunfermline, East (Mr. Brown) has said that, for the first two years, a Labour Government would observe the public expenditure framework set by this Government. Is the hon. Member for Holborn and St. Pancras (Mr. Dobson) now saying that a Labour Government would not allow council taxes to increase in year 2? If that were the case, where would a Labour Government find their public expenditure?

Mr. Dobson

I shall come to our intentions in due course. [Laughter.] Oh yes, I will.

Despite all the evidence, the Government have tried to blame the forthcoming council tax increases on councils, although the increases are the inevitable consequence of the Government's policies—the planned result of the grant settlement that will be forced through tonight. One item that will show up in the council tax bills which the Tories will try to blame on Labour councils is the increased contribution by council tax payers to the cost of their local police force, which is not covered in the settlement.

The Government claim credit for increases in police funding. Their contribution averages less than 2 per cent. in England and ranges from a princely 0.01 per cent. in Essex to 3 per cent. in North Yorkshire. However, the council tax contribution to increased police funding is a different matter altogether. The average increase in England is 13 per cent. and is as much as 18.5 per cent. in Cleveland and 16 per cent. in both Humberside and Leicestershire. That is the result of deliberate Government policy, but you can bet your boots that the Tories will try to blame Labour councils when the council tax bills start dropping on people's mats.

Mr. Clifton-Brown

I thank the hon. Gentleman for giving way, but he cannot have it both ways on council tax. My right hon. Friend the Secretary of State for the Environment has progressively lightened the capping regime to allow councils more discretion in expenditure. The Labour party wants to increase council tax, but the hon. Gentleman is criticising councils that exercise that discretion. He can either have the discretion and the increases or not have the discretion or the increases. Which way does he want it?

Mr. Dobson

Whether or not councils have the discretion, it is the Government's intention that the average council tax increase should be 6 per cent. this year and they are forcing it through.

The Tories claim to have provided 3.6 per cent. extra money for education. There is just one problem with that claim: it is not true. The Government have said that they will let councils spend more money on education provided that most of it comes from increased council tax bills and cuts in other services such as the protection of children, help for elderly people or maintaining local roads.

It is no good the Tories trying to deny the truth of what we are saying. Whatever fiction they may wish to peddle, if, next year, every education authority in England kept its spending to the Government's target, the amount spent on each pupil would be £41 less. What Ministers and Tory Members are calling an increase is actually a reduction of £41 per pupil.

It is no wonder that people are concerned about numeracy skills. The Government do not even understand the difference between plus and minus. The problem goes deeper than that. The Tories do not just have problems with numeracy and literacy; their real problem is with veracity. They are no longer able to tell the difference between fact and fiction.

The reduction of £41 per pupil is a national average. The figure varies between education authorities. Let me give some examples. The Secretary of State for Education and Employment represents a Norfolk constituency. If Norfolk education authority set its spending next year at the level suggested by the right hon. Lady, it would have to spend about £70 less per pupil. Education authorities in Birmingham, Bury, Coventry, Croydon, Leeds and Sandwell would require a reduction in spending of more than £100 per pupil to comply with the Government's target.

That inevitably takes me on to the unfair way in which the Government's grant is distributed between councils. Everyone knows that it is a racket. It is designed to look after the interests of a few privileged Tory councils. It all springs from the way in which the Government rig the system for judging the needs of each area.

Mrs. Alice Mahon (Halifax)

Is my hon. Friend aware that a 6 per cent. cut in Calderdale will require raiding the primary school budget by about £1 million, central services by about £1 million and possibly not funding the teachers' pay rise? That is a triple whammy and anyone who votes for the motions tonight will be betraying the children of Calderdale.

Mr. Dobson

I am sure that my hon. Friend will agree that the fourth part of the whammy will be when the local Tory candidates blame Calderdale council for what has happened.

The problem with the allocation of funds springs from the way in which the Government rig the system for judging the needs of each area. They decide which areas are most deprived and give them extra money. That sounds fair until we find out which parts of the country the Government have decided are most deprived.

The Government rank councils in an order from one to 357, with Tower Hamlets in first place as the most deprived, Hackney second and Islington third. Few people would dispute those rankings, but how can anybody explain why Runnymede is 37th when Great Yarmouth is 50th, or why Hereford is 41st when Basildon is 121st and Gravesham is 117th? How can anybody justify Mole Valley in Surrey being 102nd when Corby is 220th and Forest of Dean 233rd? Why is Guildford in Surrey 133rd when Waveney in Suffolk is 251st?

Huge question marks arise over any scale of deprivation under which Mid Sussex, which is 231st and Surrey Heath, which is 249th, are regarded as more deprived than Wigan, which is 276th, St. Helens, which is 279th and Rotherham, which is 280th? More startlingly still is the ranking of Huntingdonshire, which includes the Prime Minister's constituency. It is 295th and therefore treated by his Government more generously than Barnsley, which is 326th, Amber Valley which is 293rd, Bolsover which is 322nd, Warrington which is 332nd and Easington which is 331st. Nobody on earth can seriously believe that Easington, Barnsley, Bolsover, Warrington and Amber Valley are among the least deprived places in England—but that is the system that the Secretary of State is running.

Sir Peter Fry

The hon. Gentleman has clearly shown some of the unfairness of the present formula. Will he give the same assurance as my right hon. Friend the Secretary of State on changes to the area cost adjustment, bearing in mind the fact that any proposed change this year was effectively torpedoed by Labour-controlled local authority organisations?

Mr. Dobson

The undertaking that I give is that we shall have a fair system of allocation. The present one is manifestly not fair.

Mr. Gummer

If what the hon. Gentleman says is true, is it not surprising that he appears to muddle up different sorts of authorities? More important, if what he says is true, why does not one of the Labour-controlled local authority organisations support him or demand such changes? All the levels on which we operate have been set in consultation with them. Will he explain that?

Mr. Dobson

I shall come to that in my speech—[Interruption.] If I say it now, I shall be saying it twice. The Secretary of State has made it quite clear that he consults the local authority associations, and then decides. It is no good him pretending that he can shuffle responsibility on to other people; the decisions are his decisions.

Mr. Robert G. Hughes

Will the hon. Gentleman give way?

Mr. Dobson

No, I have given way about three times on this issue.

The rankings are determined by the Government. The low rankings of deprived areas are used by the Government to reduce the grant that such areas get. If, on the other hand, one uses a scale that reflects the wealth of the wealthy areas, Runnymede would move from 37th to 327th and Bromley from 115th to 310th. It is obvious that the system has a racket right at its heart.

Mr. Sumberg

The hon. Gentleman's answer to my right hon. Friend the Secretary of State just will not do. He has to explain why the Labour councils that control the metropolitan authorities are not pushing for the change to which my right hon. Friend referred. In the unlikely event that the hon. Gentleman becomes Secretary of State for the Environment, what will he do to impose such terms on them?

Mr. Dobson

The local authority associations and individual local authorities accept that, while the Government are in power, all that they can expect is fine tuning of the system. The more I look at the system, the more I believe that it needs to be changed root and branch because it is a racket.

Mr. Gummer

May I ask the hon. Gentleman the following very simple question? He uses the word "racket", so will he please explain why, in almost four years as Secretary of State for the Environment, none of the local authority associations in any of the many friendly and reasonable meetings that I have had with them—even though such associations are controlled largely by the Labour party—has ever asked me to do what he is saying ought to be done?

Mr. Dobson

My understanding is that they have asked for some of the things about which I am talking to be done.

The biggest scandal of the lot—the racket at the heart of the racket—is the Westminster racket—[Interruption.] The problem is, "They don't like it up 'em!"

According to the Government and nobody else on earth, Westminster is the fourth most deprived place in England. That must come as a surprise to the residents of Belgravia and Mayfair. In fact, it is remarkable that some estate agents in those areas have not challenged the Government for threatening property values by bringing the area into disrepute. Nobody denies that there are not some deprived parts of Westminster—the Government use such parts as their excuse to entitle Westminster to so much extra grant—yet the money that is earmarked for them does not get there or deal with people's problems there. It is squandered instead on the most expensive local services in the country and concentrated on the least deprived parts of Westminster.

I shall give just one example of the squandermongers. By not collecting service charges from people who had leased houses and flats from the council, £7 million was squandered. It is simple: the council was supposed to ask people for that money, but the man chairing the housing committee in 1988 ordered that it not be done.

Westminster council is showered with help by the Government. According to a brief produced by Conservative central office—so it must be true—if every council in the country had the same level of help as Westminster, it would cost the taxpayer £23 billion. That shows the extent of the racket. That figure is the Government's, not mine. Westminster does not deliver the goods. It is on record that its education service, for instance, is not very good.

Mr. Robert G. Hughes

Will the hon. Gentleman give way on that point?

Mr. Dobson

No, the hon. Gentleman is not from Westminster, and I am talking about Westminster. He may live there, but I do not know.

The Government grant per pupil for education in Westminster vastly exceeds that of most other education authorities. If Essex, Kent and Lancashire got the same Government help per pupil, they would each be able to take on more than 7,000 extra teachers in the coming year. Given the same help as Westminster, Cheshire, Nottinghamshire and Staffordshire would be able to take on 5,000 more teachers; Hertfordshire, Birmingham, Devon and Derbyshire would be able to take on 4,000 extra teachers; and Berkshire, Gloucestershire, Hereford and Worcester, Leeds, Leicestershire, Lincolnshire, Northamptonshire, Norfolk and Suffolk would each be able to take on more than 3,000 extra teachers. Yet tonight, Tory Members of Parliament from the areas that I have mentioned will traipse through the Lobby to force through a grant settlement that will swindle the people whom they are supposed to represent and betray the children, parents and teachers in their areas.

The unfair way in which the Government have allocated grants to local councils is not, of course, confined to education. Let us look at it another way: the contribution that council tax payers are expected to make towards the cost of their local council. The Government say that Westminster is their flagship council, so we can assume therefore that the contribution that the residents of Belgravia and Mayfair make towards the cost of their council is roughly what the Conservatives think to be right. It is certainly the level that Conservative Members will be voting for tonight. So what are the facts? In Westminster, council tax payers next year will contribute around 10 per cent. of the cost of their council services, so that must be the level that the Government believe to be fair.

What are we to make of a proposed settlement—for which Conservative Members will vote tonight—which will leave the average council tax payer in the rest of England contributing 25 per cent. of the cost of council services, compared with 10 per cent. in Westminster? In some areas, the Government's allocation of the grant means that local people will have to find a higher proportion. The Government are planning for the people of Harlow and Crawley to find 45 per cent. of the cost of council services. In Basildon, the figure is 42 per cent.; in the Forest of Dean, 39 per cent.; in Stevenage, 37 per cent.; in Amber Valley and Redditch, 34 per cent.; in High Peak, 32 per cent.; in Falmouth and Camborne, Corby, and Worcester 31 per cent.; in Chorley, Dover, South Derbyshire and Thamesdown, 30 per cent. Tonight, Tory Members who represent those areas will vote for a settlement that leaves their voters contributing between three and four and a half times more towards their local councils than the rich voters in Belgravia and Mayfair. Tory Members for another 30 areas will vote tonight for a settlement following which their constituents will have to pay more than twice the 10 per cent. required of council tax payers in Westminster.

Local people will be entitled to ask where the loyalties of those Members of Parliament lie. Do they lie with the people who elected them, or with the discredited Government? If Tory Members opt for party loyalty tonight, they will pay a heavy price in fewer than 100 days from now.

Mr. Gummer

My right hon. and hon. Friends will opt for party loyalty tonight. Their constituents know that the figures obtain because when a local council spends more than it ought to, it does not receive as much grant. Otherwise, the rest of the country would be subsidising overspending Harlow and Basildon, as well as the other Labour overspenders. Will the hon. Gentleman answer one simple question? When Labour was in power, did it give proportionally more grant to Westminster? If it did, the figure that he quoted earlier would be better than the figure when Labour was in power. How would he explain that to the country?

Mr. Dobson

The Government know, the officials know and the Secretary of State ought to know by now that the figures for the past and for the present are literally incomparable.

Mr. Gummer

They are comparable.

Ms Hilary Armstrong (North-West Durham)

The Secretary of State is lying. He said that himself in a letter.

Mr. Dobson

If they are comparable, will the Secretary of State tell us what the figures are? I will allow him to intervene.

Mr. Gummer

rose—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I think that I heard an hon. Member use the word "lying" from a sedentary position. I would be grateful if the hon. Member concerned would withdraw that word or confirm that she did not say it.

Ms Armstrong

I am happy to withdraw it, and I shall deal with the issue in my winding-up speech.

Mr. Deputy Speaker

I am most grateful to the hon. Lady. I think that the hon. Member for Holborn and St. Pancras (Mr. Dobson) had the Floor.

Mr. Dobson

I was just about to give way to the Secretary of State.

Mr. Gummer

The hon. Member for Holborn and St. Pancras knows perfectly well that he asked for details that are in the Library. These prove him to be wrong and me to be right. The hon. Gentleman has repeated something that is not true. The Labour party gave a greater grant proportionately to Westminster than the present Government, and that shoots his argument below the waterline.

Mr. Dobson

The fact that the Secretary of State—who is privileged to come to this House armed with innumerable advisers—has not produced a figure suggests that there is something amiss in his argument.

Sir Peter Fry

The hon. Gentleman should give us the figures.

Mr. Dobson

It is not my argument—I do not need to produce the figures.

Why do the Tory Members support this unfair settlement? If every council received the same help per head as Westminster, most would not need to collect any council tax at all. Most would be able to pay rebates instead. In Luton, the council would be able to pay a rebate of £529 to every council tax payer. In Bedford, the figure would be £499; in Erewash, £812; in Burton-on-Trent, £796; in North-West Leicestershire, £798; in Corby, £795; in Stourbridge, £700; in Gloucester, £831; in Lincoln, £731; in Staffordshire, Moorlands, £781; and in Slough £865. People in those places will want to know why their Members of Parliament have not got them a better deal.

The fiddling of the deprivation rankings does not stop with the residents. Councils get their grants increased in proportion to the number of visitors they get—in Westminster, it amounts to 81 per cent. The fiddling does not even stop there. According to the Government, visitors to an area are just as deprived as the inhabitants. So, according to the Government, all the people who stay overnight in Westminster are—like its residents—the fourth-most deprived in Britain.

We all know that homelessness and the numbers of people sleeping rough reach record levels under the Government, but the typical overnight visitor to Westminster is not homeless—far from it. Yet the settlement assumes that all Westminster's visitors are deprived. So we have the unbelievable situation that, for the purposes of calculating the Government grant, 12 per cent. of the people who stay at the Ritz, the Savoy, the Lanesborough and the Park Lane Hilton tonight will be regarded as living in grossly overcrowded conditions. Westminster is therefore entitled to extra grant to deal with that overcrowding.

If I said that, the Tories would accuse me of jeopardising the tourism industry by talking down the quality of London's hotels, but that is the Government's official position. Westminster does not just get a grant to match the number of overnight visitors—it gets extra grant to compensate for the deprivation those visitors have never experienced. The Secretary of State has described this situation as the "mathematics of the madhouse".

I will use one example to illustrate how crazy the system is. Let us follow a couple of foreign tourists as they visit places of historical interest in England. They come to London and stay at a hotel in Westminster. While they are in Westminster, they are regarded as being among the fourth-most deprived people in the country, and Westminster receives extra grant to meet their needs. When that same couple tire of sightseeing in London, they go to see the Brighton pavilion and immediately go up in the world. They become only the 32nd-most deprived people in England.

When this upwardly mobile couple go to see the imp in Lincoln cathedral, they move up to 59th, and they move up to 62nd when they pass through the Erpingham gate into the cathedral close at Norwich. They move up to 68th when they visit Exeter cathedral, and 87th when they visit Gloucester cathedral to see the first perpendicular gothic window in the world. They move up to 125th when they visit Worcester cathedral, and 219th when they gaze down from the ancient walls of Chester. A visit to York minster further improves their social standing to 274th, while a visit to the red sandstone of Carlisle elevates them to 288th. A visit to the High Peak secures them yet higher status, 290th, but even that cannot compare with the superiority they gain from a view of Durham castle and cathedral, which puts them at 334th.

Let me remind the House—these are the same tourists, but, according to the Government, they are not the same. The further they get from Westminster, the less deprived they become. That is social climbing with knobs on. It is not just ridiculous—it is unfair. It is also serious because, as the Government's ranking of deprivation is reduced, so is the grant that the councils receive.

The fiddle does not end there. Westminster council takes in more than £20 million a year in parking charges levied on those poverty-stricken visitors. It is allowed to keep all that money, which is not netted off against the grant for visitors. It is true that the same rule applies to every council. It is just that Westminster has more visitors who are more impoverished—according to the Government—and who pay more parking charges. The arrangement may apply to everybody, but it was custom-built to benefit Westminster.

The Government always claim—the Secretary of State has done so today—mat the allocation of funds is backed by the local authority associations. That is not true. They are consulted, but they do not make the decision. As the Secretary of State has said—

Mr. Robert G. Hughes

Will the hon. Gentleman give way?

Mr. Dobson

Please do not interrupt—I am about to quote the Secretary of State. He said last year: Someone has to decide … That is a responsibility of mine".

Mr. Hughes

Is not one of the holes in the hon. Gentleman's argument the fact that local authority associations have not seriously queried the Secretary of State's methodology? If they did, as the marionette sitting next to him cannot stop shouting, they would not only tell the Secretary of State but take him to court on judicial review. If the hon. Gentleman is right, they would win. They have not done so and they have not even argued that case. In other words, they think that the hon. Gentleman is talking complete nonsense.

Mr. Dobson

The hon. Gentleman's electors in Harrow will probably think that his time would be better spent ensuring that he does not vote for a system under which, if his area got the same help per head of population as Westminster, people would get a rebate of £416, or for a settlement under which his local people will have to pay 26 per cent. of the cost of the council instead of 10 per cent. as they do in Westminster.

Mr. Gummer

Can the hon. Gentleman just answer this question? If it is as he says, why have the local authority associations not asked for the root and branch change that he is proposing? Given that he has made this speech on previous occasions, why have none of the four associations supported him? He has made it at least five times to my certain knowledge.

Mr. Dobson

First, on an issue of principle, I am not me mouthpiece of the local authority associations. Secondly, as I have explained, those associations believe that they cannot expect any root and branch change from the Government and so, as long as they remain in power, they are looking for limited adjustments.

Mr. Charles Hendry (High Peak)

rose—

Mr. Dobson

I shall not give way at the moment. Recently, Ministers—including the Secretary of State today—have started to claim backing from the Audit Commission for their system of funding local councils. The Secretary of State quoted an Audit Commission report today, but the quote was pretty partial. The commission said that the present system was more sophisticated than foreign systems and better than the Tory scheme that preceded it. It did not leave it at that, however, and went on to say: there is nothing indisputably right about the present system … Its basis is simply a set of imperfect statistical models. Yet immense authority is invested by the Government in the current SSA formula". The Audit Commission went on to point out that some of the system's objectives were contradictory". For good measure it added: Comparing the system with a checklist of objective criteria reveals that it is deficient in several ways … The technical performance of the system delivers a degree of fairness which could be improved. The commission continued: The system is neither simple to understand nor stable in outcome", adding that Some authorities receive grant and spending power for services they do not provide. As I said, the Government have been planning for months to drive up council tax bills this coming April by an average of 6 per cent. or £40 per average household and to blame councils, but they have been found out. The Government have told too many lies and broken too many promises. Scarcely anyone believes a word they say.

Mr. Hendry

Will the hon. Gentleman give way?

Mr. Dobson

No.

On top of that overall plan to blame councils for the cuts in services and council tax increases that will follow this settlement, the Government are persisting in their now discredited, unfair share-out of grant between councils. So, if the Government force through the settlement, the distribution will be unfair and we shall vote against it. As I made clear before Christmas and on 6 January, if the settlement is forced through tonight, councils will perforce have to live with it. That is because the Government's craven postponement of the general election means that there is no alternative.

Under laws passed by the Government, councils have to decide their budgets by 11 March, which means that they have to know the level of Government grant that they will be getting well before that date. To ensure that all councils knew where they stood, I made it clear in December and January that, whatever the settlement forced through by the Government tonight, it will be the settlement for the forthcoming year and that that must include the capping levels.

We want to get rid of capping, subject to fall-back powers to deal with any council that might get totally out of line, but that certainly cannot be done this year. Councillors and council officials were entitled to know that, so we made it clear. Councils know where they stand. We are determined not to do as the Tories did at the last general election, when they made promises that they knew they could not keep. They promised tax cuts; they delivered tax increases. They promised increased public services; they delivered cuts in public services. Then they tried to blame everyone but themselves for what they had done.

The incoming Labour Government will be based on the supposition that democracy depends on the people who take the decisions carrying the can and the people who carry the can taking the decisions. So we shall be honest in our relations with local councils and we shall take responsibility for our share of those decisions. We shall not roam around the country blaming local councillors for decisions that we have taken in the House of Commons. We shall take responsibility for our decisions and they will have to accept responsibility for theirs.

Tonight, we shall vote against the grant settlement because it is unfair. If the Government manage to force it through, it will be with the help of many Tory Members whose constituents are being dealt with unfairly. Those hon. Members will be held responsible for their decisions, not by me or the Labour party, but by the—

Mr. Hendry

On a point of order, Mr. Deputy Speaker. The hon. Gentleman has referred to my constituency twice. Is it not the convention in the House that, if that happens, the hon. Member who represents that constituency should be heard?

Mr. Deputy Speaker

Conventions are not the responsibility of the Chair.

Mr. Dobson

I was trying to speed things up, Mr. Deputy Speaker. Hon. Members who vote for the settlement tonight will be held responsible for their decisions by the voters at the general election and that election cannot come a minute too soon.

5.7 pm

Mr. David Sumberg (Bury, South)

I make no apologies for devoting all my speech to the serious situation faced by my constituents in Bury because of the threat by the Labour council to cut vital public services drastically.

The council has put forward proposals for consideration that will reduce spending on primary, secondary and community education and cut out three public libraries in my constituency. There is much anger and fear in the community at those proposals, as they would severely damage the excellent quality of education in Bury—the ratings and examination results have been among the highest in the country. If the measures are implemented when the council sets its budget in a few weeks' time, it will be an outrageous attack on the education system that operates in my community and it will be entirely unacceptable.

Unfortunately, this is not the first time that the Labour council has threatened those vital public services. It is almost an annual exercise—an exercise that causes great distress and anger among the children and parents whom I represent. Last year, the council threatened to close every public library. In previous years, it threatened to close nursery education in its entirety and old people's homes and to cut adult education severely. Year by year, such threats have been made at this time. On each occasion, the council has been forced to decide where its priorities lie. It was forced to do so by public protest and outrage, and those important community services were all saved and they still operate effectively to this very day.

That record of threats followed by the withdrawal of threats leads to a certain amount of scepticism. If the threats were genuine in those previous years, when those council services were faced with extinction, I have to ask why action was not taken year on year—perhaps in a more modest way—to avert the serious situation that we face today.

It is convenient that that situation has arisen just before a general election. We all know from our experience of life and business and our professions that, if one fails to deal with a financial problem when it first arises, achieving the eventual solution becomes all the more difficult.

Bearing in mind the sorry chapter of events over several years, there can be only two verdicts on the way in which the council has behaved: either it was working year by year on the Micawber principle that something would eventually turn up to solve the problems, or it was deliberately misleading the public each year about the severity of the cuts to vital services so that, when they were saved, as I have explained they all were, the Labour council could pose as the white knight in shining armour coming to the rescue of parents, children and the community in general. Either verdict would be a sorry one: financially incompetent or morally unacceptable.

If, unlike in previous years, the financial crisis in Bury today is real—I think that there is indeed a real threat to the primary and secondary schools and colleges—two factors must be taken into account. One is extremely old, and the other new.

The old factor is a unifying point for the council—whatever its politics—for my constituents, for me and for my hon. Friend the Member for Bury, North (Mr. Burt): the formula that is used to decide how much each local authority is to receive from central Government and, in particular, the area cost adjustment. It has not worked well for Bury and the unfairness has persisted over many years; it does not take account of the borough's special position as a small authority with no economies of scale which is neither overwhelmingly rich nor especially poor.

I accept 100 per cent. the difficulty in changing a formula for anything, as consensus must be reached with other authorities. As has been vividly demonstrated in this debate by remarks from the hon. Member for Holborn and St. Pancras (Mr. Dobson) and others, there is a great difficulty in getting that consensus from all concerned. It is an obvious difficulty, because those who gain from a formula do not want to give up their advantage, while those who lose press them to do so.

It is misleading to say, as the Opposition have said, that the only gainer from the formula is Westminster city council. It may well be that many other Labour and Liberal councils also gain. That is why the metropolitan authorities are incapable of coming to my right hon. Friend or to any future Secretary of State for the Environment with a united voice, presenting a formula to deal with the matter differently.

Mr. Robert Ainsworth

Does the hon. Gentleman accept that there will never be a consensus about changes across the whole of local government, that his authority is losing out massively from the current formula, and that the Secretary of State could change it if he wanted? Why then does the hon. Gentleman continue to support him?

Mr. Sumberg

I entirely accept that my local authority is losing out massively as a result of the formula, but the hon. Gentleman and the hon. Member for Holborn and St. Pancras know that there is no large bank of money sitting in Whitehall that could do something about it. Nor can—nor should—my right hon. Friend make changes without consensus. The formula applies not to one authority alone but to all of local government.

Having said that, I must tell my right hon. Friend that my hon. Friend for Bury, North and I have urged a change in the formula that would apply throughout the system. I wish it were possible for the change to apply only to Bury, but it is not. We have long urged the Department to do something, because the current position is not fair and cannot continue. I understand the difficulties, but I am sick and tired of making this point, which I have made before in the Chamber and in delegations. I say to whomever will be Secretary of State for the Environment after the general election that something will have to be done.

I referred to an old and to a new factor. The new factor will require hon. Members to use a little bit of imagination and believe the Labour party's promises. Unlike in previous years, when I have faced criticism in Bury for the amount of local government expenditure, that criticism has this year been followed by a demand for more public money to be spent on local government.

This year, and next, we face a Labour commitment that, if Labour were in government, it would not increase by a single penny the amount decided by the Government for the next two years. Unless the Labour party is prepared to respond to that point, all its injunctions for Tory Members to vote with it tonight will fall on very stony ground.

Labour Members know the truth: if they come to power, there will be no alteration in the formula or in the amount of money that will be allocated to local government. That has been made absolutely clear by the right hon. Member for Dunfermline, East (Mr. Brown).

Mr. Dobson

There can be no change in the formula this year, because councils have to set their budgets by 11 March, but I can assure the hon. Gentleman that, if there is a Labour Government, there will certainly be changes in the allocation next year.

Mr. Sumberg

We shall wait and see. I do not believe it, because none of the hon. Gentleman's friends in local government, as I said before, has proposed any change whatever in the formula. On the whole—almough some of them lose out as we do in Bury—they are satisfied with it. In the unlikely scenario that the hon. Gentleman posits, he will face exactly the situation currently faced by my right hon. Friend.

Mr. Robert G. Hughes

This debate has been revealing about Labour policy—or not even policy, but merely tactics. The hon. Member for Holborn and St. Pancras (Mr. Dobson) read out great lists of councils that he alleges would receive more money under a Labour party allocations scheme. In other words, Labour is promising any part of the country, any town, city or county, that a change in the allocation would give it more money. Is that not profoundly dishonest?

Mr. Sumberg

It is profoundly dishonest for the hon. Member for Holborn and St. Pancras to refuse to make a commitment, today or ever, that there will be more money for local government. I cannot tell the people of Bury that, in the unlikely event of a Labour Government, they will have more money. They will not.

The hon. Member for Holborn and St. Pancras tells me that there will be a review of the formula, and I am sure that, if there is a Labour Government, we shall have reviews coming out of our ears; but can he give a commitment that the people of Bury will benefit from the change in formula after that review? I very much doubt it.

Mr. Dobson

In case the hon. Gentleman misheard, I said not that there would be a review of the formula but that there would be a change in the way in which the money was allocated.

Mr. Sumberg

The hon. Gentleman will not speak again in this debate, but perhaps the hon. Member for North-West Durham (Ms Armstrong) will set out in detail the way in which the formula will be changed rather than regaling us at length with what Westminster council gets or does not get. If she is prepared to do that, the House and the country may be prepared to listen.

Every local council now knows without a shadow of doubt that, whatever the outcome of the general election, or of tonight's vote, there will be no more money for local services. Bury's Labour council must face the difficult reality of the present situation. Whatever Government are in power, Labour or Conservative, next year and the year after, our problems will not disappear overnight. To accept that reality would be honourable and honest, and would not mislead our constituents, who are already angry and anxious enough. The really important vote, with all due respect to the House, is not tonight's.

Mr. Jon Trickett (Hemsworth)

When will the Government have the nerve to call the general election?

Mr. Sumberg

The really important vote will be called soon, because it will take place in Bury council chamber some time in March to decide what priority the Labour council gives to the services enjoyed by my constituents. I make no bones about the fact that some elements of the situation are unfair to Bury and to the council. However, just as we in our private lives must accept the situations that we face and deal with them, so must local councils. We cannot pretend that our bank manager is charging us 5 per cent. when he is charging 15 per cent. on our overdrafts, because that would result in financial disaster. Equally, while the situation may be difficult and harsh, the council cannot pretend that it lives on another planet.

If my community is to maintain our excellent education services—which is what I and the people whom I represent want—every other aspect of council spending must be examined. Some harsh, politically difficult decisions must be taken by people in the Labour party, who, I accept, hold their views very sincerely. As Aneurin Bevan said, they must use the language of priorities. Our children's education should be a priority. If the Labour council in Bury is prepared to do that, to put aside political prejudice and to work to find a solution that will preserve our excellent primary and secondary schools and adult education, it will rightly command the respect and admiration of the community; it will also have my total support.

5.23 pm

Mr. Jim Marshall (Leicester, South)

Mr. Deputy Speaker, the last time I was involved in a local government finance debate, I think that you were also involved. We both realise how long ago that was. As I listened to the Secretary of State's bluster, I reflected that I had not missed much over the past few years. If it were not for an pressing problem in the city of Leicester—I mention that to ensure that the Minister knows where my constituency is—the Secretary of State might well have driven me from the Chamber. I cannot but believe that his speech, and that of the hon. Member for Bury, South (Mr. Sumberg), had more to do with the coming general election than with the needs of local government. However, like the hon. Member for Bury, South, I am seeking the Secretary of State's assistance, so perhaps I should curtail my criticism and get on with my substantive point.

I think that all hon. Members accept that councils of all political persuasions—even the few remaining Tory administrations—agree that this year's proposed spending limits are inadequate. Despite the vehemence with which Ministers put their argument, local government and local authority bodies believe that, on a like-on-like basis, local authority spending in 1997–98 will increase by 1.5 per cent., not by 2.5 per cent. as Ministers claim. Inevitably, that will increase pressure on service provision and lead to the difficult problems highlighted by the hon. Member for Bury, South.

Nowhere are such problems clearer than in Leicester. The Minister received a deputation from Leicester in December 1996. He knows that Leicester will become a unitary authority in April. Everyone in Leicester agrees that this is one of the most traumatic periods in the political life of the city council. At this traumatic time, the city is faced with the worst budget settlement in its history. The Minister knows that Leicester is the only 1997 unitary authority that is capped at its notional 1996–97 budget plus 1 per cent., even though Ministers accept that inflation forecasts are running at between 2.5 and 3 per cent. The council faces the lowest budget settlement of any reorganised authority, this year or last. If that goes through unaltered, it will have disastrous consequences for service provision and development.

The Minister knows that, as a non-metropolitan district, Leicester is permitted to overspend to the tune of 40 per cent. above standard spending assessment. It gives me no pleasure to say that, because I know that political opponents will seek to attack it, but that is the reality. As part of the agreement with the Government, the council pursues a strategy of managed budget reduction. When it becomes a unitary authority in April 1997, it will be an authority with a spending limit of 2 to 2.5 per cent. above SSA. If the council does not receive additional assistance from Government, it will have to reduce its budget by £15 million to £18 million.

If services transferred from the county council, such as education and social services, are ring-fenced and protected from cuts to avoid the draconian action that the hon. Member for Bury, South described, the consequences for services presently provided by the non-metropolitan district, such as leisure, housing and planning, will be horrendous. The housing renewal strategy in the inner city, which assists owner-occupiers, will be especially hard hit; it will virtually cease. Neighbourhood centres throughout the city will face closure. Leisure service provision in Leicester will be decimated.

There is real disquiet among city council employees who sense the threat of redundancy. They have already seen the present Leicestershire county council issue 600 redundancy notices as a consequence of reorganisation. We hope that many of those redundancies will not occur. Nevertheless, the redundancy threat is having an enduring effect on the morale of staff of the county and city councils, which will persist long after 1 April 1997.

I hope that the city of Leicester and I can convince the Secretary of State and the Minister that it would be disastrous for the new unitary authority to start its life with large service cuts and redundancies as a consequence of the unexpected harshness of the revenue settlement. I realise—I am sure that my realisation will be borne out by experience as the debate continues—that the Government will be subjected to special pleading from hon. Members on both sides of the House. Nevertheless, I hope that Ministers will take further action to ameliorate the consequences of the decisions that they have taken already regarding the city of Leicester. Some of the worst consequences may be avoided if they consider the views and options identified by the delegation that met the Minister. I await the Minister's reply in hopeful anticipation of further assistance for the city of Leicester.

5.30 pm

Sir David Madel (South-West Bedfordshire)

The hon. Member for Leicester, South (Mr. Marshall) and my hon. Friend the Member for Bury, South (Mr. Sumberg) drew attention to the fact that the debate is about the important issue of state spending levels. The hon. Member and my hon. Friend drew attention to education and its importance locally and nationally, and both pointed to the relentless pressure on Government for increased state spending. That is particularly true at local government level, as I believe that the country is now much better informed about the activities of local authorities. Local authorities today spend much more time informing the electorate of their aims and achievements, and Governments will face continuing debate about how much the country can afford to give them in order to assist with important expenditure items.

Like the hon. Member for Leicester, South and my hon. Friend the Member for Bury, South, I shall devote my remarks to my local situation. I believe that the debate is not so much a time for special pleading but a time for drawing special attention to particular local problems. I am grateful to my right hon. Friend the Minister for Local Government, Housing and Urban Regeneration for receiving a delegation from Bedfordshire county council that my hon. Friend the Member for North Bedfordshire (Sir T. Skeet) and I brought to see him last month. Some progress has been made following that meeting, which I shall outline later.

My right hon. Friend is well aware that Bedfordshire faces particular difficulties as a consequence of local government reorganisation. Luton has been separated from Bedfordshire for the second time in 35 years, and it will become a unitary authority. One may ask whether Luton should have been joined with Bedfordshire in 1972 or been allowed to retain its county borough status—which it was granted in 1962, and thus had enjoyed for a mere 10 years. The answer is that it should have remained as it was and been allowed to develop in that direction. However, in the 1970s the Government of the day were involved in Common Market negotiations, in altering housing benefit, introducing value added tax, reforming industrial relations, and changing Ulster's constitution—it was helter-skelter legislation. Against such a background—with the Government desperate to move on—mistakes will inevitably occur, and I think that the Government's decision regarding Luton in 1972 was a mistake.

Nevertheless, Luton will become a unitary authority on 1 April. I believe that the consequences of local government reorganisation in Bedfordshire require further rapid detailed discussion between the county and the Department of the Environment. The reorganisation decision will result in the transfer of resources to Luton. The problem is that Bedfordshire's assessment of how much is currently spent in Luton is different from the Department of the Environment's provisional assessment—that is, the notional amount. Based on current expenditure levels, the county estimated that the notional amount should be £6 million more than the Department's initial estimate. As my right hon. Friend knows, that factor formed part of our representations to Government.

The transitional costs of local government reorganisation involve two elements: making the change—that is, providing information to Luton about services and reorganising the county—and compensating staff, especially those who are made redundant. The greatest concern in Bedfordshire at present is the cost of redundancies. It is impossible to predict what that will be, as the county is in the middle of reorganisation and Luton is still recruiting staff. The Government have made available resources of £2.5 million over two years, which the county council has supplemented with resources generated internally.

The Government have asked what Bedfordshire county council is doing about the reorganisation problem, and the response has been good. The district auditor has commented: Bedfordshire County Council is handling the challenge of local government reorganisation well. I draw my right hon. Friend's attention to three developments in Bedfordshire. First, departmental structures have been reorganised and there has been a 60 per cent. saving in chief officer posts, with the number of departments reduced to four. Secondly, staffing structures for core staff are being filled at only 60 per cent. of current staffing levels, which amounts to a saving of £4.5 million after adjustments for the transfer to Luton. Thirdly, central support services, such as finance and legal, have been reduced more than front-line services.

I thank my right hon. Friend for the changes that he has made to the damping grant. The Government have confirmed that Bedfordshire will receive an extra £4.2 million in Government grant, which aims to reduce the impact of local council tax increases caused by the cost of local government reorganisation. Departmental estimates suggest that that will be worth £33 to the average band D council tax payer in the county. That was one welcome consequence of our meeting with my right hon. Friend last month.

However, other problems remain, which I ask my right hon. Friend to consider. Bedfordshire county council expects to have reserves of about £1.5 million at the beginning of 1997–98. That leaves no scope for using reserves in the short term while long-term savings are realised. I offer two suggestions to my right hon. Friend which could assist the county. The Government could provide additional capital approvals or allow the county council to utilise some of the capital receipts that are frozen. That would allow expenditure to be incurred in order to achieve long-term savings.

In making that plea, I do not suggest that the Government should take the general brake off local government spending. We know what would happen if they did so: someone, in the guise of the late Anthony Crosland, would have to say "the party is over"—we all remember those vivid words. There is a risk that spending would shoot out of control, as it did when Mr. Crosland was Secretary of State for the Environment in 1974. However, I believe that there are several different brakes that could be eased gently when it comes to local government reorganisation, and one of them applies to Bedfordshire.

I ask the Government to take a swift and detailed look at my two proposals to ascertain whether, because of the costs of reorganisation, the brake on Bedfordshire could not be gently and temporarily eased. The council understands that it is asking for temporary and special treatment to see it through its temporary difficult position. There is a willingness at county hall not to spend through the roof. In other words, there is a willingness to keep expenditure reasonable. I ask the Government to understand that only a minority of councils have been reorganised in the way that Bedfordshire has. I hope that my right hon. Friend may be able to inch his way forward and accept one or other of my two suggestions to help Bedfordshire.

5.40 pm

Mr. David Rendel (Newbury)

It is sad that the debate is a depressing one for all those who are involved in local government, not least because of a sense of déjà-vu. There have been similar debates in previous years, and I recall particularly the debate that took place on 31 January 1996. The same points had to be made in January last year because the Government were doing very much the same thing.

The settlement this year will lead inevitably once again to cuts in local government spending and, at the same time, to higher council taxes. The spending assessments determined by the Government are increased in total by about 2.5 per cent. while the grant that the Government are providing for local authorities is increased overall by only about 1.5 per cent. That means that even if local authorities were to do no more than spend at the rate at which the Government expect them to spend, there would have to be huge increases in council taxes. It is a choice, perhaps, between huge increases in council taxes and cuts in local authority services, but I suspect that most local authorities will find that they must do both.

The Secretary of State said that in every area of Government spending we need regularly to undertake a review to ascertain whether things might not be made more efficient. When I asked him whether that had applied to central Government spending over the period of the Conservative Government, it was interesting that he failed effectively to reply. He merely said that central Government had apparently become more efficient and that any extra savings had immediately been spent on further central Government services.

I wonder why the Secretary of State thinks that it is so important for central Government to spend more on new services out of their efficiency savings while demanding that local government makes those savings and does not introduce any new services, especially when central Government are insisting on local authorities introducing new services year after year.

Central Government spending is up while, on the whole, central Government have been shedding their responsibilities to local authorities. Local government spending is down while, on the whole, it has been receiving extra responsibilities from central Government. How can the Secretary of State complain, when that is the position, that local authorities are inefficient? Clearly central Government must be more inefficient than local authorities.

This year, nine out of 10 of district councils throughout the country have had their standard spending assessments reduced in real terms, and rather more than that have received a reduced grant towards that spending. It is clear that districts will be under immense pressure. One of the extra responsibilities of which the Government have taken all too little account is the extra costs this year of reorganisation in those areas where that is taking place.

There is another factor that has not been mentioned so far. It is that to pay for local authority pensions, which were underfunded at the time of the poll tax, all authorities are now having to put extra sums into their pension funds. Many of the local authorities that received an undue bonus as a result of underfunding pensions at that time were then Tory controlled. Now, when they are run by Labour or Liberal Democrats, they must find extra money from the council tax payer. At the same time the Government have the cheek to try to blame those councils for raising council tax, when the fault rests with the Conservatives in their decision on pensions. For example, Waverley in Surrey has decided this year that an extra £25 per head is due as a result of the underfunding of pensions when the council was Conservative controlled in previous years.

Education always lies at the heart of local government spending. It is the most crucial area of that spending as well as the largest total amount. Most local education authorities are spending above the standard spending assessment. Why is that? The answer is that traditionally, local government has put a much higher value on education than have central Government.

I shall give an example. Last year, the budget for schools in Kingston upon Thames was £46.45 million as against an SSA which was nearly £2 million lower. This year, Kingston believes that it will have to cut its spending on schools by about £1 million. That will be a real cut in spite of the fact that there will be higher pupil numbers and many other needs. Nevertheless, the reduced spending of £45.3 million will still be larger than the Government believe that Kingston should be spending. Its spending will be greater than the Government-set SSA. That demonstrates clearly how any Government pretence that more money is being provided for education now by central Government than in the past is incorrect.

What is more, the Government have failed properly to take into account rising pupil numbers and rising special needs. All the time, more and more people realise that special needs are not being properly met. The problem of the early retirement of teachers is now being thrown on to local authorities. I can give an example of the result of these increased costs. In Northumbria, there will be a gap of about £10 million between a real-terms, stand-still budget and the capped limit. In other words, Northumbria will not be able to achieve a real-terms, stand-still budget. Instead, it will have to cut its spending on education by about £10 million.

A further example is close to my heart. A school in my constituency—Enborne Lodge—is run not by the LEA of Berkshire but, for some time, by Lambeth. It is an old Inner London education authority school. It is a boarding school for those with severe emotional and behavioural difficulties. The school has done brilliant work, achieving results with students who have had the most unbelievable difficulties. It has enabled them to experience a happy and worthwhile childhood while having a proper education and achieving some excellent exam results. It has enabled them also to lead useful lives in society, as perhaps they never could have done otherwise.

This year, the school had to close. Not only that, but the plan of the governing body to enable Enborne Lodge to continue as a grant-maintained school—I thought that the Government would like that—run by a charity has collapsed. Why is that? Lambeth has decided that it must sell the school on the open market for the best price rather than allow such a brilliant school to continue to do that which it has so successfully undertaken.

That is a tragedy. The school has been much valued in the community and by the London boroughs that have sent pupils to it. It has had a huge value to society as a whole. It has enabled its pupils to receive a decent education and then to return to the community to lead happy and normal lives thereafter.

It is a tragedy that that school has been closed, but before anyone gets the idea that it was the Liberal Democrats' fault—we are now the largest party on Lambeth council—let me say that the decision to sell on the open market was taken last Friday night as a result of a Con-Lab pact.

Way back before the last general election, the Liberal Democrat party said that education was a priority. We are delighted that the other two parties now agree with that point of view, and claim to have made education their priority, too. But the Prime Minister's pledge to put education first is seen in this settlement to be a sham, and he should never have made it.

Social services is another crucial area of local authority responsibility. Every year, local authorities are given further responsibilities for social services, but without the funding to match. In the debate last year, I referred to a 90-year-old resident in my area who was trying to obtain bath aids to enable him to remain in his own home. He was told that it would be as much as a year before he would be assessed for those aids, and that it would take a great deal longer than that before they would be installed in his home.

This year I did something rather different: I went to a meeting of people whose family members have learning difficulties. It was a fascinating meeting, and it showed me that there is a real need for the provision of further respite care. Such people should be given a chance to keep members of their family at home, but should be relieved of those duties for a short period each year.

As a result of that meeting, I agreed to spend a day visiting four such families. It was a fascinating and emotional day, and it showed me the difficulties that those families have to cope with. One child with autistic tendencies spent his whole time running round the house destroying it. He tore the paper from the walls, tore at the chairs and knocked over the crockery so that it fell on the floor and smashed, and his parents could do very little to control him. They have to live with him day after day, and they love him dearly. It is unfair for society to decide that such a family cannot have any respite care month in and month out, because of cuts in local government funds. Some councils find it almost impossible to meet even their statutory responsibilities for social services.

Many other areas of local government funding are being cut. Even the Government, in their SSA figures, have accepted that spending in other areas will have to be cut; and that is before they have taken account of the extra costs to local government of the landfill tax.

Transport will be cut, which will mean worse road maintenance year on year. Environmental services will be cut: it will be more and more difficult for local authorities to establish recycling schemes. Recreation and the arts will be cut: they draw tourists into this country. Today, I went to the launch of an appeal by the Watermill theatre in my constituency—I hope that many hon. Members have been there—which is desperately short of funds. I was told that it provides to the Government more in VAT on its ticket sales each year than it receives from the Government in subsidy. None the less, that theatre faces closure because of the Government's policies.

A cut in those areas of local government spending will produce short-term savings, but there will be long-term costs. That is the tragedy of the Government's spending settlements. It is the old story of knowing the price of everything but the value of nothing.

Today's announcement on capping will be a great disappointment, particularly in Oxfordshire. It is interesting that even the local Conservatives are saying that the capping limit is unsustainable and must be broken. All three parties seem to agree—although I understand that the Labour party has refused to propose a budget. The other two parties agree that the budget to be set must be above the capping limit. [Interruption.] If the hon. Member for North-West Durham (Ms Armstrong) wants to intervene, she is welcome. I understand that the Labour party has proposed two budgets, but has said that they are for consultation purposes only.

The Tory policy has been to abolish capping: that was agreed at the 1995 Tory conference. The Tory conference produces one or two weird ideas, but it is a great pity that the Government did not listen to what Tory party members told them on that occasion. Capping means that virtually all council spending is, in practice, determined by central Government. It is interesting that the Secretary of State said that his proposals for local government were supported by the local government associations, whereas all those associations have been saying for a long time that capping should go; and so it should.

It saddens me to say that I now regard the Labour party as little better than the Tories when it comes to local government. Labour Members have made a great fuss today, but will they follow up their words with actions? They seem terrified of Tory attacks on their tax policies. They failed to oppose this year's income tax cut, and thereby forfeited their right to demand more central Government grant this year—to be fair to the hon. Member for Holborn and St. Pancras (Mr. Dobson), he admitted as much. They say that they will stick rigidly to Tory spending and taxation levels in what appears to be yet another Con-Lab pact. They seem to be trying to prove that there is no longer any point in voting Labour.

The cut in income tax, which must be paid for by a rise in council tax, is at the heart of this settlement. The Tories are replacing what is undoubtedly a fairer form of taxation with a less fair tax. Pensioners and people on low incomes do not pay much income tax, but they will be just as hard hit—perhaps harder—by the rise in council tax that the Tories propose. It is hardly a surprise that the Tories have fallen to third place in local government. Why have they not learnt their lesson? Why have they not learnt where they have been going wrong in local government all these years? If they had listened to those of us who have been telling them where they have gone wrong, they might have done better in local government elections.

The council tax is unfair to the elderly and the poor. The real tragedy is that spending cuts will also hit those who are most in need. They will hit children, the elderly, people with learning difficulties and all those who depend on social services. It has been reported in the press today that the Government are prepared to allow the sick in our hospitals to go unfed. Is this really Britain in 1997? This is the shame that the Government have brought on our country. They should go, and they should not be allowed to return for many years.

5.58 pm

Sir Peter Fry (Wellingborough)

There used to be a saying among Conservative Members: "Vote Labour for higher taxation." We still say that, but we have just had a wonderful illustration of the fact that, if we vote Liberal Democrat, we shall be taxed even more than we would be taxed by a Labour Government. All that we have heard is a catalogue of complaints about more and more money being required. Does the hon. Member for Newbury (Mr. Rendel) not realise that there always will be a greater demand for public expenditure? He seems to forget that, because his party will never be in government—unless the Labour party lets the Liberal Democrats into government—he will never have responsibility for raising taxation to meet his demands.

I would prefer, however, to spend a few minutes commenting on what we have heard from the official Opposition. I am coming to the conclusion that, if Westminster council did not exist, it would have to be invented. Virtually all the attacks on the policies of my right hon. Friend the Secretary of State and his colleagues relate to the anomalies that Opposition Members claim exist in that council. I find it much more interesting that—apart from a peculiar phrase about root-and-branch reform—we have heard very little about what the party that expects to take office intends to do about local government. Its policy on capping, for instance, is rather unclear. Does it want to abandon capping completely, and allow councils to let rip and spend as much as they like—obviously, the hon. Member for Newbury would like one council to be able to do that—or will the right hon. Member for Dunfermline, East (Mr. Brown) make that impossible?

We cannot assume that a large amount of extra money will be available for local government purposes. We should ask ourselves, therefore, which party is the more hypocritical. Is it the Conservative party, which says, "That is the amount that you will receive; you must make the best of your budget within it," or is it the party that says, "Nowhere near enough is being spent in this or that part of the country, but there will be no extra money to fund what needs to be done"? I suggest that the official Opposition's stand is totally hypocritical and totally inconsistent.

There are those who complain that insufficient grant leads to a considerable reduction in services. As I have said before, we have been given no idea of how any increase in services—or even leaving them at their present level—can be maintained if we stick to the present guidelines for two years. Let me remind the House, and the Opposition in particular, that when a new system is adopted, the present system is generally supported by most people in local government. They may not like this or that aspect, but the overall feeling is an unwillingness to undergo another major change. As my hon. Friend the hon. Member for Bury, South (Mr. Sumberg) pointed out, there is increasing concern about the way in which the area cost adjustment has been reached in recent years. It is often forgotten that that is a comparatively recent problem, because the formula was revised only three or four years ago.

I have made it abundantly clear on previous occasions in the House that, in my view, the way in which the ACA is currently calculated is grossly unfair to the county of Northamptonshire. Despite what my hon. Friend the Member for South-West Bedfordshire (Sir D. Madel) has said, I find it difficult to understand why Bedfordshire receives £100 per pupil per year more than we do in the adjoining county. I accept, however, that if the proposals in the Elliot report had been introduced for 1997–98, the system would have been fairer. Northamptonshire would have gained up to £13 million, but—and it is a big but—many local authorities would have received less, and presumably the squeals that would have come from those authorities would have carried more weight than the arguments advanced by those who felt that they were being unjustly treated under the current arrangement.

I agree that all the local authority organisations are resisting change, and I understand that it will take time to negotiate the changes that I would like. I thank my right hon. Friend for his statement this afternoon, and for his answer to my intervention, but what I would like to hear—as, I am sure, would my constituents, no matter which party they vote for—is a similar commitment from Opposition Front Benchers. It is no good talking in vague terms about a fairer system without giving some indication of how the present system is to be made fairer.

Mr. Robert Ainsworth

Am I right in interpreting what the hon. Gentleman is now saying as meaning that he intends to vote for what he has exposed as a totally unfair settlement for his county?

Sir Peter Fry

Over the past three years, I have expressed extreme concern about the way in which the area cost adjustment has been defined and operated. Two years ago, I refused to support the Government in the Lobby because I felt that—

Mr. Ainsworth

The hon. Gentleman is fishing now.

Sir Peter Fry

The hon. Gentleman asked me a question. If he is kind enough to allow me, I will now answer it.

Two years ago, I refused to support the Government because I believed that no progress was being made in ironing out the difficulties of the area cost adjustment. Last year, largely owing to the intervention of all the Northamptonshire Members of Parliament, the Government decided to set up a review of the ACA under Professor Elliot. We made a start in the right direction, and that, along with the amount of grant that we received last year, enabled me to feel that I could support the Government in the Lobby.

This year, I made it clear to my right hon. Friend the Secretary of State, the Chief Whip and my constituents that, unless there was a meaningful move towards a change in the ACA, I would consider my position in regard to supporting the Government tonight. I have received an assurance from my right hon. Friend, and I have heard not a word in support of that from the Opposition. I—dare I say it?—would rather believe the assurance that I have been given, in very clear terms, because I think that it is generally agreed that some change should take place. That is what the Government have promised, and I would like to think that the Opposition have the courage to make the same kind of commitment.

As I have said, we have experienced problems in Northamptonshire. It has been claimed that the county council is underfunded by some £28 million. That, of course, is the difference between what the Labour county council would like to spend and what the Government feel that it should spend. When we start to investigate the source of that £28 million, we find that, interestingly, there have been enormous overspends for years in both the education and the social services budgets. It is fairly simple to put a finger on where things went wrong in the education budget. The county council decided to educate all the rising fives without obtaining any Government grant to support it; the cost has continued to increase, and now accounts for some £9 million or £10 million of expenditure—money that comes directly from the council tax payer, without Government grant.

We have not looked closely enough at the question of social services. One of the biggest grey areas in recent years has been policy on residential care. Labour's policy in Northamptonshire, where it has been the controlling party for the past few years, has undoubtedly been politically biased: it has attempted to dissuade people from choosing private home care rather than care in county council homes. The committee of the council met on 13 June 1996. The report from the director states: Action … will continue to ensure maximum use of services that are already funded. This means that directly provided services … must be used to the maximum. The report goes on to refer to Making sure that residential beds provided by the county council do not remain empty. For years, the policy of those who obey the orders of their political masters has been to steer to a county council home anyone who applies for or needs to go into residential care, despite the fact that it is cheaper and often more convenient to go into a private home. People are deliberately not informed of their rights of choice. It is interesting to see how the Labour party in power operates against individual constituent's interests.

For example, a constituent of mine who is 91 years of age was moved into a home outside his home town. As a result, he could not be visited, he was grossly unhappy and he asked to be moved back. I am still waiting to hear from the county social services department whether he can be moved back into the town in which he has lived for many years. There are two private homes, the costs of which are certainly not as high as those of the county homes, yet he is refused the choice that he wants: to stay in the town in which he, his friends and family have lived. That is the choice that the Labour county council has given him. It ill behoves anyone to defend such a policy when it leads to a certain amount of personal unhappiness for elderly people.

The refusal to give people choice is unfair, but the practical matter of cost must also be considered. It has been estimated that about 14,000 people are in residential care in my county. Private home owners claim that they could save up to £100 a week on the true costs of running the county homes. The total saving would amount to £7 million. If it were only half true, the saving would still be more than £3 million and the county council could have avoided some of the cuts that it has had to make this year and in previous years.

I understand that a council cannot suddenly change from putting most people into county homes to putting no one into county homes. A gradual alteration in policy and a rundown in the present structure would be necessary. My criticism is that the county council has known for at least three years of the difficulties that it was going to have. It made no attempt to make major changes to its policy, so it is guilty of mismanaging the social service needs of the people of Northamptonshire. It has restricted choice and undertaken unnecessary over-spending. It has therefore failed to change its policies and to live within its budget.

The effect is that the county council has had to make cuts elsewhere—in other social services—which, if it had followed a sensible policy, would not have been necessary. Other people in Northamptonshire have suffered unnecessarily because of the service reductions that the county council has had to make and because of its failures. I am therefore entitled to accuse its leadership not just of being hypocritical and of pursuing party dogma but of not getting down to managing the council's resources properly.

The county council has decided that, for 1997–98, there will be no increase in the amount paid per pupil to school governors and managers—a real cut in funding. It has already refused in the current year to pass on to school managers and governors about £2 million that the Government had allowed it in last year's settlement. To reduce the amount in real terms and to make no allowance whatever for a teachers' pay increase next year clearly passes the buck from the county council to school governing bodies. Despite that, the local education authority still keeps about 25 per cent. of total education income.

This year, the county council has decided to cut hard in many regions because, according to the blurb from county hall, the position is so serious, but the truth is that the county council, or the LEA, are acting too late. They are just making matters worse than they might have been if they had tackled the problems earlier.

I understand that my friends on the county council who represent the Conservative cause will present an alternative budget that would increase the moneys given per pupil to schools. That will be an excellent proposal because it will help schools to fund the teachers' pay increase. I commend that alternative budget to the Labour party and to the Liberal Democrats and hope only that they will vote for it.

This year, budgets will of course be tight. All along I have felt that the only proper solution to the difficulties faced by many counties is to have a fairer calculation, but I was slightly taken aback, as I am sure other hon. Members were, by the emphatic and ringing declaration by the hon. Member for Holborn and St. Pancras (Mr. Dobson) that there was going to be root-and-branch reform of local government financing. I do not detect any great enthusiasm among local government officers or councillors, no matter which party they belong to, for another root-and-branch reform. Such a statement, with the only justification for the reform being that it will be fairer, tells us only that some sort of revolution will take place in local government financing. We are told, however, that nothing will happen for the next 12 months. If the reform is going to be that radical, it will take rather more than 12 months to introduce a totally new system of local government financing. I surmise that what we have been told is going to be radical will be just another sort of tinkering with the present system.

Whatever the reform is, those words from the hon. Member for Holborn and St. Pancras should send a chill down the spine of every councillor throughout Britain. He claimed that the Labour party had a clear policy, but instead we have a threat of great change when most people in local government want a period of stability. They want the unfairnesses taken out, but they do not want another new system of local government finance. There is no demand for it in the country or in local government. It is just one of those pipedreams that the Labour party has invented, but, as with all its pipedreams, it will not tell us how it is going to pay for it.

6.17 pm

Mr. Jon Trickett (Hemsworth)

I think that I heard the hon. Member for Wellingborough (Sir P. Fry) refer to the current settlement as tight. In Wakefield, the region that I represent, it is far more than tight; it is devastating. It will devastate local communities. As you are no doubt aware, Mr. Deputy Speaker, even as we hold this debate, local councils are meeting to discuss precisely how to cope with the financial crisis. On the reform of local government finance, the settlement may be tight, but what is unacceptable is that it is inequitable. It is precisely that which is at the core of the Labour party's charges against the current settlement.

I understand that the matter was last debated in the House on 31 January last year. Unfortunately, I missed that debate because I was happily campaigning in the Hemsworth constituency waiting for the result that would be announced the following day. It was—

Mr. Mike Hall (Warrington, South)

Very cold.

Mr. Trickett

It was very cold. I recently referred to that in Committee. I should like to share these comments with all hon. Members. It was so cold that parts of my anatomy—certain extremities—have still not defrosted, at least according to my wife.

Although I could not be in the House on that day, I am familiar to some extent with the secrets and mysteries of local government finance, as I was leader of Leeds city council for seven years and, before that, I sat on the management team for three years. Over a period of 10 years, I was responsible for discussing the expenditure of about £10 billion at today's prices. During those years, I learnt a great deal about local government; indeed, I became fondly attached to local government. I was able to witness at first hand the intelligence, integrity and entrepreneurial skills that many people brought to local government. The commitment to public service and civic values was, above all things, what inspired the vast majority of practitioners in local government.

During that period, local government quite literally had dozens of Acts of Parliament or legal enactments of one sort or another imposed on it by this Conservative Government—all of which, without exception, were aimed at constraining the ability of local government to serve its communities. I have every sympathy with local government because of the Government's record and, in particular, the current revenue support grant settlement, which I would describe as both misleading and perverse. I understand that it is not parliamentary to use the word "dishonest" when referring to hon. Members, but I hope that it is not unparliamentary to describe a policy as dishonest—if it is, I withdraw the word immediately and shall return to using the word "misleading".

It is misleading, if not downright dishonest, to reduce national taxation while squeezing local government—thereby bringing about an increase in local taxation and, therefore, an aggregate increase in the overall taxation burden. The Government have made a number of misleading statements. For example, they constantly claim—although it does not fool anybody—that the total increase in local authority spending is 2.5 per cent. However, local government reorganisation must be paid for out of that money, as well as additional policing and new community care clients. In addition, account must be taken of the demographic growth factors in education. Therefore, the spending increase is more like 1.5 per cent. There are further pressures on local government spending, such as inflation and a range of pay settlements that are outside the scope of local authority control.

The truth is that, whatever they say, the Government are effectively setting council tax levels. The scope for local action or creativity by local councillors and officials has all but disappeared. During the seven years that I was leader of my council, we experienced three different tax systems for local government—the old rating system; the ill-fated, disastrous and reactionary poll tax; and, now, council tax. The one that has finally put a straitjacket on local government is the council tax, with all the legal ramifications of capping and so on.

The settlement will cause real problems for local government. I want to talk about the national position before dealing with Wakefield in particular. The Department of Transport has admitted that the £146 million allocation for local road maintenance is inadequate if councils are to comply with the Department's code of practice, let alone with commitments under the citizens charter. The Office for Standards in Education, the Government body that regulates education, has said that standards in more than 5,000 schools have been adversely affected by book or equipment shortages. The British Geriatrics Society has said that shortfalls in social services funding are a significant contributory factor in NHS bed blocking. Serious problems face local government, which impact on local councils, on communities and, ultimately, on individuals throughout the length and breadth of the country.

I want now to deal with the problems facing the authorities that are described as the Webber-Craig authorities, of which Wakefield is one. If the settlement is severe nationally, the formula by which the RSG is distributed is perverse. It is that perversity which lies at the core of many of the problems facing authorities such as Wakefield and others in the Webber-Craig basket.

It has already been said that the formula under which the standard spending assessment is distributed is wholly perverse and does not have a semblance of fairness or equity about it, as can be shown times without number throughout the country. The index of social conditions tries to identify the amount of deprivation within an authority. It puts Wakefield as the 232nd most deprived council area out of 358. Why does Wakefield suffer so badly under the RSG distribution system? Why is Wakefield's SSA per head of population only just over £703, when the average for the whole of England is £37 more?

Everyone is aware of the extent of deprivation in the Wakefield area, so how can Wakefield end up £12 million short compared with the average? Indeed, if Wakefield were raised to the average of metropolitan districts, it would receive £20 million in additional resources. That would mean a great deal in, for example, Hemsworth—traditionally a solid mining area which, over the centuries, has contributed to the wealth of the nation. Now, sadly, it faces severe deprivation because of the closure of the mines.

Mr. David Hinchliffe (Wakefield)

My hon. Friend is making an important point. During the past 15 years, Wakefield has lost 20,000 mining-related jobs, yet there appears to be no means within the mechanism for calculating the revenue support grant to take account of the efforts that the local authority has made on economic regeneration. That anomaly in the current arrangements affects my hon. Friend's constituency as well.

Mr. Trickett

My hon. Friend makes a telling and important point. A range of indices is used within the calculations, some of which are given far too much weight, while others are almost entirely ignored. For example, the devastating impact of the closure of mines on the local economic and social infrastructure should be taken into account.

I have been trying to illustrate the perversity in the way in which the formula operates. Why does Wakefield receive £2,536 per pupil when Wandsworth receives £3,551—a differential of about £1,000 per child? Perhaps we should worry about a system that puts a price on the head of a child. It is worrying to think that a child in Wandsworth is somehow considered to be worth £1,000 or 40 per cent. more than a child—or any other individual human being—living in Wakefield. It is a disgraceful system. How can it be justified, morally or otherwise?

Mr. Curry

I should like to pursue the hon. Gentleman's point. Is he saying that the amount per child should be the same across the country, or is he saying that he accepts that it should be different, but that the differential is too wide? It is a very important point. Does he accept, for example, that educating a population with a large ethnic minority group costs more? It is important to know exactly where he stands. It is easy to remark, "We get less, so it is unfair." In that differentiation, he must spell out what he thinks are the bounds of fairness.

Mr. Trickett

I thank the Minister for raising that issue. There are two or three issues to consider in the way in which the SSA system works, and the first is the system's obscurity. It is difficult for lay individuals, elected officials, hon. Members and, undoubtedly, Ministers to understand precisely how the figures are derived. When one analyses them, in many cases, it is difficult to justify the weight given to certain factors. Ethnicity is a difficult example, and it could bear further examination. I do not believe that an individual should be rewarded by additional funding under the SSA simply by virtue of his or her ethnicity. Funding should depend purely on a child's individual characteristics. Ethnicity illustrates the weaknesses of the SSA system.

I was asked about differentials. I find it very difficult to understand how a child in any area can possibly be worth £1,000—or about 40 per cent.—more to one local education authority than to another. The differential is large, and it will take some explaining. Human beings have different requirements and need different educational inputs, but it is difficult to understand how one child can be worth £1,000 more of Government money.

Mr. Clifton-Brown

I thank the hon. Gentleman for allowing me to intervene, which I do in a constructive manner. The Environment Committee—an all-party Committee—spent a great deal of time examining the current SSA system. We concluded, on the basis of all the evidence that we heard—we heard evidence from all the experts—that, although the system was not perfect, it was the best yet devised. Today I have heard much criticism of the system from the hon. Gentleman and from his colleagues, but none of them has been able constructively to tell the House how they would reform it so that it is fair to all councils.

Mr. Trickett

It seems to me, as the new boy, that the duty of the Opposition is to oppose, and not necessarily to make detailed proposals—at least not at this stage. It is up to the Government to propose a system, to live with the consequences and to face the Chamber's probing.

Another matter that I should mention in reply to the Minister's intervention is differentials between affluent and deprived areas. Wandsworth and Westminster, for example, are manifestly more prosperous than Wakefield. In children's social services, however, Wakefield receives £112 SSA per resident child aged 0 to 17 years, whereas Westminster—hon. Members may be astonished to learn—receives £554, which is almost 500 per cent. more. How can that possibly be justified, even if it were not manifestly obvious that Wakefield's needs are at least as great as those of Westminster?

The way in which all the factors are aggregated compounds the insult to the authorities forming the Webber-Craig group. If Wakefield were to receive per head the same SSA and RSG as Westminster, today a Labour group meeting would not be considering £15 million in cuts and a 9 per cent. council tax increase. If it were to receive the same amounts, we would be facing no cuts and there would be an £825 refund to every household.

Mr. Robert G. Hughes

Is that the policy that the hon. Gentleman has advocated?

Mr. Trickett

I shall not give way again, because that was an extremely silly point. The point that I am trying to make—I do not think that the hon. Gentleman is listening—is that the system is operating in an entirely perverse manner. How can a system allow such a result? If Wakefield were to receive the same per capita levels of RSG and SSA as Westminster, we could give away £825 to every household in the district and provide current service levels. That demonstrates the problem.

Mr. Hughes

Will the hon. Gentleman give way?

Mr. Trickett

I will not give way again, because the hon. Gentleman's previous point was so absurd that I can only presume that he will try to make another. I should also make some progress, as one of my hon. Friends on the Opposition Front Bench told me that I should not speak for more than 10 minutes. I apologise to hon. Members who are waiting to speak.

I should like to make one final point on the system's perversity. An index is used in social services which shows money allocated for children at risk, and one of the factors is the number of homeless households comprising a child and pregnant woman. In the past year in Wakefield, 26 individuals in that category have been housed. However, the consequence of that efficient management of resources and humanitarian attempt to get people back into housing has been an SSA reduction of almost half a million pounds. It is a bizarre situation, when efficiency and humanity in housing homeless women have been rewarded by cuts and vicious attacks on the authority.

Wakefield district, because of a perverse RSG settlement, might have to impose a 9.21 per cent. increase—which is £50 per household, or £1 per person per week—in council tax and £15 million in cuts. Hundreds of jobs are at risk, and individuals and families across the district are living in fear of what the council might decide. However, no one will make the mistake of attributing blame to Wakefield council, because the cuts are widely understood to be the result of central Government attacks.

6.38 pm

Sir Irvine Patnick (Sheffield, Hallam)

I follow the hon. Member for Hemsworth (Mr. Trickett) and note that many hon. Members from Yorkshire constituencies are present. With you in the Chair, Mr. Deputy Speaker, at least what we are saying will be understood.

As my hon. Friend the Minister will anticipate, I am still concerned about the funding for supertram. I have mentioned the issue before and I shall mention it again. I am convinced that, if the problems with supertram were remedied, it would assist Sheffield with its funding.

The council summons records the treasurer's report on 4 December that, Government grant to Sheffield has actually gone down in cash terms by £2.8 million and the Council Tax is likely to have to be increased at the capped level by 8.1 per cent. Since then, he has recast the figure, and it could be lower.

Over the years, Sheffield city council has compared itself with many cities. There is huge rivalry—as you are well aware, Mr. Deputy Speaker—between Sheffield and Leeds. Sheffield used to compare its funding with Leeds, taking into account facilities such as television centres. As soon as Leeds received less grant than Sheffield, the council moved its sights. I do not know how the council could have done this, but it then looked at Lancashire and started comparing itself with, of all places, Manchester. I thought that those on the council had taken leave of their senses. All along, Sheffield has looked around for a council that is receiving more grant and compared itself with that council.

The council summons gives the city treasurer's forecast that the city council will be £3.8 million overspent on its 1996–97 budget. As a result, it has put a stop to all non-essential expenditure, including staff overtime and many other items.

I read through the council summons report of the meeting on 29 January. It was like all my yesterdays again. Sheffield city council still carries on doing its great things. It has increased the size of the council summons, which is now up to 935 pages. It still has the attitude of a spend, spend, spend council.

As many hon. Members from Yorkshire will know, Sheffield city council used to have its own defence policy, its own foreign policy and its own constitutional policy. From my reading of the council summons, it seems that not a lot has changed.

This year, the council will have written off a further £411,000 of its housing committee debts—that is the amount of rent that it has been unable to collect. Once upon a time, the debt stood at £10 million. I have not had an opportunity to check the latest figure. In addition, it is still owed a lot of council tax and community charge.

I remember looking through the invoices not paid by the county council when I was deputy chairman of the South Yorkshire residuary body. I discovered that, in the 1980s, there were still outstanding unpaid debts from 1972–74, when the council was set up. The figures were shown in the accounts every year. I frequently wondered whether the money would have been forthcoming if the council had sold those debts. History will never let me know.

The council summons also shows that it let 12 contracts for housing maintenance. One of the organisations that weighed in with a tender was, of course, the Sheffield works department. The value of the works—painting, repairs and heating maintenance—was £9.45 million. A private contractor submitted a lower tender. There is a lovely piece of legalese in the council summons, referring to the quality criteria weightings for capability assessment, systems procedures. Council values/flexibility and user interface upon which the tenders have been evaluated and the quality points scored by the two lowest tenderers". It came to pass that those tenderers were the works department and a private contractor. There are no prizes for guessing who was awarded the contract. Just in case it is not clear, the contract went to the works department.

What does that say about how Sheffield city council works? It had design fees for a school estimated to be £50,000 on a contract of £275,000, with a Government borrowing approval of £177,000, but the £50,000 went up to £65,000 and the £275,000 went up to £343,143.

Many Opposition Members have made much of Westminster. Coming from Sheffield, I find many differences in Westminster: refuse collection here is done by private contractors; street repairs are done by private contractors; road sweeping is done by private contractors. Sheffield had to be dragged, kicking and screaming, to bring such policies in. Road sweeping in Sheffield is still done by the local authority, whatever it wants to call itself, as is refuse collection.

I have listened to what Labour Members have said. If they think that the settlement is inadequate, they should provide some figures—such figures have been non-existent—on how much they would increase funding, and admit to the tax implications of that approach. Councils make decisions that determine the level of council tax. That is shown by the huge variations between bills. On average, band for band, Conservative councils cost nearly 50 per cent. less than Labour councils in 1996–97.

I have heard nothing from the Opposition about how they think the Government should change their policy. In Sheffield, we carry on in our own sweet way. We have the regional assembly. As I have mentioned to the House before, suddenly, funding was found for that.

The Labour party is trying to reassure everybody about what it will do. The hon. Member for Holborn and St. Pancras (Mr. Dobson) said on BBC news on 6 January this year: Councils are making their budgets at the moment and they're entitled to know where they stand. And I've made it quite clear that whatever settlement the Government forces through the House of Commons at the end of this month"— I presume that that means today— will apply for the coming year—and that, of course, includes the capping limits which the Government has set.

Mr. Dobson

Spot on.

Sir Irvine Patnick

Pardon?

Mr. Dobson

Spot on.

Sir Irvine Patnick

I am sorry. I thought that I was going to have an aberration. The jokes have been the same, but there has been no new policy. I am sure that the hon. Member for Holborn and St. Pancras will not mind me saying that he has increased his volume of delivery.

The Leader of the Opposition, the right hon. Member for Sedgefield (Mr. Blair), said: You may have heard Frank Dobson say a couple of nights ago to local government: 'You have to work within the existing spending limits.' We could not be clearer about this, and if there are any proposals at all they will be made clear to people, but nothing in this programme implies rises in personal taxation. As my right hon. Friend the Secretary of State remarked, the shadow Chancellor, the right hon. Member for Dunfermline, East (Mr. Brown), has said similar things.

A new Labour Government would mean higher council taxes and higher council debts as a result of Labour's commitment to allow councils to spend their capital receipts, which are currently set aside to offset council debt. We never hear in the Chamber about the fact that, because councils have capital receipts, they are reducing council debts. We just hear capital receipts talked about as a separate chunk of money which should be available to councils.

Across the country, Labour councillors have been criticising the amount that they will get from the Government next year, yet before the settlement, the chairmen of the Labour-dominated local government associations called for an increase in local authority spending of 5.1 per cent., which works out at £2.3 billion. That is a modest figure, so they advise me.

A survey conducted by the Sunday Times on 28 April 1996 showed that four out of five Labour council leaders hoped that a Labour Government would increase the money that councils could spend. Of the 80 council leaders questioned, 46 said that their authority would have spent more in the current year if it had been allowed to do so by the Government. The total amount required by the 49 leaders who were prepared to say how much they needed would mean an extra tax bill of almost £500 million.

The Liberal Democrats are not the angels they would have us believe. We heard nothing from the hon. Member for Newbury (Mr. Rendel) about what the Liberal Democrats would do about council tax. They confirmed in their "Alternative Budget" that they are the party of high taxation. In that document, they restated their intention to put a penny on income tax if they were in government, which would cost £12 a month for people on average male earnings. They announced their intention to introduce a higher rate of income tax of 50 per cent. on incomes above £100,000 and to introduce a new carbon tax which, they admitted, would cost everyone a "great deal of money".

One thing that becomes clear from the council summons for this year—this great book—is that the Liberal Democrats are fiddling while the city burns. While the city council was juggling away to balance the books in 1996–97 and setting a budget for 1997–98, Liberal Democrat councillors proposed a motion for the council minutes, calling on the city council to support the replacement of the House of Lords by a democratically elected second chamber … establishment of democratic parliaments in Scotland and Wales … devolution of power to the regions and communities of Britain", and the introduction of "fair voting" and a "Freedom of Information Act". As I said earlier, Sheffield city council looked at foreign policy and the constitution. Years on, councillors are still doing that.

A confidential internal review of Liberal Democrat policy, "Towards 1996"—it was so confidential that it was leaked to The Daily Telegraph—contains a number of insights into the Liberal Democrat approach to finance. It admits that the Liberal Democrats are a "high tax party" and suggests that they should not be prevented from stating … strong principled support for an issue, just because it would unbalance the books. The Liberal Democrats just want to throw money at education. That is a regressive party because its education policies are designed merely to thwart and dismantle Conservative reforms.

The Audit Commission, in its report "Paying the Piper" which was published on 6 January 1995, highlights clearly the areas where further efficiency savings in local government can be made. It says that 60 per cent. of council expenditure is on staff, yet its study of non-manual staff has found that few authorities have a consistent and coherent approach to three crucial questions: How many staff do they need? How much should they be paid? How can they get the best from their staff? I want to put on the record the words of Councillor Bower, the leader of Sheffield city council. He said: There is a great deal we can do with a budget of £600 million a year, and we ought to be doing it better than we currently are. He was speaking at a meeting of the Sheffield chamber of commerce, and he added: The Council probably has the capacity to make enormous improvements in the services it currently operates, with the resources it currently has. That was reported in The Sheffield Star of 17 December 1996.

Economies can be made in council spending. However, I finish where I started—if the funding for supertram can be sorted out by the Minister, the extra cash that would go to Rotherham, Barnsley, Doncaster and, above all, Sheffield would be gratefully received.

6.55 pm

Ms Jean Corston (Bristol, East)

I welcome the opportunity to talk about the funding crisis facing the city of Bristol. For this financial year, Bristol city council had to reduce its budget by £20 million to £310.1 million just to stay within the capping limit set by the Government; half the £20 million of cuts have yet to be implemented. Just to stay within the capping limit for 1997–98, the council will have to reduce its budget by a further £16 million.

It is important to remember that Bristol gets less Government financial assistance per head of population than any comparable city in England. Indeed, when I quoted some of the figures to colleagues who come from other metropolitan and large urban authorities, they thought that I must have made a mistake. There is no mistake. Bristol gets £538 per head of population compared with £747 in Birmingham, £835 in Manchester and £741 in Leicester. Bristol is, of course, an education authority. Next year's contribution from the Government is set to fall to £530 per head, so Bristol city council will remain the lowest spender per head of all the big urban authorities while we have the third highest council tax in England.

Bristol city council has made representations on the area cost adjustment—the Under-Secretary seems to think that this is funny—to the Minister for Local Government, Housing and Urban Regeneration. During the time in which I have been a Member of Parliament, Bristol—this was also true of the old county of Avon—has sent annual deputations to the Department of the Environment pointing out that Bristol is a high-cost area in a low-cost region and that the area cost adjustment is manifestly unfair. The Government must have accepted that there was some unfairness in the area cost adjustment, because they would not otherwise have asked Professor Elliot of Aberdeen university to conduct a review. If that review were implemented, Bristol would get an extra £11 million a year.

In Bristol, the uniform business rate is beginning to be called the missing millions. The Government say that they are against nationalisation, but they seem to have nationalised the business rate. Many people in Bristol are angry about the fact that £15 million of the money that Bristol businesses pay in their business rate to the city goes straight to Whitehall and is distributed by the Government to other councils. We were astonished to discover that in the uniform business rate regime Bristol lost, while towns such as Tewkesbury gained considerable sums. Nobody can say that the costs of running Tewkesbury are comparatively greater than the costs of running Bristol.

Bristol also had to face the costs of reorganisation when it became a unitary authority earlier this year. The Government have not fully recognised those costs.

Bristol was proud of its record as an education authority until local government reorganisation in the early 1970s. We have an excellent nursery education system and there are seven nursery schools in my constituency. There is none in the entire county of Gloucestershire. Bristol is pioneering the idea of community schools which stay open from early in the morning until late at night. They attract people of all ages from all sections of the community and reinforce the concepts of lifelong learning and the learning family. That good work will be threatened, because the 1997–98 base budget is £17 million more than the Government consider necessary. They then have the cheek to say that Bristol is getting more money for education.

The allowed increase in education—1.8 per cent.—will not cover inflation, let alone the teachers' pay award. This year, Bristol will have the first ever cut in its schools' budget, which will be reduced by 1 per cent. It is likely to be followed next year by a cut of between 3 and 5 per cent. The city of Bristol and Avon county council have always protected the aggregated schools budget, which is why none of our schools considered opting out.

It is all a far cry from Westminster. As my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said, we are talking about unfairness. If Bristol received the same funding as Westminster, it could reduce the council tax by £484 or employ an extra 1,531 teachers. This year, Bristol may have to sack 450 teachers. If it received the same funding as Westminster, Gloucestershire could have 3,091 extra teachers or reduce the council tax by £831 in the city of Gloucester and £612 in the Forest of Dean. I am amazed that Tory Members can troop into the Lobby to support a local authority settlement that causes such damage to their own areas.

Mr. Clifton-Brown

The hon. Lady may be deceiving my electors in Gloucestershire. Opposition Front Benchers have already agreed not to increase expenditure next year, the year after and the year after that. If the hon. Lady is proposing an increase in overall expenditure for local authorities, will she please tell us where the money will come from?

Ms Corston

It is amazing that Conservative Members are increasingly behaving as if they were in opposition. We are debating a settlement that has been imposed by the Government and their record of 18 years. Let the hon. Gentleman defend that to the people of Gloucestershire; I do not have to do that.

Mr. Clifton-Brown

Will the hon. Lady give way?

Ms Corston

No. I have given way to the hon. Gentleman and he can make his own speech later.

Bristol also has regional responsibilities. Bristol council tax payers are expected to provide cultural, arts, leisure, recreational and tourist facilities and regional shopping for people who live in the surrounding area—those people do not have to make any contribution; Bristol council tax payers have to pay the bill.

On 10 January, there was a conference at the Council house in Bristol to enable the city council to explain to representatives from different sectors of the community the depth of the funding crisis facing the city. The chairman of Bristol 2000 asked: Why is the Government behaving so illogically towards Bristol? A head teacher said: The only remaining cuts are of people. The chief executive of the Bristol chamber for commerce and initiative said that there was an obvious disparity in funding and, although there were exemplary partnerships between the public and private sectors in Bristol, the private sector could not possibly fill the gap.

The conference debunked many of the myths about Bristol which had been put about by Tories in and outside the city in respect of money being wasted on bureaucracy—an accusation that did not stick—and collection rates for the council tax. The latter story was put about by the Chief Secretary to the Treasury, the right hon. Member for Bristol, West (Mr. Waldegrave), but it has been demonstrated that Bristol's council tax collection rate is only 2 per cent. below the national average. The most amazing aspect is that the architect of the two budgets that have caused Bristol's problems is none other than that right hon. Gentleman. No one would deny him his place in the Cabinet or the opportunity to sit on the Government Front Bench, but he should stop and consider that his prime duty is to the people of Bristol, who feel angry at the way in which he has sought to evade responsibility.

The right hon. Member for Bristol, West attended the conference on 10 January, as I did, and it was extraordinary that he did not take the opportunity to explain or defend the Government's financial settlement for Bristol and other local authorities. I gather that he is now writing to constituents acknowledging that Bristol is hard done by—but it was done by him.

The Tories have grown used to pushing certain buttons in respect of local government. They talk about high-spending Labour local authorities, but that is a bit rich, considering that people have rejected Tory authorities wholesale. The Tories can no longer rely on that. The local press reaction in Bristol was not what they expected. The leading article in the Bristol Evening Post on 13 January said: making final choices will not be easy. It acknowledged that no one will envy the councillors the tough choices they must make. and asked: How do you choose between employing fewer teachers and closing an old folks' home? That was a sympathetic and understanding response.

The choices facing the city of Bristol are: axing up to 450 teaching posts, closing up to three homes for elderly persons, and closing youth clubs and up to two child and family support centres. This year's settlement will inflict real damage and harm on one of our foremost cities. Not a single alternative proposal has come from local Tories.

We cannot put children on a waiting list for their education in the same way as patients are on waiting lists for hip replacements. Children must have their education tomorrow, this term and this year. They cannot wait another two or three years for things to get better. Parents in Bristol want an assurance here and now that they will be able to provide the best for their children. Many of them have written to me saying, "We shall have a Labour Government in May, so things can change on 2 May, can't they?" However, the measures that we are debating now will take effect next year. Local authorities have to set their budgets by the beginning of March, so any changes will not come through for a couple of years.

We have such a thing as local democracy. Many of my hon. Friends and I have been astonished at the Government's denial of local democracy and accountability and the overcentralisation of power. It was once explained to me somewhat patronisingly by a Conservative Member, who said, "We do not have to take quite so much notice of local government as you suggest, because more people vote for us than vote for them. Only a few hundred people vote for local councillors, whereas tens of thousands of people vote for us." That seemed to be a pretty bogus argument, because local councils and local government have the same political legitimacy as we do and the way in which the Government have treated local authorities in general, and my city of Bristol in particular, is one reason why at the next general election there will be no Conservative Members left in our city.

7.9 pm

Mr. Robert G. Hughes (Harrow, West)

Normally, one thanks Madam Speaker or the Deputy Speaker for calling one early in a debate. I am glad that I have not been called too early in this debate, because I have been able to listen with interest to various voices on the Opposition Benches. Opposition Members have been very good, followed their brief, kept their heads down, avoided the arguments and banged on about points made by Labour party researchers, which is very commendable from their party's point of view.

Such speeches have been interesting, because Labour Members have been trying to peddle points that are incompatible with each other. They have been trying to tell people that, if there were a Labour Government—the hon. Friend the Member for Bristol, East (Ms Corston) said it too—they could do nothing for a couple of years because the budgets would have been set by the councils. Let us be clear: that is simply not true.

If there were a Labour Government and they wanted to increase the money going to local authorities, they could do it in a new Budget. They could make extra money available, change the regulations, change the capping levels and give more spending and borrowing permission. Labour Members recognise, however, that, if they say all that, the financial writers and people who understand the economy will rumble what the Labour party is about. Labour Members recognise that they cannot breathe a word of all that before the election. If the Labour party wants to pretend to be a tax-cutting party—

Ms Corston

What about the Government's policy?

Mr. Hughes

With the greatest of respect, the hon. Lady spent most of her speech talking about Conservative Members. It is therefore perfectly reasonable for me to talk about Labour policy. I shall come to Conservative matters in a moment. [Interruption.] Oh, God, I see that twittering Hilary is back just in time for my speech.

Mr. Deputy Speaker)

Order. The hon. Gentleman should retract what he has just said. That is not the type of language that should be used in the House.

Mr. Hughes

I should have said the twittering hon. Member for North-West Durham (Ms Armstrong).

The Labour party wants us to believe that it is financially responsible and would not increase taxes, yet we get all the talk about Westminster. Why do Labour Members go on and on about Westminster? It is because they want us and their constituents to believe that what happens is all a political fix—that Westminster and Wandsworth are given all the extra money because they are Conservative authorities. Why do Labour Members not look at the figures? I see that all the Labour Members have briefing notes in lovely Labour party yellow.

Ms Corston

I have the report.

Mr. Hughes

If the hon. Lady had read it—it is a rather nice yellow—she would have the same figures as me.

Mr. Dobson

The hon. Gentleman is a clown.

Mr. Hughes

Being called a clown by the hon. Gentleman is praise indeed.

Mr. Hardy

Would the hon. Gentleman care to comment on his calculation? He will agree that roughly two thirds of local authority expenditure goes on education. If the proportion of Westminster's population of children in school is half that in Rotherham, why does Westminster get between four and five times per head more from central Government?

Mr. Hughes

Obviously, I do not know, because I do not know the hon. Gentleman's constituency well. [Interruption.] If the hon. Gentleman wants to intervene again, I shall let him do so in a moment. The point is, why does Islington get much more than Westminster? If I represented Westminster or Wandsworth, I would demand to know why my council was not getting as much as Hackney, Tower Hamlets or Islington. I do not think that anybody in the House would disagree that the cost of running services in inner London is higher than in the rest of the country. Why does Westminster, which is so often quoted by the Labour party, come only about halfway down the league table of inner-London authorities? There are only 12 authorities in inner London, yet Westminster is sixth in the table.

Why does the Labour party bang on about Westminster? It is because Westminster is Conservative controlled and Labour Members can make a cheap political point, and because they want people to believe that, were there ever to be a Labour Government, somehow more money would be given to each of their Labour local authorities, just like more money is given to Westminster. There can be no other reason for banging on about the same point speech after speech. They do so simply to mislead people into thinking that more money will be forthcoming.

The hon. Member for Holborn and St. Pancras (Mr. Dobson) has told us that there would not be any more money. His speech was designed for the shadow Chancellor and the City. We are, however, told that more money would go to some local authorities because the way in which the grants were allocated would be changed. What the hon. Gentleman omits to tell people is that calculations must be made on the basis of the most recent information in the Secretary of State's hands and that, if the Secretary of State does not use it, that Secretary of State will be up for judicial review.

If the system were rigged as the Labour party claims, and it were based on the Secretary of State's political will, it would be inconceivable that Labour local authorities would not try for a judicial review and win it. If the money were there, they would go after it. Many of us, on both sides of the House, who have served in local government know that. It is notable that authorities have not taken such an opportunity. Why have they not done so? It is because they know that what the hon. Member for Holborn and St. Pancras says is complete nonsense. They know that, were there to be a Labour Government, the formula would have to be of the same sort, however it was tinkered with, and that such a formula would inevitably produce a system that could be parodied as unfair.

Hon. Members who probably have almost no knowledge of Wandsworth or Westminster ask how such areas can possibly be more deprived than others, especially the ones that they represent. They do not know whether such areas are more deprived. Such a judgment can be based only on the proper indices. If the indices were not the correct ones, they could not have been used because the Government would not have been able to sustain them.

Mr. Harry Barnes (North-East Derbyshire)

Does the hon. Gentleman accept the enhanced population figures with which my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) dealt?

The other side of the coin of Westminster's population being swollen by 81 per cent. and being added to the calculation due to people entering the area to work is that areas such as north-east Derbyshire lose 18 per cent. of their population under the calculation because people work outside them. North-east Derbyshire therefore loses grants for that 18 per cent.

A sensible and reasonably weighted enhanced population figure would mean that Westminster would receive much less grant and areas such as north-east Derbyshire much more. Such a methodology for the standard spending assessment would be much more reasonable.

Mr. Hughes

There are, of course, two sides to each element. In a sense, it is swings and roundabouts—sometimes one loses, sometimes one wins. Such arguments have to be put by individual local authorities. Indeed, local authorities have to try to persuade their political friends that such changes should be made.

I turn to one element that affects the borough of Harrow in my constituency: the area cost adjustment, of which much has been made in this debate. What happened with the Association of London Government? It was a Labour party stitch-up. The Labour party in central London did not, of course, want to lose the money that it would inevitably lose if there were a change in the area cost adjustment, as has been suggested.

What happened? Outer London Labour boroughs—not all, but some—voted with the Labour party in inner London to say that they did not want any change in the area cost adjustment and that further studies should be carried out. They did that because they wanted to maintain Labour party solidarity—not solidarity with the people in the boroughs. Their decision had nothing to do with fairness. Local government should not be run in that way. The Labour party in London voted virtually unanimously to stop a change in the area cost adjustment that would have been to the benefit of my constituents.

I wish to refer to the Liberal Democrats, for whom the hon. Member for Newbury (Mr. Rendel) made a characteristic speech. It is also characteristic that, although the Liberal Democrats bang on about these matters throughout the country, there has been one Liberal Democrat Member in the Chamber—perhaps on a shift system—to listen to or take part in the debate. The Liberal Democrats tell us that they would pay for extra services, and speak as if they were the only honest people in politics. They always refer to the extra penny on income tax that would pay for these extra services.

Even in the limited speech that we heard from the hon. Member for Newbury, we heard about the tax increase. However, that increase would not be a penny—a penny does not sound like very much. It is interesting that, when detailed opinion polls are done, people think that the Liberals are talking about just a penny more. They do not understand that the Liberals are really talking about £12 a month in extra taxation for an average wage earner. When that is explained, people are much less ready to back the Liberals' suggestion for an increase in income tax.

The hon. Member for Newbury was not talking about £12 a month, and his shopping list would amount to more like £24 or £26 a month. Add that figure to all the extra money that the Liberals want to spend in other areas—which were not mentioned tonight—and we are speaking about £30 or £40 a month in extra taxation. We can dismiss the Liberals' tricks from this debate, and I now wish to refer to my borough of Harrow.

First, I thank the Under-Secretary of State for the Environment, my hon. Friend the Member for Croydon, Central (Sir P. Beresford), for his patience in dealing with a delegation from some parties in Harrow. I am afraid to say that the matter has become so politicised by the Liberal and Labour parties in Harrow that it was impossible to have a joint delegation. As is typical of the Liberals in Harrow, so political did they want to make the matter that they did not want to consult the Members of Parliament who represent Harrow. We had to fight to find out when the delegation was visiting my hon. Friend the Under-Secretary.

Even to this day, the Liberal council has refused to give me the paper that it gave my hon. Friend the Under-Secretary in support of its argument. The council tried to fob me off with a paper that I was told was the paper presented, but I know different. All the council gave me was the crib sheet from which it was working when it spoke to my hon. Friend. I am grateful to him for seeing that delegation, and I know from the people who attended that he listened patiently to what was said.

I am also grateful to my hon. Friend the Under-Secretary for the patient way in which he has listened to the arguments from me and my hon. Friend the Member for Harrow, East (Mr. Dykes). We have sought to put to him the important point about the area cost adjustment, and—even if it is not this year—I hope that he realises that outer London needs a change in the adjustment. We have made our points to him with some force, and he has listened patiently.

Harrow has made some points about its education standard spending assessment, but even the council officers say that their argument is weak and that they are obliged to accept that the methodology of the Department is right. For example, Harrow has argued that it has lost money in education SSA because of a change in the way in which the number of income support claimants is measured. The council wants to return to the old method. I can understand that—Harrow did better under the old method.

The old method of collecting data was based on a 5 per cent. survey which showed that, in 1997–98, there would be 10,626 children of income support claimants in Harrow schools. When a 100 per cent. survey was done, it showed that the figure would be 9,726—a 3.5 per cent. reduction. That does not sound like much, but it is a significant amount of money out of Harrow's education SSA. It can hardly be argued that it would be right to return to the previous way of assessing these matters—a 5 per cent. survey—rather than using the current 100 per cent. survey. Much as I would like to see the money going back to Harrow, no one could argue logically for the use of the old methodology. There must be boroughs and councils up and down the country that gain from the new methodology and that would therefore object strongly if we were to return to a less accurate way of doing things.

This is a tight settlement for Harrow, and I do not object to that. In running the economy, the Government must take account of the fact that local authority expenditure is 25 per cent. of the whole of Government expenditure. Therefore, not controlling local authority spending would be foolish indeed. That is certainly not the way in which I or my voters would expect a Conservative Government to behave. What do we get from Harrow? We get an absolute torrent of invective from the Liberals, who do not control the council but form the largest group. They say that they have been handbagged by the Government, and they have used the word "mugged" in their newsletters. They said that they expected £22 million extra from the Government, but that was not true and it never has been true. That figure was the difference between their wish list and the money that was to be made available to them.

I pay tribute to the Liberal party, as it is a fantastic campaigning organisation. In terms of propaganda, it is second only to Goebbels. The Liberals are wonderful at getting their message across. If they would use only 1 per cent. of the energy they use in putting across their propaganda in running the finances of Harrow council properly, Harrow would be a better place today. For three years, we have suffered under a Liberal-run administration whose profligacy has been amazing.

There is a hole in the council's budget—it has had to threaten large cuts in delegated school budgets—because it has spent money on pet projects, notable among which has been the establishment of a driving centre. That is a centre where trainee drivers can go and where the highway code can be taught. It is commendable, but is it a priority? A driving centre in Harrow—which was opened when my party controlled the council—ran reasonably successfully for a number of years, but it was a huge drain on resources. When the time came to make a choice between social services and education on the one hand and keeping open the driving centre on the other, a Conservative administration in Harrow had no choice and closed the driving centre. I think that was the right decision.

When they took power, the Liberals made it a priority to reopen the driving centre. How can that possibly take priority over education? They have spent money on pet projects and ordered council officers to stop looking for savings. Everyone who has been on a council knows that, throughout the year and outside the normal budgeting process, the council has to look for sensible savings. It has to look for money that is wasted or that can be clawed back to be spent on priority areas, and that is true whether the council is run by the Labour party or the Conservatives. The Liberals have stopped council officers doing so, have spent money on pet projects and have upped their councillors' allowances to the tune of £190,000, which is a lot of money for a council. The Liberals have spent that money on other things and have a hole in their budget which is difficult to fill.

The Conservatives have not been in power in Harrow, so we have not been able to make those savings. All that we can do is to try to patch up the budget as it stands. It is clear from the Conservative alternative budget, however—the Labour and Liberal parties even tried to block debate on that, but failed because we called a special council meeting—that it is possible to maintain school budgets without any cuts, retain the vital social services threatened with cuts and make cuts in other areas. That is what a responsible council would do in Harrow. That is what anyone running the council who meant business would do.

I shall make one prediction. I do not believe that the school budgets will be cut, and I shall tell hon. Members why. Once again, the Liberals have been led up the hill by the Labour party. Whereas I may disagree with Labour party policies in Harrow, I think that Labour councillors know what they are doing. They have led the Liberals by the nose and will cut them off when they get to the top of the hill. The Labour party will then come up with a budget that will mean no cuts in school budgets. Doubtless, that will come through.

I hope that the Liberals will be left high and dry where they ought to be—exposed as a bunch of amateurs who do not know how to run a council, who are dangerous to the people of Harrow and who ought to be drummed out at the first opportunity.

7.31 pm

Mr. Jim Cousins (Newcastle upon Tyne, Central)

This is the fag end of a Parliament and of a Government. The sole remaining serious business of the Government is to make life as difficult as they can for those who will come after them to pick up their burdens.

Since the present Prime Minister became Prime Minister, we have doubled the national debt. In six years, we have borrowed the amount of money that it took 300 years of British Governments to borrow from when the national debt began to May 1979. That is an inheritance that all hon. Members who speak in such debates must bear in mind.

With respect, the hon. Member for Newbury (Mr. Rendel), who spoke for the Liberals, sought to bypass that problem, unwisely. It ought to influence all our discussions on this matter. I do not, therefore, come here from the city of Newcastle to ask for bold changes in the Government grant system from this Government. I do not even come here, as every Conservative Member who has spoken in the debate has come here, to ask for changes in the Government grant regime, welcome though those might be in some respects. All we ask in the city of Newcastle at this time—as time is running out for this Government—is a little flexibility to manage our affairs with our money and to have a sensible debate in our city about how much we think we can afford to put into our local council services.

The problems in our city are formidable. Across the city, two in five of all children are brought up in families who are dependent on income support. My predecessor tried a ludicrous stunt—trying to live for a week on the dole. In the city of Newcastle, those two in five children are not living for a week on the dole—most of them have spent a lifetime in families who are dependent on income support. That damages them, their neighbourhoods and their community.

In one small area of the west end of Newcastle, which is represented by my hon. Friend the Member for Tyne Bridge (Mr. Clelland) and myself, 1,000 children between 18 and 20 have left school and have no work. The effect on the neighbourhoods in which they live is dreadful. Their prospects are limited.

The Government have cargo culted in sums of money that are time limited over a brief period, leaving an inheritance of voluntary sector projects that are doing good work. We should have the flexibility to absorb some of those projects into the main spending of the local authority. All that we ask for is that the city council should have enough money to match the resources that it is supposed to match within the terms of the additional Government grant scheme, which the Government gave to the city only this year.

All that we ask for is a little flexibility to deal with our education problems. The Government grant assessment per child in Newcastle has changed by £35 in the past four years. It is a totally unrealistic figure. Due to the way in which the capping limits now work in Newcastle, we are contemplating spending only £2 per head more per child next year than we spent in schools four years ago. Is it any wonder that every school in the city has run out of supply cover and has mixed-year classes and that 3,000 more children are being educated in classes of more than 30 than were four years ago?

We do not ask the Government to cargo cult in more money from Government. We ask that, in the time left to them, they give us the opportunity to have a sensible debate within our city about how much more we can all afford to contribute as citizens of that city to make up that difference. That is all we ask. In the time remaining to this Government, it is not an unreasonable request.

That is the issue that we put to the Government tonight. We do not expect them to do now things that in the past 18 years they have never done, or to solve all the problems of our city that have been created in those 18 years. It is too late for them and it is now too late for us. All that we ask is that in the last few weeks of this Government, while they still have the authority of a Government, they give us the opportunity as a city to debate how much of our money we will put in. It is not much to ask. In the remaining time of this Government, surely it is a request that, even now, they might meet. It will cost them nothing.

7.37 pm

Sir Teddy Taylor (Southend, East)

The speech by the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) has been the only speech that I have enjoyed in a debate that has been appalling. In general, I try to avoid these debates because basically they are made up of a politically motivated exchange of views that are a load of rubbish and, unfortunately, one finds that the Opposition say today what the Conservative party may well say if there is a change of Government after the election. The situation is complex, with standard spending assessments, grants and capping levels. Unfortunately, it is so complex that it is possible for almost everything to be misinterpreted.

On the strict understanding that I do not single out the Opposition for blame, I must draw attention to their campaign against Westminster. If, by chance, it happened to be true that the Conservative Government have deliberately picked on Westminster and said, "We will give you a nice settlement because you happen to be a nice Conservative council," I hope that the Opposition will say why the previous Labour Government were even more generous to Westminster.

The hon. Member for North-West Durham (Ms Armstrong) is shaking her head, but I happen to have the figures. Westminster was given £487 per head, compared with £327 for Liverpool, a difference of 50 per cent.; so the last Labour Government gave Westminster 50 per cent. more than they gave the unfortunate, sad and miserable people of Liverpool. That seems a foul and filthy thing to do, but they did it.

Under the present Government, in every year since 1991, the SSA for Westminster has increased by less than the inner London average. [Interruption.] The hon. Member for Wentworth (Mr. Hardy) may shout about it, but he should consider why the last Labour Government gave Westminster 50 per cent. more than Liverpool, whereas today it gets only one third more. That is a straight fact, although I see that the hon. Member for North-West Durham wants to challenge it.

Ms Armstrong

The problem is that the Minister has written to me, after many months of my trying to get an answer, to say that the figures for the year that the hon. Gentleman has cited are not in any way comparable with the current figures for Westminster. He said: In my written answer, I pointed out that figures on a comparable basis, to facilitate year on year comparisons, are available only from 1992–93 onwards. That is the reality that the Minister had eventually to admit. We cannot compare the figures, because the calculations used to be made on a totally different basis.

Sir Teddy Taylor

I am sure that there have been many changes, but I am making a simple, basic point. Is it or is it not true that the last Labour Government gave 50 per cent. more to Westminster than to Liverpool, and that the wonderful—or miserable, depending on one's point of view—Conservative Government are giving it only one third more?

What has been happening is appalling. Labour issued figures that I know about, because my local press said, along with everyone else, that the proportion of expenditure from the council tax for Westminster was only 4 per cent., and that that was terribly unfair, when the figure for Tower Hamlets was 10 per cent. and for Lambeth 13 per cent. It seemed as though the Government were giving a big handout to Westminster while poor old Tower Hamlets and Lambeth were being hammered.

The fact, however, is that the figure cited by the Labour party was for 1994. Currently, the figure for Westminster is 14 per cent.; for Tower Hamlets, 10 per cent.; and for Lambeth, 13 per cent. I am not trying to say that the Labour and Conservative parties are comparing bad with good. When the Government have imposed a tight settlement and we all know that the Labour party would make no significant change but would apply the same tight figures if it came to power, the political gerrymandering and fiddling with figures that we have heard are almost an insult to democracy.

I am no special friend of Westminster, because I have to work there, but the plain fact is that it has a higher density of population than Hackney, Islington, Lambeth or Southwark; and a higher proportion of people from ethnic minorities, people living in overcrowded accommodation and people aged over 85 than Islington, Lambeth and Southwark. If there has been any unfairness and Westminster has been given a special privilege, that was more pronounced under a Labour Government and has grown steadily less. I challenge any Labour Member to say that that is not true.

Some of my hon. Friends have said equally unfair things about Liberal councils. I wish in all sincerity that people would appreciate that most councils, irrespective of who controls them, are trying their best to do an extremely difficult job and need encouragement, not propaganda.

I have a couple of questions for the Government which are important to me as a representative of Southend-on-Sea. Southend has accepted the great challenge of becoming a unitary borough next year. When it takes responsibility for social services, for that part of education that we still control, and for libraries and museums, there will obviously have to be a new grant settlement. We are worried, because we have listened for years to Essex county council saying that it has to subsidise Southend.

Essex county councillors have told me that they are giving us lots of money because of our special problems. Those problems include a higher than average share of unemployment; a large number of houses in multiple occupation; and a large number of elderly people. We simply want to know whether, when the grants are reviewed, Southend will get a fair deal that takes into account its special problems. Will the Minister give me some assurance that that will happen and some idea about how it will happen? I appreciate that almost every council has difficulties, but when there is a change in the system the specific problems of a place should be taken into account.

I want to make a point about the situation facing Essex county council, from which Southend will break away next year. Like many councils, Essex county council has an acute financial problem.

Mr. Cousins

Did the hon. Gentleman argue in favour of unitary status for Southend and, if so, why did not he consider those issues then?

Sir Teddy Taylor

I supported Southend becoming a unitary borough, because I always feel that it is better for decisions to be made at local level by one group of councillors, so that we do not get into the position where the borough blames the county and the county blames the borough.

I endeavoured at the time to get the issue of funding clarified by the Government. I received some helpful messages and I hope that, as the change is about to happen, they will be confirmed. That is one reason for saying these things in this debate, in which everything is on the record.

Even if Southend does not get better services, it will certainly have less confusion. Nothing is worse in local government than to have one part blaming the other for its problems. If everything is run by one council we shall at least know where responsibility lies—to the extent to which it is not assumed by central Government.

Essex county council has acute financial problems even though, unlike Southend borough, it had what appeared to be a reasonable financial settlement. The problem is that the county council has for several years been overspending by about £5 million a year on its fire budget, taking money away from other services. It is important to find out why that is so, because there could be several reasons.

One reason could be appalling inefficiency, but an investigation recently conducted by an outside authority said that the Essex fire authority was extremely efficient and appeared to live up to all the appropriate priorities and responsibilities for such departments, so that cannot be the answer.

What is the fire authority to do when suddenly faced, as at present, with a new report saying that it has to open extra fire stations? One of those is in an airport of which the Minister will be well aware—the local national airport, not far from where I live—and the other is in a town in the constituency of my right hon. Friend the Member for Braintree (Mr. Newton), where there are big fire problems.

Essex county council faces a bit of a nightmare, as it is already overspending and has been asked to provide that extra fire cover. It has proposed closing three fire stations: one in Rochford; one in Leigh-on-Sea; and the other in Canvey Island. Those proposals are considered preposterous and outrageous by the local community, because we have more people, more buildings and more calls on the fire service than we have ever had, and it seems especially unfair to choose three stations in the south of the county, where we cannot call on other fire authorities, as can be done in the north, because there is water between us and Kent. What can be done about that? Essex could have requested additional SSA from the Government before 10 January to enable it to spend a little more money. Unfortunately, it did not, but it says that it wrote to the Minister expressing its concern about spending at the end of December. It had a reply before 10 January saying that the Government would bear that point in mind.

The big problem is what to do now. Would the Government consider, in the light of the special circumstances, the council spending above its capping level? The difficulty for the county is that if it takes a gamble and spends more than its capping because of the special problem and the Government say, "Get lost," it could face a horrendous bill of £500 million and have to send new local taxation demands to all residents.

Another problem is that Essex county council seems to have had favourable financial settlements over the years. However, the fire service presents a special problem. I would like the Minister to say that he appreciates that carefully negotiated schemes have been drawn to assess priorities. However, what can be done when a service facing special demands, and which has been overspending rather wildly in recent years, has huge new demands placed on it? It would help Essex if the Minister would consider this special, acute problem and would have a word with local Members and councils—not confrontationally, but to examine what can be done.

I in no way suggest that things are necessarily better under a Conservative Government than under a Labour Government. As a Conservative, I believe that our long-term policies are better for the country, but I fear that when special local government funding problems arise, there appears to be no system for examining them and finding whether they can be solved. I hope that the Minister will examine the problem and realise that a serious issue is involved. Although none of the fire stations involved is in my constituency, I would be appalled if fire stations that served areas of increasing need had to be closed simply because an addition burden had been placed on the service. The Government may consider that because our national airport requires additional cover, something extra should be done.

I hope that we can resolve the matter without getting involved in politics. Sadly, politics has been one of the nightmares of local government. I was a councillor for five years in the city of Glasgow, where I represented the Glasgow Progressive party. It was not linked to any other party but it controlled Glasgow and things went very well. When politics came into local government, everything was blamed on the other parties and if we could not blame them, we tended to blame the Government. Whether Labour, Conservative or Liberal Democrat, most councillors endeavour to do the best job that they can for their communities.

The blatant misrepresentation of the Government's policies in the debate has been appalling. The Opposition have tried to suggest that the Government tried to resolve the matter in favour of Conservative councils. My local paper telephoned me before the debate and told me that it had been telephoned by Liverpool Labour party, which had said that if Southend-on-Sea had the same education settlement as Westminster, it could have 7,000 more teachers. That must be either true or untrue. It is either devious, horrible and miserable or wildly out of range. I told the paper that I would raise the matter in the House. I ask the Minister for his thoughts, which I shall ensure are communicated to the people of Southend. We need the truth in such matters, not the blatant distortions that we get from all parties, and especially, I am afraid, from parties in opposition.

In view of the present campaign to bash policy on Westminster, I hope that the Minister will remind people that Westminster got a far better deal under a Labour Government than it gets under this Conservative Government. The facts are clear. If there is any doubt, let hon. Members examine the figures that I have with me. I hope that the Government will try to do what is proper and correct, and tell people the truth. Truth is the secret weapon in politics. If we had more truth and less propaganda, there would be less disappointment in local government and less of a feeling that nobody understood its problems or responsibilities.

7.54 pm

Mr. Michael Clapham (Barnsley, West and Penistone)

I was interested that the hon. Member for Southend, East (Sir T. Taylor) said that local councillors are hard working and require encouragement: that is precisely what the Opposition try to give.

I shall briefly consider the national settlement and relate it to the local settlement and the implications for Barnsley. The Secretary of State announced his 1997–98 proposals for local government finance on 27 November 1996. Total central Government support is £33.185 billion. After taking account of nursery vouchers and community care, that represents a year-on-year increase of only 0.6 per cent., which is further reduced to 0.2 per cent. if police funding is removed. As my hon. Friend the Member for Hemsworth (Mr. Trickett) said, the figures are misleading and they impose a harsh settlement that will cause enormous difficulties, especially in my local authority of Barnsley.

In their submissions to the Secretary of State, the local authority associations pointed out that in the previous year, 1996–97, local authorities budgeted to spend £2.522 billion, or 5.6 per cent., more than was provided for in the actual settlement. Their assessment was that the 1997–98 settlement would require another £2.264 billion if services were to be maintained. They argued for a 9 per cent. increase. The hon. Member for Harrow, West (Mr. Hughes) said that the local authority associations have not suggested any formula changes. They may not have suggested changing the methodology, but they certainly said that some modification to the way in which the settlement was made was needed.

It is clear that the Government's settlement falls well short of what the local authority associations required. After adjustment for funding changes, the 1997–98 settlement is an increase of only 1.8 per cent. When that is further adjusted to take account of the disproportionate increase for police services, the result is a 1.5 per cent. increase for other local authority services. In real terms, it is effectively a 1 per cent. reduction. Perhaps the Minister could comment on that.

The implications for Barnsley are enormous. Its provisional standard spending assessment for 1997–98 is £156.63 million. After adjusting for changes in national funding arrangements, that is only 0.8 per cent. higher than the current year equivalent. However, in real terms, according to figures from the local metropolitan borough council treasurers department, it is a reduction of 1.7 per cent. Barnsley's increase is broadly in line with the overall metropolitan district increase of only 0.9 per cent. For SSA per head of population, we are still in 31st place in the league table of 36. Although there have been no major SSA methodology changes in 1997–98, Barnsley, which is a good provider of nursery education, has suffered as a consequence of the Secretary of State's decision to make deductions from the under-fives SSA block based on current nursery provision for four-year-olds. Although that is presumably an unintended consequence, it must be taken into consideration.

Under the proposed capping criteria for the metropolitan districts, Barnsley's 1997–98 provisional cap is £160.869 million. The cap is roughly 2.6 per cent. above SSA, compared with the 2 per cent. tolerance for the current year. However, that tolerance remains significantly lower than the metropolitan district average of 6.4 per cent. It compares particularly unfavourably with Stockport's tolerance of 12.5 per cent. The difference between Barnsley's tolerance above SSA and the metropolitan district average equates to about £6 million in budgetary terms. Perhaps the Minister will consider that point. Calculations have confirmed that the capping level will force Barnsley metropolitan authority to cut services by about £10 million this year. In the eight years since SSAs were introduced in 1990–91, Barnsley metropolitan council has been forced to cut community services by almost £60 million. Such cuts are enormously detrimental to the community.

I urge the Minister to consider the problems and the needs of Barnsley metropolitan borough council. The cut in local authority services in Barnsley is particularly devastating as it comes on top of the collapse of the coal mining industry and associated engineering business. The Minister winces—I do not know whether that is because he is reaching over or because I have mentioned the coal industry—but I assure him that Barnsley is in enormous trouble, despite its attempts to regenerate the local economy. For example, employment in Barnsley fell by 19 per cent. between 1981 and 1991, compared with a 3 per cent. increase nationally. That shows the scale of our unemployment problem.

I refer the Minister to a recent study conducted by Coopers and Lybrand and Sheffield Hallam university, which confirmed that Barnsley is one of the worst areas for unemployment in England, with high unemployment and hidden unemployment. Barnsley needs 19,000 new jobs—a 25 per cent. increase in total employment—to reduce unemployment to the national average by 2001. I think that the Minister will agree that that illustrates the dire situation facing Barnsley metropolitan borough council.

The Henley centre recently conducted a study that predicted that Barnsley's gross domestic product growth from 1995 to 2001 will be the fourth lowest in Britain. South Yorkshire's GDP is currently only 76 per cent. of the national level. With national GDP expected to grow at four times the rate of GDP in south Yorkshire, areas such as Barnsley will require a great deal more Government support than they are receiving at present.

Despite those dismal predictions, Barnsley has faced the challenge and invested heavily in regeneration. Much derelict land—in the Dearne valley, for example—has been recovered and access is afforded by the Dearne valley link road, which will eventually join the M1 at junction 36. It is predicted that that development will create 8,600 jobs in the next few years. Barnsley has a great deal of poverty. When the methodology was drawn up after the SSA review in 1993, poverty and unemployment levels were not taken into account.

Some 23 per cent. of dependent children in Barnsley live in households with no adult in employment, compared with a national average of 17 per cent. Deprivation is an obstacle to opportunity. Rather than restricting the local aumority's attempts to deal with the problem, the Government should give active assistance. Only one in three households in Barnsley receive a council tax benefit—in other words, there is little opportunity to raise additional finance through me imposition of council tax.

The measures of need in Barnsley clearly show that, in terms of unemployment, poverty and disability, the area requires greater consideration from Government than it receives through the SSA and the tolerance above SSA. Perhaps the Minister will comment on the supertram project, which the hon. Member for Sheffield, Hallam (Sir I. Patnick) mentioned and which could worsen Barnsley's economic position.

Mr. Illsley

My hon. Friend knows that, if the capital funding for the supertram project this year is not met by some Government allowance—either in terms of SSA or funding—council tax in Barnsley could increase by about £150. Will he press the Minister to say what action the Government will take to prevent supertram funding from falling on the four local authorities, including Barnsley?

Mr. Clapham

I thank my hon. Friend for his intervention. I have asked the Minister to respond to that issue. Perhaps he will tell us what assistance we can expect from the Government.

Barnsley's needs clearly show that, even if the SSA formula cannot be modified—I doubt that that could occur at this late stage—the Government must provide more financial assistance. Perhaps the Minister could meet the three Members of Parliament from Barnsley to discuss the possibility of introducing a cap allowance. That would help Barnsley metropolitan borough council to tackle the severe problems that it must face in the next few years.

8.8 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

I thank you, Mr. Deputy Speaker, for allowing me to catch your eye. As I have only about 10 minutes in which to speak, I shall not accept any interventions.

The local authority in my constituency, Gloucester county council, is Liberal dominated and nearly 100 per cent. supported by the Labour party. Every year, the Liberals and Labour say that they wish to have a budget of so many millions of pounds more than the previous budget so that existing services might be maintained. That figure is usually entirely unrealistic. When my right hon. Friend the Secretary of State gives them a more "realistic" budget, they claim that they face a cut of so many per cent. That is a bogus way of representing the real financial position.

Gloucester's standard spending assessment this year is £323 million. There is an increase on general services of 2.5 per cent., while the specific increase in spending on education is 3.6 per cent. Any company that could not find some efficiency savings in a budget of £323 million should not be in business. The Chartered Institute of Public Finance and Accountancy has calculated that labour costs account for about 60 per cent. of most local authority costs, and that if each local authority could make a saving on such costs of 5 per cent. the total saving countrywide would be more than £500 million.

I am certain that if a clever firm of management consultants examined Gloucester county council's huge budget it would find savings. Indeed, I know that it would find savings. I am almost certain that it would find many areas in which the council has increased staff.

In the short time that is available to me, I make the plea that the 3.6 per cent. that my right hon. Friend is making available to Gloucester county council for education should go directly to the schools. It would be a disgrace—it would be short-changing our children and their parents—if the extra money did not go straight to schools. I expect that it will do so but I am not certain, because Gloucestershire has one of the highest rates of top slicing of any local authority in the country.

Top slicing is the amount that each local authority withholds for central administration before moneys are made available to schools. I should like Gloucestershire's top slicing to be drastically reduced so that we might push as much money as possible directly into schools.

I spend much time visiting schools in my constituency, where I see a huge amount of dedicated work being undertaken by teachers and by parents helping those teachers. At the same time, I have seen some remarkable new building projects. The other day I visited a brand-new school in Tewkesbury, which had cost £1.5 million. That must be set against the nonsense that we hear from Opposition Members who claim that North sea oil revenue has been squandered. That assertion cannot be true when we have seen new schools, new additions to schools, new hospitals and new additions to hospitals over the past 18 years. It is a misrepresentation of the facts to say that the assets of North sea oil have been squandered.

I return to the issue of increases in council tax. As I said to the hon. Member for Holborn and St. Pancras (Mr. Dobson) in an intervention, he cannot have it both ways. Will he allow local authorities discretion in deciding by how much they should be able to raise their council tax? It is clear that they will do so if they have that discretion. The Sunday Times recently conducted a survey of 180 Labour authorities. Of 80 council leaders questioned—all 180 authorities were up against current capping limits—49 said that they wished to increase their spending over and above the Government's capping limits. It is clear that as much as Ministers relax capping limits, Labour-controlled authorities will spend up to those limits ad infinitum.

Yesterday, I was sitting next to a senior member of the Bristol chamber of trade. He wanted the uniform business rate repatriated to local authorities. I believe that that is the Labour party's policy, if not the policy of the Liberals. I had to remind him—he had entirely forgotten—that when we had local control of business rates we had Labour local authorities pricing businesses out of business. I do not want that to happen again. That is why I am delighted that in the settlement my right hon. Friend has been able to provide help for all businesses. No business should face an increase in UBR over and above the rate of inflation.

Much more important than that, the UBR of many hundreds of thousands of small businesses will be pegged to the same rate as last year. In other words, they will experience a real reduction in their UBR.

Oxfordshire receives the area cost adjustment whereas Gloucestershire does not. That puts Oxfordshire at an advantage of some £20 million. I have suggested that there should be a better tapering of the ACA. There should not be a line on a map that means that one authority gets something and the next-door authority, which faces broadly similar costs, gets nothing.

In answer to a question tabled by the hon. Member for Holborn and St. Pancras—the answer appeared in column 85 of Hansard on 27 January—we learnt that teachers' labour costs for Gloucestershire amounted to £178 million whereas those same costs for Oxfordshire were £187 million. That goes to prove that labour costs in Oxfordshire are only marginally higher than those in Gloucestershire. I welcome my right hon. Friend's assurance this afternoon that he is continuing to examine ACA weighting within the SSA system to ascertain whether in the longer term there cannot be a fairer distribution method.

I make special pleading on the ACA but I am delighted that the sparsity factor has not been altered. It is clear that we cannot have something in one hand and gain something with the other. It is right that the sparsity factor should be carefully applied to rural constituencies such as my own where it is more expensive to deliver local services.

There are many good provisions in the settlement which time prevents me from mentioning. I merely say that I have every sympathy with the deprived areas that are represented by Labour Members—for example, Barnsley and Newcastle, Central, in the context of the debate—but it is probably true that spending per pupil in Newcastle, Central is about double, if not treble, the spending of Gloucestershire. I am well aware that Gloucestershire has one of the lowest expenditure per head figures of any local authority in the country, yet it still manages to provide a reasonable level of services.

We have heard much from Labour Members about paucity of provision, but many of the constituencies that they represent receive help that is not extended to Gloucestershire. They receive city challenge, sector challenge, the single regeneration budget and European funding in the form of 5b and 2b, for example.

I guess that Labour-controlled authorities are similar to Liberal-controlled Gloucestershire county council when it comes to indebtedness. Nine of the most indebted local authorities are Labour controlled. The same can be said of Liberal-controlled authorities and their indebtedness. When Conservatives last had control of Gloucestershire county council in 1985, it had a debt of £25 million. When I inquired last year what its debt was, I was told that it had risen over the past 10 years to a staggering £135 million. I guess that it now stands at almost £150 million.

That is a staggering cost for the council tax payers of Gloucestershire. They must pay interest on that debt year in and year out. If the Liberals are in charge for another 10 years, I hate to think of the debt with which the children of my constituents will be saddled. The Labour and Liberal parties want to free up capital receipts. If that happens, indebtedness will increase. That will put an even greater burden on our council tax payers in meeting interest payments. Our children will eventually have the burden of repaying that debt, as all debt has eventually to be repaid. My message to council tax payers in Gloucestershire is that they must beware of re-electing Liberal councillors in the county on 1 May. If the Liberals are re-elected, council tax payers will be saddling themselves and their children with increased costs.

8.19 pm

Mr. Jack Thompson (Wansbeck)

Conservative Members' contributions have been intriguing. I have heard all but one of their speeches. They have made many criticisms—the Secretary of State was no exception—of Labour and Liberal-controlled councils. Conservative Members have not asked why there are Labour and Liberal-controlled councils. They are Labour and Liberal controlled because there is a lack of confidence in the Government and in Conservatives at local government level.

The hon. Member for Newbury (Mr. Rendel), the Liberal spokesman, referred to the county council in the area that I represent. We are very sensitive about that, because when he talked about the £10 million cut, he referred to us as Northumbria. The county is called Northumberland. I hope that he accepts that correction. Northumbria is a mythical area: at one time, it was a kingdom that stretched from the Humber to Edinburgh. It is reduced to a county in the north of England, which reflects a thousand years of boundary changes.

Like all right hon. and hon. Members, I have an interest to declare—I have not heard anyone make this declaration yet. We are all council tax payers and users of local authority services in one form or another. As such, we should have a keen interest in the on-going effects of the revenue support grant settlement, which have followed reduction after reduction in expenditure in previous years. We have now reached the point of no return.

Three local authorities provide services in my constituency—Northumberland county council, Wansbeck district council, which are controlled by Labour, and Castle Morpeth borough council, which has a mixture of independent, Conservative and Liberal councillors, although I am never sure which is which. They have all made representations to the Secretary of State with little hope of success. From the figures that the Secretary of State presented, I imagine that most of the other local authorities in England have also made representations with the same amount of success.

Reference was made to local council associations. The Secretary of State specifically said that he had not received representations from local authorities, but he did not say that they were not prepared to make them. Given the Government's life expectancy, there is no point in making representations to them.

Criticism of the Government's policies on funding is universal, and relates to councils with all forms of political control. The Government, in effect, set council tax levels, and leave the local administration to be little more than agents of Whitehall, with front-line responsibility for trying to explain to the residents why they are being asked to pay more for poorer services.

Local authorities have attempted, year on year, to maintain a reasonable level of service—I include all authorities, whatever the political control, in that comment. The long-term effects of the reduction in funding in previous years are now beginning to show through in a range of areas in my constituency, at both county and district level.

Given the time constraints, I shall concentrate on the problems facing my county council, although the limitations are felt in both district authorities in my constituency. One of the biggest problems that Northumberland county council faces is the determination of the sparsity factor. The county is the most sparsely populated shire county in England, yet it is recognised as being only eighth in the sparsity factor element of the SSA. That issue cuts across all the services that the authority provides. The huge rural areas in the north and west of the county create costs in the provision of adequate education, highways, fire and library services, economic development and social services.

The council has tried to maintain good schools in those areas. It is estimated that the cost of educating a child in a rural school is five times higher than in the urban parts of the county, such as my constituency. Although rural schools have small class sizes, the council is determined to keep them open. However, that is at the expense of class sizes in urban areas. Statistics show that the average class size in primary schools is 27 and in secondary schools it is 22, but those figures are distorted by some extremely small class sizes in rural areas, especially in first and middle schools.

I refer to a letter from the chairman of governors of one of the schools in my constituency, to the leader of the county council. It says: Dear Mr. Swithenbank I know it saddens you to preside over the end of education in Northumberland"— that is a strong statement to make in the first place— but that will be the impact of the cuts being considered. It is true you will still have a schools system, albeit an underfunded one, but education is more than schools. There are many other opportunities being denied to children just because they live in Northumberland, whether these be in Music and Drama, Outdoor Education or from a lack of practical activities in overcrowded classrooms. There is no equality of service within Northumberland as long as rural children are educated in a class of 6 while urban pupils are with over 40 others and each is demanding the attention of one teacher. Five years ago, when asked about the closure of small schools, you said the savings were not significant. Last night you said it would require fifty to close—well the saving from 10 closed schools over 5 years is more than that from fifty closures in one year. This may be the price to be paid for living in a rural area but it should not be at the cost to children in urban South East Northumberland. There is a high price to be paid by schools in the south-east urban part of the county, to maintain schools in the rural areas. As a socialist, I do not disagree with that. We should provide the best education we can for our children, but the price to be paid is becoming too high. [Interruption.] Does someone want to intervene? Apparently not.

The council faces problems in other areas. A problem arises from the sparsity factor as it affects the fire service. We have more fire stations than one would expect in a county of its size, but that is necessary because of its large rural areas. If a there is a fire on a rural farm, it may take the fire engine a long time to get there on difficult roads. We are supposed to be classified as a remote rural area under the fire risk categorisation. We spend 25 per cent. above the fire SSA to provide sufficient cover.

The mobile library service is beneficial to rural areas, but it is a high-cost facility. It does not seem to be recognised that a county with a population of about 300,000 and a land area of more than 500,000 hectares requires 4,500 miles of road, because it receives no SSA for highways on the basis of usage and population. Although it has 3 per cent. of national vehicular users on its roads, road users in my area suffer because of that unfair provision.

My county council has genuinely attempted to comply with the reduced expenditure that has been thrust on it. The youth and community service has been cut in the past five years by 48 per cent., road maintenance by 36 per cent., winter road maintenance by 27 per cent., and book provision by 41 per cent.; and in the same period, pupil:teacher ratios have risen by 15 per cent. The reserve balances are now at the all-time low of 1.5 per cent. of net revenue expenditure, which is well below the recommended level.

I and my council claim that not only are the overall revenue support grant arrangements unsatisfactory, but the distribution is out of all proportion to local authorities' needs and responsibilities. The whole system should be radically reviewed.

Conservative Members referred to the area cost adjustment. That also affects my authority. Local government associations strongly advocate that Professor Elliott's recommendations should be closely followed. Professor Elliott made a statement with which I totally agree: whilst most discontent has been directed at the ACA, it should be focused more appropriately on the SSA system as a whole. The present arrangements for the council tax are only a marginal improvement on those for the almost entirely forgotten poll tax. The introduction of the poll tax was a mess, and it looks as if we are heading for the same problems with the present system.

8.29 pm

Mr. Christopher Gill (Ludlow)

Like many other speakers, the hon. Member for Wansbeck (Mr. Thompson) expressed his dissatisfaction not only with the system but with the way in which the revenue support grant is allocated. In my county, there is certainly continuing dissatisfaction with the weighting given to the sparsity factor—to which the hon. Member for Wansbeck referred—and to the area cost adjustment, to which able reference was made by my hon. Friend for Cirencester and Tewkesbury (Mr. Clifton-Brown). In Shropshire, the sparsity factor is now a serious consideration—we do not feel that enough weighting is given to it—but the problem will become even more acute after reorganisation. Once Telford becomes a unitary authority, the rest of the county, far from experiencing sparsity problems, will experience super-sparsity problems.

Let me offer the House a little homespun philosophy. I say to my Front Bench that, regardless of who wins the next general election, the incoming Administration will have to re-examine the structures of local government. There will have to be a further attempt to improve the present system, which, as hon. Members have already pointed out, leaves much to be desired. I am aware that we have had two reorganisations of local government. We have had three local government finance systems: the old rates system was followed by the community charge, which has now been succeeded by the council tax. What we seem never to have done satisfactorily is sit down and decide exactly what we expect local authorities to do. We have not agreed on a division of responsibilities between local government and central Government. I am anxious that there should be a clear-cut division, rather than the continuing confusion that results from central Government's having so much hand in what goes on in local government.

I believe that, sooner or later, Parliament will have to consider making education and social services a direct responsibility of the national taxpayer, leaving all other services as a charge on the council tax payer. The present system is a recipe for failure: as long as it is perpetuated, there will be continual wrangling between local government and central Government. We have seen that again this evening. We must try to sever the umbilical cord between the two, to set local government free and to establish an arrangement under which local authorities fund themselves and all their services, justifying every aspect of their expenditure to their voters. If we are to pay more than lip service to local democracy, we must enable the electorate to understand how local government works, how it is financed and who pays for local services. We must enable voters to judge how well, or how badly, their local councils perform, and to hold their councillors to account for whatever they do.

In Shropshire—and I am sure that the position is mirrored in many other counties—there is currently wrangling about the winter road maintenance expenditure. In former times, no one doubted that that was a local authority function, and that the local authority would decide how much provision to make and how much to spend. Now, when the electorate complain about winter road maintenance in Shropshire, councillors immediately blame the Government for not providing enough revenue support grant. That cuts across all the best traditions of local democracy, and it must end. I do not accept the Whitehall view that the way in which to improve local government is to impose ever-greater limitations and control from the centre.

I know the old argument—used by many in Whitehall and Westminster—that, if such matters are not controlled from the centre, the calibre of local councillors is such that the whole process will run amok. I do not believe it. This is a case of cause and effect: if the authority for discharging such responsibilities is removed from local councillors, the calibre of people who are attracted to local government will continue to spiral downwards.

If we are to have local democracy, there must be clear accountability in local government. It must be plainly demonstrated to the voters that, when they elect councillors, those councillors will be spending council tax payers' money. The financial picture must not be confused by the granting of money from the centre, in accordance with the complicated formula that we are now discussing. If we are to have local democracy and local accountability, the system must be intelligible: the voters must be able to understand it. I stress again the importance of placing authority and responsibility in the same pair of hands.

May I draw my right hon. Friend the Minister's attention to a specific aspect of local government finance affecting my constituency? He will, I am sure, be aware that Shropshire will have no transport programme policy allocation for the 1997–98 financial year. How can that possibly be equitable, given that Shropshire is England's largest inland county? My right hon. Friend also knows that we have been unsuccessful in bidding for capital challenge money. The Whitburn street relief road in Bridgnorth, in my constituency, has been half built, and £250,000 from the district council is promised for its completion. The county council has confirmed that, if there were any money in the TPP allocation, the relief road would be its top priority; but the whole project has now stalled.

We can extend that example. It is appalling that the way in which the money is allocated leads to such waste. Men and women employed in the Department of Transport, in departments at shire halls and in district council offices have no projects to complete, because no money is forthcoming. Surely, if there were any equity or fairness in the system, there would be some money for all local authorities under all headings. The current stop-go arrangement is leading to enormous frustration among the local electorate: schemes that they fully expected to proceed do not. The way in which these things are organised represents a negation of local government and local accountability, as local priorities are either ignored or never fulfilled.

8.39 pm

Mr. Gordon Prentice (Pendle)

I agree with some of what the hon. Member for Ludlow (Mr. Gill) said, but it is a pity that it has taken him 18 years to discover the truth.

Mr. Gill

Will the hon. Gentleman give way?

Mr. Prentice

No. I have only a few minutes.

Mr. Gill

I simply want to point out—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. The conditions in this Chamber are that an hon. Member either gives way or does not and they must be respected.

Mr. Prentice

Ordinarily, I would give way, but I am conscious that many of my colleagues have been in the Chamber all day and will not have an opportunity to make a contribution, so I want to keep my comments brief.

The Conservatives are an endangered species in local government. There are only 13 Conservative councils nationwide. There is only one Conservative county council—Buckinghamshire—and a handful of Conservative London boroughs. There are no Conservative councils in Scotland or in Wales, yet Conservative Members come to the Chamber and thunder their prejudices with nothing behind them. After the general election, the House of Commons will be devoid of many Conservative Members as well.

A story in today's press is testimony to our times. It shows how local government services are fraying at the edges. Hammersmith bridge, which is 110 years old and is located in a region of London that I know well, is being closed indefinitely because it is unsafe.

Mr. Toby Jessel (Twickenham)

It is a Labour council.

Mr. Prentice

The hon. Gentleman says that the bridge is being closed by a Labour council. A total of £130 million is needed to repair all the London bridges, including Westminster bridge. The riparian boroughs made a submission for £44 million, but the Government allocated only £22 million and that is why Hammersmith bridge is closed. West London could seize up because of that. For Conservative Members to try to make cheap party political points beggars belief. The revenue support grant settlement contains no increase at all for highway maintenance.

We never hear about the other services block. One may ask: what on earth is the other services block? It includes things such as food safety. Only a few days ago, the Minister of Agriculture, Fisheries and Food said in the House that the Government were going to appoint a food supremo. The other services block, which pays for environmental health officers who inspect greasy spoon cafes throughout Britain, is going to be cut by £3 million.

I have examined the food safety inspection figures for all districts in England. In 1992, 22,414 improvement notices were served; by 1995, 2,314, a tenth of that number, had been served. In my authority of Pendle, in 1992, there were 1,241 visits to cafés and food establishments by environmental health officers, yet, by 1995, there were 728 visits. It is one of the services that does not receive the Ritz treatment, but it is important and should be important to the Secretary of State for the Environment, who famously ordered his daughter to sink her teeth into a hamburger, saying that there was no problem with food safety in Britain, when people were first nervous about BSE. We now have E. coli and listeria. In 1990, there were 90 deaths from food poisoning in Britain; in 1995, there were 202 such deaths.

After the deaths in Wishaw and elsewhere, I shudder to think what the 1996 figures may be. In December, there was an E. coli outbreak in Pendle, yet Conservative Members seem to think that this is amusing and that they can make cuts in food safety, while making glamorous speeches in the Chamber that do not accord with the reality of what is happening outside. Under 40 per cent. of all the food establishments in Blackpool that were subject to food enforcement law were inspected in one year; they should all have been. The figures come from an Audit Commission report, so those matters are not trivial, but important.

In the few minutes left to me, I shall say a word about my own local authority and about Lancashire as a whole. For the fourth year running, Pendle council, which is responsible for the food safety enforcement that I have been discussing, has a standstill budget. It has been allowed to increase its budget by a miserly £2,000 a year and it just cannot cope.

My constituency has the oldest and most decrepit housing in England. Only two inner London boroughs have more housing that was built before the first world war than does Pendle. That housing is falling down. My local authority, which has to cope with all the effects of that—the poor health and the deprivation—has been told for the fourth year in a row that it must deal with a standstill budget. It simply is not good enough.

The hon. Member for Newbury (Mr. Rendel) and my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson), the Labour Front-Bench spokesman, mentioned that education is important because it is such a large spending service. We again had a complete distortion from the Secretary of State. He was very economical with the truth because he was trumpeting the education increase—

Mr. Dobson

Miserly.

Mr. Prentice

Indeed. The Secretary of State was trumpeting the education increase of 3.6 per cent. That is totally fictitious. My hon. Friend the Member for Holborn and St. Pancras said that the figure is correct only if the education spending increase is loaded on to council tax payers. If all education authorities throughout Britain had to spend at the SSA level, which is the level that the Government think is right for all the authorities, there would be not an increase next year, but a decrease per pupil of £41. How on earth can we believe anything that the Secretary of State says when he is prepared to dissemble on that gargantuan scale? In Lancashire, we are already spending 7 per cent. above SSA. Three quarters of all local education authorities are already spending above SSA, so the Secretary of State should take that 3.6 per cent. and stuff it up his jumper. It is completely wrong.

I have got to say this on behalf of my county council. Many Members have spoken about the area cost adjustment and I took some comfort from the fact that the Secretary of State has finally seen the light and acknowledged that there is a problem that has to be addressed. The problem will be dealt with not by him, but by my hon. Friend the Member for Holborn and St. Pancras. However, it was encouraging to know that, after 18 years, or since it became a problem in 1990, Ministers finally acknowledge what we have been saying for years and years: that it is a problem.

I look at the spot where the hon. Member for Southend, East (Sir T. Taylor) spoke in the few minutes when he was in the Chamber. He came in, delivered his speech and disappeared again. A primary school child in Essex receives £112 more than a primary school child in Lancashire. In Essex, a secondary school pupil receives £145 per year more than a secondary school pupil in Lancashire. It is little wonder that teachers in my constituency and in Lancashire are up in arms and infuriated about the unfairness of it all. I take comfort from the fact that, before too long, perhaps before the passage of a couple of months, these unfairnesses will be seriously addressed by my hon. Friend the Member for Holborn and St. Pancras.

8.48 pm

Mr. Toby Jessel (Twickenham)

It is a pleasure to have been invited to take part in the debate, but I was astonished by the temerity of the hon. Member for Pendle (Mr. Prentice)—if he would give me his attention for one second—when he referred to Hammersmith bridge, as the news of its closure was extraordinarily sudden. We were given only a week or two's notice. Hammersmith and Fulham council simply failed to inspect it and everyone has been taken by surprise by its sudden closure. That has considerable effects throughout west London, and it will cause great inconvenience to hundreds of thousands of people, including many of my constituents. He might have been wise to have kept quiet on the subject.

My hon. Friend the Member for Ludlow (Mr. Gill)—if I may make this point before he leaves the Chamber, which I thought he was about to do—made some most interesting comments on the structure of local government. Of course it must be a compromise because the ideal size of a local authority would be quite different for its different functions. For example, we might want a very small local authority to look after footpaths; we might want a bigger one for rubbish collection; a bigger one again for old people's homes; and an even bigger one than that for education, which would have to cover special overheads such as the employment of education officials expert on the special needs of, for example, handicapped children. However, we cannot have five, six or seven local authorities covering one area, so the size of local authorities, as decided by Parliament, must be a compromise.

Education is the most important of all local authority functions. It is also the most expensive. Increasingly, we have handed over powers to schools and their governing bodies while curtailing the corresponding powers of local authorities. One of the arguments for keeping local authorities big has, therefore, diminished. The next time that Parliament reforms the structure of local government—perhaps in five, 10 or 20 years' time;—we should move to smaller local authorities, especially in London. The London boroughs typically have populations of 180,000 to 350,000. Therefore, the smallest unit of local government is the size of a fairly large city such as Portsmouth, Coventry, Bradford or Cardiff. That militates against local government being local.

Something else that militates against local government being local is the ward system, where there might be two, three or four councillors to a ward rather than one. That is absolute nonsense. A ward should have only one councillor; that would bring that councillor closer to the electors. It should be one polling district covering a couple of thousand people. We should do away with the wards in towns and cities that have 6,000 people represented by, perhaps, three councillors, who are hardly known to most of the people other than by their party labels.

It is absolutely wrong of hon. Members on the Opposition Benches to want to impose regional government—however suitable that might be for Scotland or Wales—across England, including Greater London. There is no desire for that among the population of the south-east and London, which is the area that I know best. It is ludicrous to consider having a regional government covering Canterbury to Chichester, or stretching across London. The functions of the former Greater London council were gradually whittled away and there is no need to replace that body. To do so would add hugely to the expense for council tax payers, whose position we are considering tonight.

My constituency includes Teddington, all the Hamptons and Whitton. It suffers considerably from the extravagance and waste of money by Richmond upon Thames borough council. That is most blatant with the so-called civic centre—a sort of town hall that the council constructed in York street, Twickenham, about six or seven years ago at a cost of £12 million or £13 million. It would have been perfectly possible to have built, for a very much smaller sum—perhaps £4 million to £6 million—a local authority headquarters with adequate prestige, had the design been less extravagant. It has see-through lifts. It has a big hall in the middle called an atrium, which takes up a substantial amount of space. In the hall there are statues climbing up ropes. The outside comprises several different colours of brick so that the building looks the same as it did before it was rebuilt.

Mr. Bayley

rose—

Mr. Jessel

If the hon. Gentleman will forgive me, I will not give way as I have only a few minutes left.

The council has been run by the Liberal Democrat party since 1984. In order to build the civic centre, the council borrowed money at a high fixed rate of interest. It was about seven or eight years ago, when interest rates were high. Of course, it was not long before interest rates began to fall, so the unfortunate inhabitants of the London borough of Richmond upon Thames—represented in this place by my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley) and myself—were forced, through their council taxes, to pay out for a hire purchase scheme for the civic centre, at a high fixed rate of interest. Local people were therefore unable to take advantage of the fall in interest rates during the early 1990s in response to the world trade recession. It was an unutterably stupid action by the majority of councillors on the council. Most of them could not run a business; most of them could not run a whelk stall.

Not surprisingly, there was a fall in public support and, at the last council elections in 1994—in London the whole of a local authority is elected once every four years, not some each year as is the case outside London—the Liberal Democrats lost six seats in the Twickenham constituency alone, four to the Conservatives in Central Twickenham, South Twickenham and Hampton Wick, and two to Labour in West Twickenham—Labour won seats for the first time in 20 years.

Recently, there have been other extravagances, such as the so-called millennium markers. The council wanted to put 10 tall prongs, every half mile, along one of the most beautiful stretches of the Thames between Kew and Hampton Court, at a cost of £5.5 million. The millennium fund said that it would put up half the money, with the other half having to be found by the councils of Richmond, Hounslow and Kingston. Those councils employed a full-time fundraiser, at council tax payers' expense. Six months passed, but they had raised only £500,000 and had no convincing plan of how to raise the other £2.25 million. Not surprisingly, the millennium fund said that they could not continue the scheme, which then had to be dropped. Meanwhile, they had produced a large amount of expensive promotional material; they have refused to say how much they spent on it.

The council spent a great deal of money on fruitless lawsuits on aircraft noise—which have not resulted in any noise reduction, as they were simply cosmetic. It also installed road humps, some of which had to be removed because they were in the wrong place—such as at Egerton road, Twickenham, outside the Richmond upon Thames tertiary college. Despite all the money that it wastes, the council has the cheek to claim that the Government do not give it enough money.

Richmond is a most unsatisfactory council, and I am not surprised that the Government have determined to clamp down on the amount of money that it will be allowed to spend. The amount of money is being reduced regardless, because, since the passage of the Higher and Further Education Funding Act 1992, the tertiary college—which takes young people at the ages of 16, 17 and 18, which was formerly a local authority function—has been placed under the Further Education Funding Council, which is funded by the Department for Education and Employment. Therefore, that important and expensive sector of public education no longer relies upon council taxes.

I am glad to have taken part in this debate, to draw attention to those matters. I hope that my right hon. Friend the Minister will refer to them in his reply.

8.58 pm

Mr. Robert Ainsworth (Coventry, North-East)

I shall not follow the hon. Member for Twickenham (Mr. Jessel) in speaking about sleeping policemen, statues, atriums and fancy bricks, although there was a serious point in parts of his speech. Once upon a time, local government had much greater control over how it raised money and dealt in the money markets. Perhaps his council would have been saved some of the debt incurred if it had that degree of autonomy today.

I shall start my speech on a note of thanks—although it may not continue throughout my speech—to the Parliamentary Under-Secretary of State for the Environment for meeting a delegation from Coventry during this year's standard spending assessment review. We came, as we have for the past four or five years, to talk about specific issues affecting Coventry. We will not necessarily fall out about those issues politically, but they can nevertheless have damaging effects on the SSA and on the grant made to Coventry. He received us courteously, and I hope that the issue that we raised will be taken on board by his officials, if not by himself—as I rather hope that he will not be in office for very much longer.

It was a constructive meeting, and I hope that the exchanges that Coventry has conducted on many matters have been helpful not only to the city but to the Department. There are problems with the SSA—as it is a complicated issue—although not all of them are equally controversial. At the meetings we attempted to raise some relatively non-controversial issues. I hope that the Minister will confirm that he will examine, for example, Coventry's problem with nursery voucher numbers, as it could easily cost us £100,000. According to the response that we have received from the Department's officers, double-counting has occurred, although it was unforeseen and they thought that they were dealing with accurate numbers.

Although we have raised such issues as homelessness year after year, I hope that the Minister will seriously consider whether it should be a factor in the SSA formula. There are so many different methods of assessing homelessness. Moreover, a perverse disincentive can be provided in that local authorities that truly and successfully deal with the problem of homelessness may lose money.

I also hope that the Minister will deal seriously with the issue of whether owner occupation is a genuine measure of deprivation. There are very high levels of rented accommodation in some areas, particularly in parts of the capital, such as Westminster, whereas there are very high levels of owner occupation in Coventry, which does not mean that we are a rich city by comparison. I do not believe that owner occupation provides an adequate measure in determining deprivation. If we were to sort out some of those smaller problems and clear anomalies over time, I am sure that Ministers would not leave themselves and the system open to the type of ridicule poured on them so well by my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson).

At meetings we do not raise the issue of the area cost adjustment, because there is no point in having a political row over it. However, there is no excuse for a 29 per cent. gap in consideration of payments to teachers between the midlands and London, because the actual gap in teachers' salaries between London and the midlands is more like 10 per cent. There is a definite skew against areas outside the south-east, which cost them a great deal of money.

Ministers get annoyed when we mention Westminster and say that it is an irrelevance to mention it. However, we mention it for a very simple reason: it is the most blatant example of the way in which the area cost adjustment is deliberately fiddled—I cannot use any other word to describe what happens. We raise it because it is the most blatant example. Why should we talk about percentages and get into complications when we are trying to spell things out in a way that people understand on this difficult issue?

The Audit Commission's figures show that Westminster is one of the least efficient councils in the country. Its refuse services cost £55 a head; Coventry's cost £12.44. Street cleaning in Westminster costs £36 a head; in Coventry it costs £5.51. Westminster spends £241 per claimant on benefit administration—the most expensive benefit system in the country.

Why is Westminster's council tax so low? We have shown that it has wasted huge sums of money on gerrymandering. It is so incompetent that it cannot get insurance for much of its housing because of the asbestos problems that it has imposed on its tenants. I am reminded of the television programme that investigates interesting topics—"How Do They Do That?" How does Westminster council manage to behave in that way, waste so much money and yet have a council tax that is so low in comparison with Coventry? How do they do that? The answer is simple. Westminster's council tax is so low because it is fiddled. The Department of the Environment does not just turn a blind eye to that fiddling, it actively participates in it.

Westminster has recruited consultants at fantastic costs to make its case, not under the rules in the way that Coventry and other authorities make their case every year, but by putting pressure on Conservative Members and Ministers suggesting what they could do for the council, making the case politically for help to maintain control. If Coventry got Westminster's level of grant, we would hand back a £212 rebate to council tax payers instead of charging them. If we got that much grant, we could employ another 1,496 teachers. If all councils got Westminster's grant, 334 of the 356 councils would charge no council tax, but would pay rebates. That is why we expose Westminster—it is the most blatant fiddle of the standard spending assessment.

I have one other point to make, not about the distribution, but about the total grant. The Secretary of State made great play of his argument that if council taxes go up in May, everybody will know who is to blame—he wants people to believe that it will be the Labour councils, not the Government. In the same speech, he tried to say that he consults local authority associations and does business through them. When it suits him, he puts the blame for decisions on the local authority associations.

The local authority associations say that the Government grant support for councils with education responsibilities has increased this year by 0.4 per cent. For districts, without education responsibilities, the grant has been cut by 3.6 per cent. If that is wrong, I ask the Minister to say so clearly and to justify what he says. The Minister knows the inflation rate faced by local authorities. He therefore knows that he has effectively planned for a £40—6 per cent.—across-the-board council tax increase. That is the situation that, on average, will face council tax payers across the country and the responsibility lies fairly and squarely with the Secretary of State and this Government.

9.9 pm

Mr. Peter L. Pike (Burnley)

I want to turn the clock back to what the hon. Member for Bury, South (Mr. Sumberg) said at the start of the debate. He said clearly that the difficult decisions that would be taken in Bury as a result of its financial position would be blamed on Bury local authority. He said that the Labour council would be blamed for increasing council tax and cutting services. The hon. Gentleman is not living in the real world.

People know that the Tory Government are to blame for the position of local government; they know what the Tories have done to local government over the past 18 years. Whether they are in Blackpool, Bury, Lancashire generally or anywhere else, they know that the council tax will go up because of what the Government have done. People know that services will be cut because of what the Government have done and they will tell the Government that it is time to go as soon as they get the opportunity to vote at a general election. The Government have kidded the people for far too long and their time is now up. People know the truth.

The hon. Member for Bury, South referred to the importance of education. We all accept that education is the most crucial service provided by local government. However, the Government were misleading and dishonest last year, even about education. They increased the grant for education, but they did not increase the overall revenue support grant by the same level. That meant that if the increase was passed on to schools, as the Government expected, local authorities had to make cuts in their other services. Virtually the same is happening in 1997–98.

It is no good giving increases for education unless they are matched fully throughout the funding for local authorities. As several hon. Members have said, three quarters of local authorities already spend above the level of their standard spending assessment. The Minister looks dismayed when I say that, but it is the reality. He has said that spending is up to local authorities and that the system is flexible. We accept that, but if the Government believe that a good local authority should spend at a certain level, it is time that the SSA reflected that.

The reality is that councils cannot spend above the SSA under every heading so they have to make cuts, whether in social services or in other equally important services. That is the problem with the SSA system. We all know about the difficulties with previous systems, such as the grant-related expenditure assessment, and we know that we have moved to a simpler system. It involves fewer factors and it is easier to work out, but because it is easy, it can sometimes be flawed. I believe that if we are serious about education, we must ensure that the SSA level contains adequate provision for it throughout local government. We all know that the reality is that for 1997–98, the increased provision for education is £20 million less than local authorities are spending this year. That illustrates the problem.

Many hon. Members have referred to the area cost adjustment; I have met the Minister to discuss that and I accept that the figures will be examined again. We all know that the way in which the area cost adjustment was originally to change this year would have been acceptable to some, but not to others. I recognise that it is not easy to change the ACAs, but I believe that if we are to have the ACA system, it must be seen to be fair. The present system is not fair. The difference between Lancashire, Essex, Hampshire and other authorities is not acceptable in terms of education alone; that gives us a major problem.

The Department of Transport admits that this year's allocation of £146 million for local road maintenance is inadequate to comply with the code of practice and citizen's charter commitments. Ofsted reports that standards in more than 5,000 schools have been adversely affected by shortages of books or equipment. Those are just two of the condemnations. After 18 years of Tory Government and despite what they have called, certainly in the past few years, an economic miracle, there are major flaws in local government and an inability to maintain services.

The Association of District Councils points out: The local government finance settlement is particularly bad for non-metropolitan districts. Provision for spending and the amount of grant they will receive for 1997–98 will severely restrict district councils' ability to respond to the demands on their services. This extremely poor settlement follows a run of bad settlements in recent years. That is important. We cannot look at 1997–98 in isolation. We have to consider what the Government have done over many years, causing tremendous problems for local government.

Having been a local councillor, at times I wonder why people serve on Lancashire county council or Burnley borough council as their ability is now so limited. They can only touch things at the edge and that is a major problem.

In 1997–98, 241 shire districts—more than nine out of 10—will receive less grant support than they did in 1996–97. That is appalling. Burnley is concerned about the population figures—a matter that we have pursued with the Minister for several years—which have a major effect. A further drop in the population of 2,670 in the past three years has caused financial problems. In 1992–93 the capping level was £11,886,000. In the coming year it will be £12,109,000. In the same period the SSA has reduced from £11,744,000 to £9,489,000. In 1992–93 Burnley spent 1.2 per cent. above the SSA; it now spends 27.6 per cent. above the SSA. That has occurred with almost no increase in the council's spending over the period. In real terms it represents a reduction in spending of 16 per cent. The council is portrayed as a serious overspender. That is simply not true. It tries to provide good local services for the people of a deprived area.

Finally, let me refer to Westminster. I live in the London borough of Wandsworth, which has not been mentioned tonight. Wandsworth is not a very good provider of local services. The roads and pavements are as full of dog dirt as those in many other local authority areas. The funding that Tory Westminster has received is clearly an outrage. Three authorities—Kent, Lancashire and Essex—could employ 7,000 extra teachers at no extra cost if they received the same as Westminster. Lancashire could employ 7,371 extra teachers. The people of Burnley, Blackpool and Bury believe that it is wrong. They believe that it is time for the Government to go and the quicker that happens the better.

Mr. Deputy Speaker

I call Mr. Peter Atkinson.

Mr. Hardy

On a point of order, Mr. Deputy Speaker. I understood that hon. Members who had only just arrived would have to wait a reasonable time before being called. Some of us have been here all day.

Mr. Deputy Speaker

I am grateful to the hon. Gentleman for that observation. Had he been a little more observant, he would have checked at what time the hon. Gentleman came in. I can assure him that the Chair did so. As hon. Members will note, I have called two Labour Members in succession.

9.18 pm

Mr. Peter Atkinson (Hexham)

For the benefit of the hon. Member for Wentworth (Mr. Hardy), I was here at the start of the debate. I had a reception for some of my constituents, so I have been absent and I apologise to the House. I am glad briefly to take part in the debate, particularly as the hon. Member for Holborn and St. Pancras (Mr. Dobson) is back in his seat as I wanted to congratulate him on his efficiency and economy—two issues that concern us both.

I refer to the efficiency and economy in the hon. Gentleman's speech. I read his speech from 1995 and the one he made last year and they are exactly the same. He has taken it back off the shelf, dusted it down, tweaked it a little and gone on about exactly the same lines as last year. There is nothing new from the Opposition tonight. He mentioned the same old names, such as Runnymede, about which he was very keen to talk, as well as Knowsley and Easington. He made the same mistake in constructing the league table as he did the previous time. He picked one line—the social needs line—out of the many that make up the standard spending assessment. Since he has made the same point for the third year running, we should try to impress on him that awarding money to local government is not done simply on the basis of social need. It is about the delivery of services to all members of the community.

The implication of what the hon. Member for Holborn and St. Pancras says is that people in Runnymede, who are apparently all very affluent, should have less money, poorer quality teachers and education and a less safe fire service than, for instance, Easington. That is nonsensical. Fixing the SSA is entirely about providing service and is a mixture of all sorts of ingredients.

When I had to leave the Chamber earlier, Opposition Members were whining on about Westminster. When I came back, they were whining on about it again. The entire debate appears to have been based on the Opposition saying that Westminster gets too much money and other local authorities do not. The system is vastly more complicated than that. I am rather alarmed that the hon. Member for Holborn and St. Pancras does not understand local government finance.

I turn to Labour-controlled Northumberland county council in my constituency, which, like the hon. Member for Holborn and St. Pancras, is rather like a record. Every year at this time it launches an amazing public relations campaign about the cuts that it will face. This year it says that it faces £10 million-worth of cuts. Northumberland county council is not facing £10 million-worth of cuts. It sets a wish-list budget, says how much it thinks that it needs, puts a price on it, and when it does not get it from the Government and cannot raise it from the council tax payers, it hollos about a cut.

Every year for the past three years, Northumberland county council has had more money in real terms. If one read the local papers that swallow some of the council's press releases, one would think that it is once again facing doom and gloom. It is again threatening to cut school budgets. Last year, it said that it might have to abolish every free school meal due to budget cuts. This year, it is doing the same.

Mr. Jack Thompson

The hon. Gentleman represents a constituency in Northumberland, as do I. I am sure that he is fully aware that Conservative councillors support the county council's view. His own colleagues in Northumberland do not support his arguments.

Mr. Atkinson

I think that Conservative councillors would support the argument that the claim that there is to be a £10 million cut is bogus. They can add up the figures. I am glad to say that some of the local press are beginning to add up the figures, too, and are realising that the council is using the problems of their budget—I accept that there are problems and shall turn to them later—to play a political game, which damages the county council's credibility and makes it harder for us to address the real problems in Northumberland.

I am happy to make it clear that there are problems with delivering services to a very sparse rural county. Northumberland has the smallest population of any shire county and enormous expanses of some of the least inhabited areas of countryside in the north-east—indeed, in the United Kingdom. Unfortunately, most of its population is tucked away into one small corner of the county, which of course makes it difficult to get the proper sparsity payments out of the system which it needs. I think that most of the Conservative county councillors would accept that.

Instead of running an annual PR stunt to try to blame the Government for purely political reasons, the county council would do very much better to heed the words of the right hon. Member for Dunfermline, East (Mr. Brown) that there will be no money coming from Labour, and heed the fact that there will be no more from the Government, and get down to addressing the problems of running services in a very sparse county.

The hon. Member for Wansbeck (Mr. Thompson) may not know that Northumberland has the highest SSA per head of population of any county, receives the biggest grant per head of population of any shire county and has the highest capping level per head of population of any shire county. When representatives from Northumberland come to see Ministers—I am grateful to my hon. Friend the Under-Secretary for receiving an all-party delegation—they should talk seriously about readjusting the budget to deal with elements such as sparsity and the recouping of education fees, another local problem. They should not run stupid campaigns every year in an attempt to persuade council tax payers that this is all the Government's fault.

Northumberland would have vastly more credibility if it did not waste money. The council is about to embark on an utterly unnecessary public inquiry into the Army's plans for the Otterburn training range. Local people want the project, as it will provide them with jobs and will secure the future of the training area. There is unanimous local agreement that the development is a good idea, yet the local authority is running a full-scale public inquiry which will cost Northumberland county council—according to one estimate—almost £1 million. They would do better to use that money for the purposes that the people of Northumberland want.

I appreciate that every local authority has different problems and needs, and that is why we have an SSA system which, inevitably, is not perfect. We need to develop the system, but this must be done after sensible discussion and not with hysterical outbursts claiming that this is all the Government's fault.

9.25 pm

Mr. Peter Hardy (Wentworth)

I shall be brief, as part of the argument that I would have advanced has been presented by my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham). My local authority is in a similar position to that of my hon. Friend, as we too need to know about the position on the supertram, which the Government support.

I am not surprised by the present position. We have had 18 years of Conservative rule, economic incompetence, lost opportunities and other failures. The sheer misjudgment and incompetence that the Conservatives have shown in local government has demonstrated that they are not fit to be in charge. One does not need to look merely at the period of this Administration; during the past 25 years, we have seen two of the most inflationary exercises in Britain's history—the reorganisation of local government in 1974, and the poll tax, which costs up to £20,000 million in administration and related costs.

What grieves me is the slick response that I received from the Secretary of State when I asked him about capital receipts. I asked if we could allow capital receipts to be released to cover the necessary local authority contributions to the single regeneration budget, city challenge and cases of maintenance which would offer serious cost if they were not carried out in the year ahead.

Mr. Curry

Will the hon. Gentleman give way?

Mr. Hardy

No. The Minister will have a longer time to speak than I have.

I was making a prudent point. Unemployment costs about £10,000 per person, and it would be sensible if local authorities were allowed to release their capital receipts to allow people to get back to work. I would be glad if the Minister would reassure me on that matter.

I have not "bleated" about the subject of Westminster in this debate, as I first raised what I called "the arithmetic of corruption" about Westminster 10 years ago. That local authority boasts that it does not levy a rate or that it has levied the lowest rate in the land year after year. But people can see the equation that I offered the House when I intervened on the hon. Member for Harrow, West (Mr. Hughes). This House may not see it, but the rest of the country does. Conservative Members should understand that the Government have allowed the Tory fleet to sink so that the Tory flagship can remain afloat. That flagship has remained afloat on the basis of an arrangement and a calculation that can only be described as corrupt.

When I got home last week, I read in my parish magazine a piece by the Bishop of Sheffield, who is shortly to retire. The Conservatives in South Yorkshire screamed blue murder. The bishop referred to the prophet Joel, when he said, "Old men dream dreams". He also offered one other quotation, which seems to have offended the hon. Member for Sheffield, Hallam (Sir I. Patnick) and all the other Tories in our county. It was simply this: From each according to his abilities, to each according to his needs. If we had gone along that road a little further in the past decade, Britain and local government would be a great deal better off.

9.29 pm

Ms Hilary Armstrong (North-West Durham)

I am delighted that my hon. Friend the Member for Wentworth (Mr. Hardy) managed to speak in the debate. We tried to cut short the winding-up speeches so that as many hon. Members as possible could speak. Most hon. Members have expressed concern about constituency issues. Indeed, many Conservative Members upheld our contention that the allocation system is unfair and needs to be tackled. It is remarkable that, after all this time, and after having constructed and reconstructed the system several times, the Government have still not managed to come up with a system of grant allocation that gets anything like support on both sides of the House.

Many hon. Members have raised issues that arise from the real difficulties facing their local authorities. Many, including my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins)—in a remarkable and powerful speech—and the hon. Member for Ludlow (Mr. Gill), made important and telling points about the inability of local government to be properly accountable because of the way in which the Government have constructed the local government finance system.

An effective democracy depends on alternative and competing sources of power; yet the Government have centralised power and enfeebled local government to such an extent that commentators say that it is worse than at any time this century. It is small wonder that many councillors feel that they have become little more than an administrative outpost for Government. It is no good the Government complaining that councils blame central Government. Central Government have so constructed the system of local government finance that they tell it how much it can have, what it can spend it on and how to spend it. The country has rumbled that and knows that central Government are taking the decisions and deciding how those decisions will impact in every area.

Local government has the potential to be the engine of regeneration in the locality. It is local rather than central Government that has a clear awareness of the needs and desires of the local community; it is local and not central Government that is best placed to respond flexibly to changing circumstances in the locality; and it is local rather than central Government that works closely in its area on a daily basis with other public agencies, local businesses and community groups.

As a result of the poll tax fiasco, local government is exceptionally reliant on central Government for its funding. The poll tax fiasco and the nationalisation of the business rate mean that councils are now responsible for raising less than a quarter of what they spend. That is not an accident, but the result of deliberate decisions. Indeed, Sarah Hogg commented in her book: More and more Tory MPs thought that the logical solution was for central Government to take over completely. However, those Members still moan and say that local government continues to recognise that central Government are taking the decisions.

Mr. Clifton-Brown

Will the hon. Lady give way?

Ms Armstrong

I am coming to the hon. Gentleman. Perhaps I can deal with his intervention then.

The revenue support grant settlement this year places councillors—even the rare Tory councillor—in a straitjacket designed by central Government. Many local politicians do not even have a choice between cutting services and hiking up the council tax, because the settlement forces them to do both. Local people will pay more in tax and get less in service.

The Government have turned their back on giving local people more choice and are trying to use local democracy as a cover for further tax hikes. The Budget figures have revealed that, over the next three years, the gap between what central Government believe that local government should spend and the amount that they will fund will widen by £4 billion. The Government have planned for council tax rises next April of about 6 per cent. That would mean a rise in the average band D council tax of about £40 a year.

Councils have been forced to make difficult choices. To protect school budgets, many councillors have to slash other services, including social services, that are already under strain because of the rising community care costs; at the same time, they have to increase council tax bills by more than inflation. The Government have been rumbled, and people know whom to blame.

The Government said that the distribution was fair. Almost every hon. Member who has spoken in this debate has made it clear that that was not so. The Secretary of State kept trying to say that all the associations accepted the settlement. However, the chairman of the Association of Metropolitan Authorities, who also chairs the new Local Government Association, wrote a letter to the Secretary of State on 13 May 1996, so the right hon. Gentleman should have had time to come to terms with what he said.

Sir Jeremy Beecham said that none of the associations was content with the present distribution of SSAs. He said that associations and authorities put in representations each year to try to persuade the Government to change the distribution, but that in the end the decisions were for the Department. It seems that the Secretary of State has a short memory and does not remember what people say to him.

Mr. Gummer

Will the hon. Lady explain why no Labour chairman of any of the associations has ever used the argument of the hon. Member for Holborn and St. Pancras (Mr. Dobson) and asked for the far-reaching proposals that he has advanced to the House on five separate occasions?

Ms Armstrong

The Secretary of State has already demonstrated this afternoon that he has little credibility, and he is continuing that.

The letter from Sir Jeremy Beecham said that he had pointed out to the Environment Select Committee that some authorities, including Westminster, had benefited from some very strange decisions on SSAs made by the Secretary of State's predecessors. That backs up the arguments of my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson). If I were in the Secretary of State's position, I would want to apologise to the House.

Mr. Clifton-Brown

The hon. Lady has spent her entire speech criticising the present distribution system. Does she recall her interview with the Local Government Chronicle on 5 January 1996? She was asked whether she would change the system, and replied: Of course we will be looking at it but I would not like to promise major changes at this stage. I know too much about it to be flippant enough to say you can quickly shift it.

Ms Armstrong

I shall certainly deal with that. In his speech, the hon. Gentleman raised various issues that demonstrate that his only information source has been the Tory central office brief. I expected more from him.

There are clear problems with the system. Several hon. Members have raised the problems with the manner in which Westminster council has been awarded its grant. I invite the hon. Member for Southend, East (Sir T. Taylor) to examine work that I have, from the Library and the Ministry, which demonstrates that the Tory central office brief is leading him up the garden path and that there is serious unfairness. Opposition Members are not naive about the difficulties of getting a fair allocation system, but we are determined to seek one. I am not going to con anyone that it can be done overnight; it has taken the Government years to get to the present unfair position.

In The Daily Telegraph, which is not a newspaper that normally supports the Opposition, the independent, slightly right-wing commentator John Grigsby writes: The Westminster case does matter because it is so illogical. He says that it is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly seen to be done. The iniquities of the system are likely to get worse. The deduction of SSA funding because of the introduction of nursery vouchers, which was raised by my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth), will penalise forward-looking councils that provide nursery education for most or all of their four-year-olds and divert it to authorities that choose to provide fewer places. We have made it clear that the system for allocating local authority funding should be open, transparent and independently verified. That means that it will change.

Several hon. Members tried to say that everything was all right and that local councils had got it wrong. That belies the history of the past 18 years. The gap between what the Government acknowledge councils should spend and the funding that they receive from central Government is widening. The economy has been mismanaged by the Government. They have pursued short-term policies that have failed to equip our economy for the future. It is not surprising, given the record and given the tax rises that the country has had to suffer, that we now know that the Tories are the party of high taxation.

The typical family will have paid £2,120 extra tax since 1992 and will be paying 35 per cent. of its gross income to the Exchequer by the time of the next general election, compared with only 32 per cent. in 1979. Taxation has gone up by 3 per cent. for every taxpayer. Given that record of mismanagement, it is not surprising that the public sector borrowing requirement is expected to be £4 billion higher than was forecast last year. Projected borrowing has been revised up for next year by another £4 billion. There has been £66 billion more public borrowing in this Parliament, which is £66 billion more man the Tories claimed in the pre-1992 general election budget.

More borrowing means a higher debt interest burden. This afternoon, Conservative Members—including the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown)—complained about local authority debt. They believe the Tory central office brief issued by the Under-Secretary, the hon. Member for Croydon, Central (Sir P. Beresford). Let us compare local government debt with that of Tory central Government. Between 1990 and 1996, local authority gross debt per head decreased by 6.2 per cent., while central Government debt exploded by more man 133 per cent. from £2,412 per head to £5,638 per head. Those figures speak for themselves. It is not Labour councils that have squandered the £85 billion in North sea oil revenues or the proceeds of privatisation; it is not local government that has pursued short-term policies at the expense of this country's long-term interests.

This is a dishonest settlement. Council tax payers and service users are paying the price of this Government's economic incompetence and waste. That is why we cannot promise them more money next year. [HON. MEMBERS: "Oh!"] The electorate will not be fooled: when services are affected and council tax is increased, the people will know that the Tory Government are to blame. They will know that Tory Members supported the unfair settlement tonight. The people want a general election. The Government are frightened of a general election, but at a general election the people will decide.

9.46 pm

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry)

It is perhaps worth recalling the background to this settlement. Interestingly, Opposition Members spoke almost exclusively about redistribution; they did not address the amount available for local government in the public expenditure round. In previous years, the Opposition call was "Spend, spend, spend". Suddenly, the tune has changed: it is now all about redistribution.

The background to the change is that we live in a competitive world marketplace in which no one owes us a favour. Sensible people recognise increasingly that international competition imposes strong constraints. Whether the Opposition like it or not, that means that there will be increasing demands for the private sector to assist with the delivery of public services, as that is a way of securing efficiency and value for money. It means also that we shall have to control the level of public expenditure. Everybody recognises that fact—the Chancellor recognises it and, if we can believe him, so does the shadow Chancellor. That has put the hon. Member for Holborn and St. Pancras (Mr. Dobson) in a straitjacket. Instead of his usual rant and incitements to Labour local authorities to increase expenditure, he is under lock and key, and the key has been thrown away.

This is a tough settlement, but it is necessarily tough. It is less tough than the settlements that many Government Departments have had to accept. It is the end of the first stage of a process. Local authorities may set their budgets and, if they do so above the prescribed cap, they may put their case to the Government. We have shown that we will listen to local authority representations when there is an inescapable need to exceed that figure.

Several hon. Members mentioned the area cost adjustment, so let me be clear about it from the start. The Government and the local authority associations have tried for some years to find a way of assessing real labour costs—the total costs of employment—throughout the country. That is an extremely difficult exercise, and it is not easy to translate it into a workable mechanism. The latest Elliott report has provided much additional information, and we shall work with local authorities to try to arrive at a sensible, comprehensible mechanism that will command wide support, which we shall include as soon as possible.

The hon. Member for Wentworth (Mr. Hardy), who got in for a quickie at the end—he is now engaged in conversation—asked about the use of regeneration receipts. Perhaps someone should prod him to get his attention. It is possible for local authorities to use capital receipts specifically in the regeneration process. Speaking from memory, there are four wards in Rotherham that apply themselves to that approach. It is possible to use regeneration receipts alongside private sector money in the process of regeneration.

Mr. Hardy

It is capped.

Mr. Curry

It is not capped. It is not revenue support grant money but money that is realised for investment in regeneration. I hope that the hon. Gentleman will urge his local authority to do that, as I hope that he will urge it to transfer housing stock and to understand that local authorities should be in the business of service, not ownership. The authority should explore the full use of the private finance initiative. Local authorities that are imaginative and want to improve services have a great opportunity to do so if they get out of the old mindset of what they think local government is in place to do.

The hon. Member for Holborn and St. Pancras inevitably asked more questions than answers. Off hand, I cannot think of any question that he answered. He said that Labour would follow the expenditure pattern set this year by the Government. But he does not need to do that. If he wanted to, he could get rid of capping overnight. Legislative change is not needed. The capping orders that the House may consider when local authorities set their budgets will necessarily come after the election. He could say now, "We shall cap nobody. Go ahead boys, do what you want to do." It is not necessary to legislate to do that.

What would be the position in year two? If the hon. Members for Holborn and St. Pancras and for Durham, North-West (Ms Armstrong) are attacking the Government figures on council taxes in the Red Book, and if a Labour Government would maintain the Conservative Government's public expenditure control, the incoming Labour Government will have to agree to an increase in council taxes or cut the revenue support grant, which would cut public funding to local authorities from the centre. What would the Labour Government do? It is an important question. Opposition Members cannot have it both ways. Either a Labour Government will observe the expenditure constraints that have been set or they will throw them overboard. We need to know what the Opposition intend to do.

If the hon. Member for Holborn and St. Pancras is to use capping only as a reserve power—I use the words that he used—where is the saving to come from? If councils are not capped, there will be an increase in expenditure. Of course, the hon. Gentleman must find savings, because if we are to believe the right hon. Member for Dunfermline, East (Mr. Brown) the overall total will not change. The hon. Gentleman said that the distribution "will change". He said that he would see changes in the way in which the money will be allocated. He did not say anything about consulting anybody about the changes. Apparently that is not the same as changing the formula. I did not understand where the hon. Gentleman drew his distinction.

If distribution changes, those authorities whose provision increases will be able to spend more. That is a logical necessity. Authorities whose standard spending assessment reduces will still be able to spend at the same level, however, unless they are spending vastly over their SSA. So capping cannot force budget reductions. The effect of a major forced change in grant distribution can mean only an increase in public expenditure, which the right hon. Member for Dunfermline, East has said he will not tolerate. If capping is loosened, there will be an even greater increase in expenditure, which the right hon. Gentleman has said he will not tolerate.

We need to know where Labour stands. Is it a theoretical constraint or a practical constraint? Does it apply to the hon. Member for Holborn and St. Pancras or is it just for the birds? Where does this leave the Opposition in their claims about public expenditure?

We have heard the litany about Westminster, which is the Opposition's favourite council. We have heard notably about day visitors. Let us say that Westminster receives a grant of about £25 million for day visitors, which is 0.1 per cent. of RSG. What would happen if we opted for a great redistribution of that money? Let us suppose that we opted for County Durham, or the Durham authorities, as recipients of this munificence. It would amount to about £100,000 to be shared between County Durham, which is the county council, the seven districts, Darlington unitary authority and the police authority. It is worth noting who the big winners would be. Let us take Sedgefield, for example? Will it be £1 million or £2 million, £100,000 or £200,000? What will it be? It comes to a little over £20,000. Derwent Water would get £9,000, and Durham city would lose £34,000, because it receives a lot of money from the day visitor calculations. It would not be the only loser. Camden would lose £5.5 million, Tower Hamlets £1 million, Manchester £1.5 million, and even Blackpool, that haven of fresh air and fun, to which the hon. Member for Holborn and St. Pancras did not take his continental tourists—a terrible mistake that will be deeply resented in the town of the party conferences—would lose £150,000.

That is what would happen if the hon. Gentleman did nothing to damp the changes. If he damped the changes, the net benefit would be the square root of tuppence ha'penny. That shows how poverty stricken the Labour party's central proposition is.

The hon. Gentleman referred to the index. Let me tell him what is in the index that he so derides. It is about the proportion of households living in housing that is not self-contained or permanent, the proportion of households in overcrowded accommodation, the proportion living in rented accommodation, the proportion likely to be from ethnic minorities—born outside Britain, Ireland, the European Union, the old Commonwealth or the United States—or the proportion of households in priority need of housing. Those are the indicators of need that we use, and which are so roundly ridiculed and condemned by the Opposition.

Mr. Dennis Turner (Wolverhampton, South-East)

Will the Minister give way?

Mr. Curry

The hon. Gentleman was not present for the whole debate, so I shall not give way to him now.

Mr. Turner

On a point of order, Madam Speaker. The Minister said—as he did in the previous debate on local government—that I was not in my place during the debate. I was present during the speech of my hon. Friend the Member for North-West Durham (Ms Armstrong) and during the Minister's winding-up speech, and I wanted him to give way so as to hear about Wolverhampton.

Madam Speaker

I think that that was a point of frustration rather than a point of order.

Mr. Curry

We had the maiden voyage of Labour's new flagship local authority, which appears to be Harlow. In 1996–97, Harlow budgeted 40 per cent. above SSA, and this year it will budget at 43 per cent. above SSA if it is at its cap. Its council tax collection costs per household are £26.79 against a family average of £16.90. Its number of staff per thousand population is 17.5 against a family average of 8.7. Harlow is to efficient local government what J. Paul Getty is to beachcombing. If that is Labour's flagship, heaven help the flotilla and God save the admiral in charge of the fleet.

Hon. Members raised a great many points on the details of the settlements, a number of which related to the new unitary authorities. They will be looking for the efficiencies that we expect will come from bringing services together under one roof. A further tranche of credits will be released later in the year to deal with matters such as redundancy, because local authorities have asked for that.

My hon. Friend the Member for South-West Bedfordshire (Sir D. Madel) and others referred to transitional grant for council tax. I have noted the points that were made. Of course we will consider the needs of local authorities that face the particular strains of transition. My hon. Friend the Member for Wellingborough (Sir P. Fry) referred to social services, and his points were extremely well made in a debate in which individual services have figured very little.

The hon. Member for Hemsworth (Mr. Trickett)—who can be sensible when he does not think about it—said that the formula should take account of mine closures. The formula takes account of the number of short-term and long-term unemployed, and of the number of people who receive housing benefit and income support. He made a serious point about weightings for children, but he will know that the idea that everyone should receive the same value is nonsense. How would he weight the needs of a city such as Bradford, which has a high immigrant population, and some areas in South Yorkshire, which have a small immigrant population? It is a question of judgment and detail, and not of fundamental principle.

It must be recognised that the supertram is a fundamentally misconceived project. If Sheffield had accepted some of the offers from the bus operators to carry out a joint ticketing operation at the start, it might have worked rather better. It seems that to go from where no one lives to where no one wants to go is an interminable journey—but there is still a problem to be solved, and I shall be meeting people shortly in that connection.

This is a sensible settlement, and a necessary settlement. The Opposition are talking nothing but hot air, and I commend the settlement to the House.

Question put:—

The House divided: Ayes 311, Noes 269.

Division No. 63]	[9.59 pm
AYES
Ainsworth, Peter (E Surrey)	Boyson, Sir Rhodes
Aitken, Jonathan	Brandreth, Gyles
Alexander, Richard	Brazier, Julian
Alison, Michael (Selby)	Bright, Sir Graham
Allason, Rupert (Totbay)	Brooke, Peter
Amess, David	Brown, Michael (Brigg Cl'thorpes)
Ancram, Michael	Browning, Mrs Angela
Arbuthnot, James	Bruce, Ian (S Dorset)
Arnold, Jacques (Gravesham)	Budgen, Nicholas
Arnold, Sir Thomas (Hazel G)	Burns, Simon
Ashby, David	Burt, Alistair
Atkinson, David (Bour'mth E)	Butcher, John
Atkinson, Peter (Hexham)	Butler, Peter
Baker, Kenneth (Mole V)	Butterfill, John
Baldry, Tony	Carlisle, John (Luton N)
Banks, Matthew (Southport)	Carlisle, Sir Kenneth (Linc'n)
Banks, Robert (Harrogate)	Carttiss, Michael
Bates, Michael	Cash, William
Batiste, Spencer	Channon, Paul
Bellingham, Henry	Chapman, Sir Sydney
Bendall, Vivian	Clappison, James
Beresford, Sir Paul	Clark, Dr Michael (Rochf'd)
Biffen, John	Clarke, Kenneth (Rushcliffe)
Body, Sir Richard	Clifton-Brown, Geoffrey
Bonsor, Sir Nicholas	Coe, Sebastian
Booth, Hartley	Colvin, Michael
Boswell, Tim	Congdon, David
Bottomley, Peter (Eltham)	Conway, Derek
Bottomley, Mrs Virginia	Coombs, Anthony (Wyre F)
Bowden, Sir Andrew	Coombs, Simon (Swindon)
Bowis, John	Cope, Sir John

Cormack, Sir Patrick	Hogg, Douglas (Grantham)
Couchman, James	Horam, John
Cran, James	Hordern, Sir Peter
Currie, Mrs Edwina	Howard, Michael
Curry, David	Howell, David (Guildf'd)
Davies, Quentin (Stamf'd)	Howell, Sir Ralph (N Norfolk)
Davis, David (Boothferry)	Hughes, Robert G (Harrow W)
Day, Stephen	Hunt, David (Wirral W)
Deva, Nirj Joseph	Hunt, Sir John (Ravensb'ne)
Devlin, Tim	Hunter, Andrew
Dicks, Terry	Hurd, Douglas
Dorrell, Stephen	Jack, Michael
Douglas-Hamilton, Lord James	Jackson, Robert (Wantage)
Dover, Den	Jenkin, Bernard (Colchester N)
Duncan, Alan	Jessel, Toby
Duncan Smith, Iain	Johnson Smith, Sir Geoffrey
Dunn, Bob	Jones, Gwilym (Cardiff N)
Durant, Sir Anthony	Jones, Robert B (W Herts)
Dykes, Hugh	Jopling, Michael
Eggar, Tim	Kellett-Bowman, Dame Elaine
Elletson, Harold	Key, Robert
Emery, Sir Peter	King, Tom
Evans, David (Welwyn Hatf'ld)	Kirkhope, Timothy
Evans, Jonathan (Brecon)	Knapman, Roger
Evans, Nigel (Ribble V)	Knight, Mrs Angela (Erewash)
Evans, Roger (Monmouth)	Knight, Greg (Derby N)
Evennett, David	Knight, Dame Jill (Edgbaston)
Faber, David	Knox, Sir David
Fabricant, Michael	Kynoch, George
Fenner, Dame Peggy	Lait, Mrs Jacqui
Field, Barry (Isle of Wight)	Lamont, Norman
Fishburn, Dudley	Lang, Ian
Forman, Nigel	Lawrence, Sir Ivan
Forsyth, Michael (Stirling)	Legg, Barry
Forth, Eric	Leigh, Edward
Fowler, Sir Norman	Lennox-Boyd, Sir Mark
Fox, Dr Liam (Woodspring)	Lester, Sir Jim (Broxtowe)
Fox, Sir Marcus (Shipley)	Lidington, David
Freeman, Roger	Lilley, Peter
French, Douglas	Lloyd, Sir Peter (Fareham)
Fry, Sir Peter	Lord, Michael
Gale, Roger	Luff, Peter
Gallie, Phil	Lyell, Sir Nicholas
Garel-Jones, Tristan	MacGregor, John
Garnier, Edward	MacKay, Andrew
Gill, Christopher	Maclean, David
Gillan, Mrs Cheryl	McLoughlin, Patrick
Goodlad, Alastair	McNair-Wilson, Sir Patrick
Goodson-Wickes, Dr Charles	Madel, Sir David
Gorman, Mrs Teresa	Maitland, Lady Olga
Gorst, Sir John	Malone, Gerald
Grant, Sir Anthony (SW Cambs)	Mans, Keith
Greenway, Harry (Ealing N)	Marland, Paul
Greenway, John (Ryedale)	Marlow, Tony
Griffiths, Peter (Portsmouth N)	Marshall, John (Hendon S)
Gummer, John	Marshall, Sir Michael (Arundel)
Hague, William	Martin, David (Portsmouth S)
Hamilton, Sir Archibald	Mates, Michael
Hamilton, Neil (Tatton)	Mawhinney, Dr Brian
Hampson, Dr Keith	Mayhew, Sir Patrick
Hanley, Jeremy	Mellor, David
Hannam, Sir John	Merchant, Piers
Hargreaves, Andrew	Mitchell, Andrew (Gedling)
Harris, David	Mitchell, Sir David (NW Hants)
Haselhurst, Sir Alan	Moate, Sir Roger
Hawkins, Nick	Monro, Sir Hector
Hawksley, Warren	Montgomery, Sir Fergus
Hayes, Jerry	Moss, Malcolm
Heald, Oliver	Needham, Richard
Heath, Sir Edward	Nelson, Anthony
Heathcoat-Amory, David	Neubert, Sir Michael
Hendry, Charles	Newton, Tony
Heseltine, Michael	Nicholls, Patrick
Hicks, Sir Robert	Nicholson, David (Taunton)
Higgins, Sir Terence	Norris, Steve
Hill, Sir James (Southampton Test)	Onslow, Sir Cranley

Oppenheim, Phillip	Stern, Michael
Page, Richard	Stewart, Allan
Paice, James	Streeter, Gary
Patnick, Sir Irvine	Sumberg, David
Patten, John	Sweeney, Walter
Pattie, Sir Geoffrey	Sykes, John
Pawsey, James	Tapsell, Sir Peter
Peacock, Mrs Elizabeth	Taylor, Ian (Esher)
Pickles, Eric	Taylor, John M (Solihull)
Porter, David	Taylor, Sir Teddy
Portillo, Michael	Temple-Morris, Peter
Powell, William (Corby)	Thomason, Roy
Rathbone, Tim	Thompson, Sir Donald (Calder V)
Redwood, John	Thompson, Patrick (Norwich N)
Renton, Tim	Thornton, Sir Malcolm
Richards, Rod	Townend, John (Bridlington)
Riddick, Graham	Townsend, Sir Cyril (Bexl'yh'th)
Rifkind, Malcolm	Tracey, Richard
Robathan, Andrew	Tredinnick, David
Roberts, Sir Wyn	Trend, Michael
Robertson, Raymond S (Ab'd'n S)	Trotter, Neville
Robinson, Mark (Somerton)	Twinn, Dr Ian
Roe, Mrs Marion	Vaughan, Sir Gerard
Rowe, Andrew	Viggers, Peter
Rumbold, Dame Angela	Waldegrave, William
Ryder, Richard	Walden, George
Sackville, Tom	Walker, Bill (N Tayside)
Sainsbury, Sir Timothy	Waller, Gary
	Ward, John
Scott, Sir Nicholas	Wardle, Charles (Bexhill)
Shaw, David (Dover)	Waterson, Nigel
Shaw, Sir Giles (Pudsey)	Watts, John
Shephard, Mrs Gillian	Wells, Bowen
Shepherd, Richard (Aldridge)	Wheeler, Sir John
Shersby, Sir Michael	Whitney, Sir Raymond
Sims, Sir Roger	Whittingdale, John
Skeet, Sir Trevor	Widdecombe, Miss Ann
Smith, Sir Dudley (Warwick)	Wiggin, Sir Jerry
Smith, Tim (Beaconsf'ld)	Wilkinson, John
Soames, Nicholas	Willetts, David
Speed, Sir Keith	Wilshire, David
Spencer, Sir Derek	Winterton, Mrs Ann (Congleton)
Spicer, Sir Jim (W Dorset)	Winterton, Nicholas (Macclesf'ld)
Spicer, Sir Michael (S Worcs)	Wolfson, Mark
Spink, Dr Robert	Wood, Timothy
Spring, Richard	Yeo, Tim
Sproat, Iain	Young, Sir George
Squire, Robin (Hornchurch)
Stanley, Sir John	Tellers for the Ayes:
Steen, Anthony	Mr. Richard Ottaway and
Stephen, Michael	Mr. Matthew Carrington.

NOES
Abbott, Ms Diane	Betts, Clive
Adams, Mrs Irene	Blunkett, David
Ainger, Nick	Boateng, Paul
Ainsworth, Robert (Cov'try NE)	Bradley, Keith
Allen, Graham	Bray, Dr Jeremy
Alton, David	Brown, Gordon (Dunfermline E)
Anderson, Donald (Swansea E)	Brown, Nicholas (Newcastle E)
Armstrong, Ms Hilary	Bruce, Malcolm (Gordon)
Ashton, Joseph	Burden, Richard
Austin-Walker, John	Byers, Stephen
Banks, Tony (Newham NW)	Callaghan, Jim
Barnes, Harry	Campbell, Mrs Anne (C'bridge)
Barron, Kevin	Campbell, Menzies (Fife NE)
Battle, John	Campbell, Ronnie (Blyth V)
Bayley, Hugh	Campbell-Savours, D N
Beckett, Mrs Margaret	Canavan, Dennis
Beith, A J	Cann, Jamie
Bell, Stuart	Carlile, Alex (Montgomery)
Benn, Tony	Chidgey, David
Bennett, Andrew F	Chisholm, Malcolm
Benton, Joe	Church, Ms Judith
Bermingham, Gerald	Clapham, Michael
Berry, Roger	Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)	Hoon, Geoffrey
Clelland, David	Howarth, Alan (Stratf'd-on-A)
Clwyd, Mrs Ann	Howarth, George (Knowsley N)
Coffey, Ms Ann	Howells, Dr Kim
Cohen, Harry	Hoyle, Doug
Cook, Frank (Stockton N)	Hughes, Robert (Ab'd'n N)
Cook, Robin (Livingston)	Hughes, Roy (Newport E)
Corbett, Robin	Hughes, Simon (Southward)
Corbyn, Jeremy	Hutton, John
Corston, Ms Jean	Illsley, Eric
Cousins, Jim	Ingram, Adam
Cox, Tom	Jackson, Ms Glenda (Hampst'd)
Cummings, John	Jackson, Mrs Helen (Hillsborough)
Cunliffe, Lawrence	Jamieson, David
Cunningham, Jim (Cov'try SE)	Janner, Greville
Cunningham, Dr John	Jenkins, Brian D (SE Staffs)
Dafis, Cynog	Johnston, Sir Russell
Dalyell, Tam	Jones, Barry (Alyn & D'side)
Darling, Alistair	Jones, Ieuan Wyn (Ynys Môn)
Davies, Bryan (Oldham C)	Jones, Jon Owen (Cardiff C)
Davies, Chris (Littleborough)	Jones, Dr L (B'ham Selly Oak)
Davies, Denzil (Llanelli)	Jones, Martyn (Clwyd SW)
Davies, Ron (Caerphilly)	Jowell, Ms Tessa
Davis, Terry (B'ham Hodge H)	Keen, Alan
Denham, John	Kennedy, Charles (Ross C & S)
Dewar, Donald	Kennedy, Mrs Jane (Broadgreen)
Dixon, Don	Khabra, Piara S
Dobson, Frank	Lestor, Miss Joan (Eccles)
Donohoe, Brian H	Lewis, Terry
Dowd, Jim	Liddell, Mrs Helen
Dunwoody, Mrs Gwyneth	Litherland, Robert
Eastham, Ken	Livingstone, Ken
Ennis, Jeff	Lloyd, Tony (Stretf'd)
Etherington, Bill	Llwyd, Elfyn
Evans, John (St Helens N)	Loyden, Eddie
Fatchett, Derek	McAllion, John
Faulds, Andrew	McAvoy, Thomas
Field, Frank (Birkenhead)	Macdonald, Calum
Fisher, Mark	McFall, John
Flynn, Paul	McKelvey, William
Foster, Derek	McLeish, Henry
Foster, Don (Bath)	Maclennan, Robert
Foulkes, George	McNamara, Kevin
Fraser, John	MacShane, Denis
Fyfe, Mrs Maria	McWilliam, John
Galbraith, Sam	Madden, Max
Galloway, George	Maddock, Mrs Diana
Gapes, Mike	Mahon, Mrs Alice
Garrett, John	Mandelson, Peter
George, Bruce	Marshall, David (Shettleston)
Gerrard, Neil	Marshall, Jim (Leicester S)
Gilbert, Dr John	Martin, Michael J (Springburn)
Godman, Dr Norman A	Maxton, John
Godsiff, Roger	Meacher, Michael
Golding, Mrs Llin	Meale, Alan
Gordon, Ms Mildred	Michael, Alun
Graham, Thomas	Michie, Bill (Shef'ld Heeley)
Grant, Bernie (Tottenham)	Michie, Mrs Ray (Argyll Bute)
Griffiths, Nigel (Edinburgh S)	Milburn, Alan
Griffiths, Win (Bridgend)	Miller, Andrew
Grocott, Bruce	Mitchell, Austin (Gt Grimsby)
Gunnell, John	Moonie, Dr Lewis
Hain, Peter	Morgan, Rhodri
Hall, Mike	Morley, Elliot
Hardy, Peter	Morris, Alfred (Wy'nshawe)
Harman, Ms Harriet	Morris, Ms Estelle (B'ham Yardley)
Harvey, Nick	Morris, John (Aberavon)
Hattersley, Roy	Mowlam, Ms Marjorie
Henderson, Doug	Mudie, George
Heppell, John	Mullin, Chris
Hill, Keith (Streatham)	Murphy, Paul
Hinchliffe, David	Oakes, Gordon
Hoey, Kate	O'Brien, Mike (N Warks)
Hogg, Norman (Cumbernauld)	O'Brien, William (Normanton)
Home Robertson, John	O'Hara, Edward
Hood, Jimmy	Olner, Bill

O'Neill, Martin	Spearing, Nigel
Orme, Stanley	Spellar, John
Pearson, Ian	Squire, Ms R. (Dunfermline W)
Pendry, Tom	Steinberg, Gerry
Pickthall, Colin	Stevenson, George
Pike, Peter L	Strang, Dr Gavin
Pope, Greg	Straw, Jack
Powell, Sir Raymond (Ogmore)	Sutcliffe, Gerry
Prentice, Mrs B (Lewisham E)	Taylor, Mrs Ann (Dewsbury)
Prentice, Gordon (Pendle)	Taylor, Matthew (Truro)
Primarolo, Ms Dawn	Thompson, Jack (Wansbeck)
Purchase, Ken	Thurnham, Peter
Quin, Ms Joyce	Timms, Stephen
Radice, Giles	Tipping, Paddy
Randall, Stuart	Touhig, Don
Raynsford, Nick	Trickett, Jon
Reid, Dr John	Turner, Dennis
Rendel, David	Tyler, Paul
Robinson, Geoffrey (Cov'try NW)	Vaz, Keith
Roche, Mrs Barbara	Walker, Sir Harold
Rogers, Allan	Wallace, James
Rooker, Jeff	Walley, Ms Joan
Rooney, Terry	Wardell, Gareth (Gower)
Ross, Ernie (Dundee W)	Wareing, Robert N
	Watson, Mike
Rowlands, Ted	Wicks, Malcolm
Sedgemore, Brian	Wigley, Dafydd
Sheerman, Barry	Williams, Alan (Swansea W)
Sheldon, Robert	Williams, Alan W (Carmarthen)
Shore, Peter	Winnick, David
Short, Clare	Wise, Mrs Audrey
Simpson, Alan	Worthington, Tony
Skinner, Dennis	Wray, Jimmy
Smith, Andrew (Oxford E)	Wright, Dr Tony
Smith, Chris (Islington S)
Smith, Llew (Blaenau Gwent)	Tellers for the Noes:
Snape, Peter	Mr. Kevin Hughes and
Soley, Clive	Ms Angela Eagle.

Question accordingly agreed to.

Resolved, That the Local Government Finance Report (England) 1997–98 (House of Commons Paper No. 203), which was laid before this House on 27th January, be approved.

MADAM SPEAKER then put the remaining Questions required to be put at that hour.

Resolved, That the Special Grant Report (No. 23) (House of Commons Paper No. 204), which was laid before this House on 27th January, be approved. That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1997–98 (House of Commons Paper No. 205), which was laid before this House on 27th January, be approved.—[Mr. Peter Ainsworth.]