Local Government Finance (Buckinghamshire) (Hansard, 14 January 1997)

§ Mr. David Lidington (Aylesbury)

I am grateful for this opportunity to raise the subject of the local government settlement, as it affects Buckinghamshire county council, for the financial year 1997–98. I welcome in particular the fact that my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) is in her place. She is, within the inevitable limitations imposed by her ministerial duties, assiduous in representing the interests of her constituents and the wider interests of the county to the appropriate authorities.

Buckinghamshire county council is an efficient and well-run local authority. It now faces difficult decisions about priorities, which are in large part the result of the creation of a separate unitary authority for the new city of Milton Keynes. The county council's record is a good one which combines good public services with prudent financial management. In terms of services, examination results in Buckinghamshire's schools are consistently among the best in the country. No fewer than nine schools in the county are figured in the chief inspector's published list of 200 which he singled out as the schools representing the best practice in the nation.

As for social services, the number of home care hours provided by the county council has risen by a fifth over the past three years. The county has established a close partnership with the voluntary sector. For example, the Buckingham association for the blind and the Royal National Institute for Deaf People provide services for visually and hearing impaired people on behalf of the county's social services. The county museum at Aylesbury was named as the national heritage museum of the year in 1996.

As one would expect, the county council has concentrated its expenditure on key services. Spending on schools over the past three financial years has risen from £148.8 million in 1994–95 to an estimated £155 million in the current financial year. Spending on social services follows a comparable pattern, increasing from £68 million in 1994–95 to an estimated £80 million in the present financial year.

Such a record requires rigorous attention to priorities. Buckingham has found £4 million of efficiency savings in the current year and identified an additional £4 million for the next financial year, partly through contracting out services to the private sector. Its aim is to cut administration and management more than will be made necessary in any event as a consequence of local government reform and the establishment of a separate unitary authority in Milton Keynes.

To take one department by way of example, a social services management review has cut £400,000 from administration costs over a full financial year. The library service secures no less than a fifth of its budget through income generation.

The county council has struck a sensible balance between the interests of the service user and those of the council tax payer. The council tax level in 235 Buckinghamshire is less than that of every neighbouring authority. For example, the council tax for a band D home is £464.21, whereas in neighbouring Oxfordshire, controlled by the Labour party, the comparable council tax is £510.45. Buckinghamshire, through prudent housekeeping, has managed to retain money for balances and reserves when many other more profligate authorities have found themselves with extremely shallow pockets.

The proposed local government reform will have a severe impact on this well-run authority. The same good principles that I have described will, of course, govern the setting of next year's budget. There is no denying, however, that reform of the local government structure will make life significantly more difficult for my constituents and those, for example, of my hon. Friend the Member for Beaconsfield (Mr. Smith), who I am pleased to see in his place and who represents areas in mid Bucks and south Bucks.

Milton Keynes has about 29 per cent. of the population of Buckinghamshire at present, but on the provisional figures from the Department of the Environment it is being awarded 34 per cent. of the standard spending assessment and 37 per cent. of support from central Government via business rates and revenue support grant. Those simple facts knock a hole in the county council's finances.

Those of us who represent areas outside Milton Keynes must acknowledge that there is huge support within that city—it extends across party political boundaries—for its own city government with a unitary council. We accept, too, that Ministers cannot pick and choose their favourite local authorities. They must apply the same distribution formula to every local authority in the country. Under that formula, Milton Keynes benefits because it is poorer than the rest of Buckinghamshire. There are more children in Milton Keynes than elsewhere in the county and more single parents. Therefore, in terms of needs factors identified in the distribution formula, it receives a disproportionately large share of the available money. In the rest of the county, that is seen as rough justice for Buckinghamshire, which has pursued a prudent financial course for many years.

If the county council spent to its cap next year without using balances, it would mean a council tax increase of 12.5 per cent. If Milton Keynes did the same, it would mean a council tax cut of 7 per cent. It is true that the provisional settlement will allow the continuing Buckinghamshire county council to spend more in 1997–98 than in the current year. Having talked to the council's leadership, I know that its priorities will again be schools and social services. The county is looking hard at how to use its balances to improve the situation, and at how to cut back on lower priorities to save money for key services.

Despite those principles, the council will have to make tough decisions, especially as rising school rolls and a growing number of elderly people place additional demands on service provision. I should add in passing that for Buckinghamshire, as for many other local authorities, an increase in teachers' pay, following the review body's decision, of much more than the rate of inflation would cause grave difficulties in planning the budget for the forthcoming financial year.

Sensible people realise that the Government have no secret crock of gold from which to dispense extra largesse on demand. In 1997–98, the Government intend to pay out 236 to local councils more than £35 billion via the business rate income and revenue support grant. That sum is roughly equal to the entire budget of the national health service, and it is about one and a half times what we spent on defence. I accept that we cannot isolate local government spending from overall decisions about public finances.

To increase central Government support for local councils by only 1 per cent. would, by my reckoning, cost more than £350 million. To set that in context, it is about the same as the cost of 10 new hospital building schemes, such as those presently planned for the South Buckinghamshire NHS trust and for Stoke Mandeville hospital. Unless the distribution formula is changed, there is no guarantee that Buckinghamshire will receive its fair share of any overall increase in spending next year or in subsequent years.

I hope that my right hon. Friend—sorry, I am jumping the gun—I hope that my hon. Friend the Minister, before making his final decision, will consider carefully the division of money between Milton Keynes and the continuing county council in Buckinghamshire. On a specific and detailed point, I hope that he will impress on his colleagues in the Department for Education and Employment the case for including in the calculations the four schools that provide for more than 600 pupils, because those figures have somehow gone missing from the Department's official listing. In the absence of that data, the SSA calculation for Buckinghamshire assumed that there were no pupils at those schools. Getting that calculation right will be worth £1.5 million to the county council.

I hope that my hon. Friend will encourage the shadow unitary authority in Milton Keynes to work with Buckinghamshire county council to dispose of surplus land and other capital assets as quickly as possible, so that some of the proceeds from such sales can be used to fund services in the forthcoming financial year. Until the change of heart that was signalled in the past week or two, Milton Keynes had proved reluctant to act in that respect, and any persuasive powers that my hon. Friend can bring to bear will be most welcome.

In the medium term, I ask Environment Ministers to reconsider the composition of the SSA formula—I accept that it is too late for these points to be considered in the context of the 1997–98 financial year.

Two factors in particular deserve attention. The first is sparsity. Not only Buckinghamshire but other continuing counties affected by the creation of new unitary authorities have been hit in the provisional calculations by the weight given in the distribution formula to urban needs rather than factors specific to rural areas, and giving more weight to that sparsity factor would be one way of addressing the disparity.

Perhaps even more important is the need for the Government to implement the recommendations of Professor Elliot's independent inquiry into the area costs adjustment, which the Department commissioned. Had those proposals been in force, Buckinghamshire county council would have had an extra £7.5 million in 1997–98, which is equivalent to about 2.6 per cent. of the county's budget. Implementation of the report would also have benefited the Thames Valley police authority and Aylesbury Vale, Wycombe and Chiltern district councils, all of which provide services in my constituency.

I hope that, with his characteristic robustness, my hon. Friend the Minister will not allow himself and his colleagues to be seduced by the blandishments of the 237 Labour and Liberal councillors who dominate the local authority associations, but will take the Elliot report—which the Government commissioned—off the back burner and press ahead with its implementation as soon as possible. I look forward to his reply, and hope that he will find ways to support a council that provides excellent value for money.

§ The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford)

I congratulate my hon. Friends the Members for Aylesbury (Mr. Lidington) and for Beaconsfield (Mr. Smith) on their contributions to the debate. I shall reply to my hon. Friend the Member for Beaconsfield first, as that is simplest. I thank him for his recognition of the efforts that have been made. On the basis of past evenings, I waited for a "but", but it did not come, which was bound to be rather pleasant.

I think that we all recognise that Buckinghamshire—with a Conservative county council—has a well-established reputation for tight and effective budgeting. In setting its budget it has taken an even-handed approach, responding to the priorities highlighted most frequently by its electorate and favouring education and social services. Spending has been well targeted, and services have been delivered effectively and efficiently.

I recognise the challenge that the county faces as it approaches reorganisation. Milton Keynes's move to unitary status later this year, and the disaggregation of the county's budget that that has necessitated, have brought their own difficulties. Recently—this, I think, is accepted by my hon. Friend the Member for Aylesbury—it has been a credit to both authorities that they have been able to reach a considerable measure of agreement on disaggregation. They are proceeding with encouragement from some of my right hon. and hon. Friends in the Department.

The authorities are, I think, recognising that the time has come when they must act, and do so by agreement, because if they do not we will have to step in and have a say. It is much better if the matter is sorted out simply and straightforwardly between them, and that is happening. I am sure that Buckinghamshire will continue to meet the challenges of reorganisation in the same constructive manner.

238 My hon. Friend raises a point about some of the data. If he could imagine the volume of data that has to be gone through for each local authority and for all the standard spending assessment needs and calculations, he would recognise that, occasionally, the data are a little awry. We will consider not only his points and those of both local authorities in their representations to the Department, but, in particular, the data anomalies.

My hon. Friend recognises the need to control public expenditure. Local government accounts for about a quarter of general government expenditure and authorities must play their part. That was spelt out to them when it was explained that the public, in effect, expect lower expenditure, lower taxation and lower council taxation but better services. The phrase, "More and better for less" has been used.

We have responded to frequent requests from local authority associations that they should be allowed to raise a greater proportion of their expenditure locally. However, the moment we offer them that opportunity, they scream, as the Labour Front-Bench team has, that that moves taxation from central to local government. The setting of it is, however, largely down to local authorities and they have the opportunity to reduce expenditure if they are willing—many are.

Although this is a tight settlement, we have ensured that the authorities will again be able to concentrate their increases in education, personal social services, the fire service and the police. Every year, there are shifts and changes. This year, as was mentioned, the review of the area cost adjustment, and research on the effects of sparsity and density of population on the costs of local authorities were again considered. Research was carried out by the Department of Health into social services for children and residential social services for the elderly. All research and the review of the area cost adjustment were discussed fully with individual authorities and the local authority associations.

On the sparsity factor, we finally came to a decision that was accepted fairly well by both local authority associations and the Government side of the discussion. If my hon. Friend's authority wishes to continue that discussion, I hope that it will move to do so because I am certainly willing to listen.

On the area cost adjustment, the only unanimous thing on which the local authority associations agreed was to disagree. That happened across the local associations and it is the same in the House, so we have accepted that the position is difficult and that we must consider it. We are conducting a review and we will consult and discuss further on the matter.

We need to accept—there is good reason for this—that forward-thinking authorities such as Buckinghamshire county council will continue not only to deliver the best value for money to their local residents and council tax payers, but to look for new and better ways of providing services and reducing expenditure. In particular they will accept that disaggregation offers a chance to move forward towards the millennium, with a Conservative council showing us the way throughout Britain.