Standard Spending Assessments (Hansard, 3 June 1997)

§ 6. Mr. Skinner
To ask the Secretary of State for the Environment, Transport and the Regions if he will introduce measures to increase the total standard spending assessments in areas of high unemployment. [449]

§ The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford)
We will introduce measures that will lead to a fairer distribution of grant. Unemployment currently forms part of the economic index used in the calculation of standard spending assessments. That is one of the aspects of SSAs that we are reviewing this year, and we have notified the Local Government Association that we will do so in consultation with the assn. The Government are also committed to supporting areas of high unemployment through the welfare-to-work programme.

§ Mr. Skinner
Does my hon. Friend recall that, when we were a party of protest for 18 years and sat on the Opposition Benches, we used to regale the Tories and anyone else who cared to listen about the fact that Westminster and Wandsworth were getting money that should have gone to areas of high unemployment and to city areas that were deprived of money? Now that we are no longer a party of protest but a party of power, will my hon. Friend give guarantees, alongside those that he has already given, that areas of high unemployment, such as coalfield areas, will benefit and that places such as Westminster will not get the sort of money that they have received in the past?

§ Mr. Raynsford
My hon. Friend makes a fair point. Most fair-minded observers are shocked by a system that ensures that Westminster, which contains some of the most affluent areas in our country, features at number four in the social index ranking, whereas Bolsover features only in 322nd position. That is clearly not a just arrangement and we certainly intend to re-examine Westminster's treatment by the previous Administration.

§ Mr. David Heath
Will the hon. Gentleman consider the fact that not only urban areas but rural areas suffer from unfairness? One of the major unfairnesses is the area cost adjustment. Will he reopen the review on the basis not of Professor Elliott's review, which, when asked the wrong question produced the wrong answer, but of a fair reflection of the costs of unemployment?

§ Mr. Raynsford
The hon. Gentleman makes a valid point about one of the many intricacies of the local government finance system and he will not be surprised to know that we have entered into discussions with the Local Government Association about a range of issues; indeed we have mentioned the area cost adjustment. However, complex considerations need to be considered carefully and he will understand that we are going to do that before reaching any firm decision on the matter.

§ Mr. Sutcliffe
I welcome my hon. Friend to his post. In addition to looking at areas of high unemployment with the change in formula, will he look at areas with high ethnic minority populations to ensure that they get a fair share of the redistribution of grant?

§ Mr. Raynsford
My hon. Friend will be aware that the presence of significant numbers of people from ethnic 174 minorities is one of the factors taken into account in the indices used to calculate SSAs. It is one of the considerations that indicate a need for expenditure by local authorities. Clearly, in our review of those indices, we are considering that factor along with the other factors, in particular the issue of unemployment to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred.

§ Mr. Curry
Will the hon. Gentleman give the House the assurance that if a local authority's SSA reduces because of a change in methodology, that decline will be limited by damping and will he confirm that he will continue the established practice of limiting the reduction to a maximum of 2 per cent?

§ Mr. Raynsford
I can assure the right hon. Gentleman that we have already mentioned the issue of damping in our preliminary discussions. No decisions have been reached and we will need to discuss all those concerns much more fully with the relevant bodies, in particular the Local Government Association, before we reach final decisions on the review that we are currently undertaking.