HC Deb 12 June 1997 vol 295 cc1334-44

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Graham Allen.]

6.47 pm
Mr. David Heath (Somerton and Frome)

This is a particularly timely debate in more ways than one. I am surprised to be addressing the House at such an early hour. As the Minister will appreciate, the debate is timely because of the announcement of the capping of Somerset county council a couple of weeks ago. It will come as no great surprise to him to hear me say that the capping announcement was a considerable disappointment to the many people I represent in Somerset and those in the wider county. They had hoped, perhaps in vain, for rather better from the new Government.

The county council will decide within the next week whether it wishes to appeal against that capping designation. I have a strong suspicion that it will decide that it will wish to appeal. If I am right, it will certainly have my support and that, I believe, of the other Members of Parliament representing Somerset. We will support the county council, because we believe that it has an extremely strong case.

That is not a surprising statement. All councils believe that they have a strong case to spend more. I have sat through enough meetings of the Consultative Council on Local Government Finance and other consultative bodies to know that the arguments that go backwards and forwards between local and central Government tend to be a little stereotypical and to be rehearsed in detail each year, but I honestly believe that there are good reasons why Somerset's case merits close consideration.

The first is that there is no doubt that Somerset county council is extremely badly treated by the formulae. Remember that, this time around, Somerset was given a capping limit of 2 per cent., the lowest of all the county authorities. Remember also that the amount that Somerset county council has budgeted to spend in excess of that limit is marginal in its context—a further 1.2 per cent and a total of £3.6 million.

Secondly, the county council has an extraordinary record of efficiency and prudence in the way in which it conducts its business, and we can substantiate that. Thirdly, the areas in which that money is be spent are precisely those that the new Government claim are their priorities over coming years. The county council has made it clear that its interests and priorities are to protect frail and elderly people, to provide a proper education for our children and to maintain the safety of citizens in Somerset. Those are, I hope, aspirations that the Government share.

Let us deal with the formulae. Somerset is not a high-spending authority. There are no aspects of county spending to which people can point and say, "There is an authority that spends over the top on its services." They can say, of course, that Somerset spends more than its standard spending assessment allowances. Were that not true, the county would be in a parlous state. It spends £12 million more than the education SSA. Despite that, its education spending is still 4 per cent. below the Audit Commission family average. No one who has visited Somerset schools and who knows the Somerset education service would believe that Somerset is a high-spending authority in terms of education.

Why, then, is the SSA so inadequate? Technical issues need to be considered. They are based on sparsity factors and the rural nature of Somerset, which falls between all the measures that are reflected in the SSA. The SSA fails to reflect properly the growth not only in the population but in the clientele in the most important sectors—the number of children in school and the number of elderly persons and persons needing support from the social services departments.

Therefore, the SSA is at fault; and then we have the area cost adjustment. Were the right hon. Member for Bridgwater (Mr. King) here, I am sure that he would want to intervene at this point to say how important it is that the area cost adjustment be reviewed. He has consistently held that view from the moment that he ceased to be a Minister with responsibility for the environment.

Other factors, such as the landfill tax, weigh heavily on a county such as Somerset, which has no realistic alternatives because—again—of the sparsity of the population. It faces a substantial imposition in terms of the landfill tax, without the room within the capping formulae to provide.

Remember that a previous Government already considered an appeal against capping designation by Somerset in 1995–96 and, wonder of wonders, they agreed with us. Somerset is the only authority that has ever successfully gone through the cap and been granted every penny that it asked for. The formulae were clearly out of step with the county's needs. In that year, the council was granted an extra £2.6 million, which represented a 1 per cent. addition to its expenditure.

Let us consider the efficiency and effectiveness of the authority's education service. Somerset has the lowest administrative costs of any authority in the country—£9.29 per child; some authorities spend more than £120 per child. That is out of all proportion, and shows the level of the education service's effectiveness and efficiency. Somerset has the highest proportion of spending devolved to schools and, as I have mentioned, the highest spending above SSA of any county. It also has the lowest proportion of surplus places in primary schools. Given that we have many village schools and schools that are monopoly providers for the area they serve, that is a remarkable achievement.

The maximum amount of money that is provided from Government is going to our schools, yet our schools still suffer from underfunding. Class sizes have been steadily increasing. Last year, before the general election, I was the first Somerset education committee chairman in eight years to propose a budget that did not involve real-terms cuts, which is remarkable, but that depended on the county council being allowed to spend above the capping designation.

Social services are equally important. Somerset was one of the first counties to externalise its residential care service and it is the only one to have externalised domiciliary care. That may be right or it may be wrong, but what is absolutely certain is that the results are very low unit costs and very low management and support costs. That has just been checked by the Audit Commission and the social services inspectorate and it is demonstrably the case. Again, the fire service has among the lowest costs in the country, yet it is one of the most efficient brigades in terms of its call-out response time. Expenditure on highways maintenance, which is among the lowest in the country, has now been put into education.

All that means that the county is operating extremely effectively. There is no spare money. There is no scope for using reserves, as some authorities might, because there are no reserves. There have been no reserves for many years. Few—one can never say never—further administrative savings can be made within the county. The results of cutting real-terms expenditure are cuts in the services that people in the county need.

Where, therefore, will the extra £3.4 million of expenditure go? Is it to be frittered away? Of course not. It is to go in the main to education—an extra £2 million. Here I must declare an interest. I have two children in a Somerset school. They will be affected by the proposals. They will certainly be affected if the Government impose the capping limit.

I have mentioned that class sizes have increased. In 1995, 24.9 per cent. of primary classes in the county contained more than 30 children; in 1997, the figure has gone up to 31.6 per cent. We are not crying wolf. Those are real affects in our schools. As I have said, this year, we have a standstill budget, but what if the designation is confirmed? It will mean 90 teachers will lose their jobs. How do the Government reconcile that with the priority of education, education, education? How would they find the extra £1 million that will then have to be spent on redundancies, to sack teachers, instead of paying for more teachers for a better education for our children?

The rest of the money totals £1.4 million, which is to go towards social services. Already, we have limited support in the county for carers. Already, domestic support to the frail and elderly has been cut. Already, the home care service has been cut. If the designation is confirmed, 125 places for elderly people in care homes will be lost and 50,000 hours of personal care for the frail and elderly will be lost. The child care team will also be cut.

No caring council would contemplate making such cuts, and I suggest that no caring Government would contemplate enforcing them. I know that the Minister is a caring man: I am sure that he will consider my comments and listen to the representations made to him. I hope that he will not take it the wrong way when I ask him not to recite the brief to which he referred in replying to a similar debate on Oxfordshire several weeks ago. Parts of that brief seemed a little stale: perhaps they predated the change of Government and were written by the same civil servants. Perhaps the policy was a left-over from the previous Government.

I hope that the Minister will consider the realities of Somerset and its case. I hope that he will remember that the rationale for capping is to protect the public from irresponsible authorities and from excessive council tax increases. Somerset has a very low council tax compared with those of neighbouring authorities. It is not an extravagant authority, and there are no easy alternatives to be taken.

Who is being protected? Last week, I asked the Minister in a written question how many representations he had received from people in Somerset complaining about their council tax bills this year. The answer was none: not a single person from Somerset has complained about his or her council tax. However, many people have written to say that they do not want cuts in education, social services or the fire service.

The Conservatives assisted us in the last county council election by opposing going through the cap, thereby presenting a clear alternative to the people of Somerset. As a result, the Liberal Democrats won by a massive margin and the Conservatives made very little progress. Therefore, like the Government in this place, the Liberal Democrats have a mandate in Somerset.

I ask the Minister to consider matters of local accountability. The Government have just signed the charter of local self-government. Let the Minister prove that he believes in self-government by allowing local people the discretion to make local decisions about local services and what they are prepared to pay for them. That will not affect the departmental totals; it will affect the total spend, but, as far as I know, that has not been capped. It will not affect the Department's contribution to local authorities, but it will allow the county of Somerset to offer a fair deal to our children and our elderly.

I hope that the Minister's reply will not involve further reviews of sparsity, area cost adjustments and the SSA system. The children of Somerset cannot wait for those reviews to take place. It is a truism that children have only one chance at education. If the council is forced to sack teachers, it will have a devastating effect on the children in Somerset schools now—next year, the year after, some time or never will be too late for those children. The Minister has an opportunity to make a real difference to the services provided in Somerset. I urge him to seize that opportunity in responding to the debate and, more important, in responding to those representations that I fully expect him to receive from the county of Somerset in due course.

7.3 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Nick Raynsford)

I congratulate the hon. Member for Somerton and Frome (Mr. Heath) on his success in securing the Adjournment Debate this evening and on his powerful advocacy of his county council's case. He has put a strong and eloquent case, and I acknowledge his concern for the interests of his constituents and others in the county.

The hon. Gentleman will not be surprised to hear that my reply will inevitably reiterate many of the points that I made to the hon. Member for Oxford, West and Abingdon (Dr. Harris) during last week's debate. We are considering broad principles concerning the operation of local government finance that apply equally to Somerset and Oxfordshire county councils.

First, I shall make some general points about the new relationship between central and local government. As the hon. Member for Somerton and Frome mentioned in his speech, last week we signed the Council of Europe's charter of local self-government. That is a clear pledge of the Government's commitment to forging a new and constructive partnership with local government at home. Local government has a central role to play in tackling the neglect and mistakes of the past 18 years.

We recognise, and believe in, the importance of local government as an independent democratic institution. We want to reinvigorate local government in ways that encourage increased democracy, with local people having more say in the affairs of their council; increased autonomy, with more freedom for authorities to take their own decisions; increased accountability, with elected representatives being more visibly accountable for their actions; and increased partnership between central and local government and between local authorities and people, businesses and groups in their areas.

Within that framework, local authorities have important roles as commissioners and deliverers of a wide range of local services, of which education—which the hon. Gentleman described in considerable detail—housing and social services are often seen as the most important. Authorities are responsible for assessing service needs, balancing priorities, procuring delivery of services and providing them directly, monitoring standards, reviewing performance and acting on complaints.

However, local authorities are concerned with more than simply ensuring the delivery of high-quality services. We want to see local authorities develop their roles as leaders and champions of their areas: identifying local problems and areas of concern and developing strategies to address them; bringing groups, businesses and agencies together; and being the voice of local communities in dealing with Government, Europe, investors and other interests.

Local government is at the sharp end of the fight against deprivation. The Government will join local government in a concerted attack against the multiple causes of social and economic decline—social exclusion, unemployment, bad housing, crime, poor health and environmental problems. Good local government can play a key part in tackling those serious and deep-rooted problems.

Equally, we recognise that poor local government will stifle improvements not just directly in terms of the services that an authority provides, but by imposing an excessive cost burden on the community and creating a vacuum of community leadership. We therefore need to work with local government to ensure that people receive good-quality services from the whole of the public sector.

We also need to work together in developing our policies for local government. It is essential that we work together to create systems that work, and have detailed discussions about policy and implementation before we enact legislation. We want to forge close links with local government and related organisations that can make a real contribution. We want to see practical experience and knowledge brought to bear at the early, formative stages of policy development, and not left to the end of the process, when minds are made up and the scope for change is limited.

We have all had too much experience recently of central Government legislating in haste, and local government having to live with, and sort out, the problems that followed. We must now start to work together on future legislation. We must examine ways in which we can develop pilot studies on a wide range of issues including best value, a new approach to regeneration, community planning and partnerships with other agencies and democratic innovations.

We must—and intend to—work together to assess the scope of the new duty on local authorities to promote economic, social and environmental well-being in their areas, and on ways in which we can strengthen local authorities' community leadership role, facilitate innovation, and encourage local partnerships in the delivery of services. Of course, we must work closely with local government in order to implement our manifesto commitments on local government finance.

As to this year's settlement, all public expenditure programmes must be examined rigorously each year, and local government spending—which accounts for a quarter of all public expenditure—is no exception. Decisions on local government spending must take account of the pressures on local authorities and of the scope for greater efficiency and effectiveness within those authorities.

As I have stressed on other occasions, we have inherited this year's local government spending plans and are clearly committed to retaining them. Although we are committed to reviewing the local government finance system in future years, for this year at least we must work within the current spending plans.

Mr. Tom King (Bridgwater)

rose—

Mr. Raynsford

The right hon. Gentleman has just entered the Chamber. He cannot expect me to give way when he has not heard the opening speech by the hon. Member for Somerton and Frome and has had little opportunity to listen to my comments. I have made it quite clear that we inherited the local government spending arrangements.

Mr. King

rose—

Mr. Raynsford

I have already said that I am not prepared to give way to the right hon. Gentleman, who was not present for the speech by the hon. Member for Somerton and Frome.

Mr. King

On a point of order, Mr. Deputy Speaker. Can you confirm that this debate is entitled to run until 10 pm? The fact that the Government's business has collapsed does not affect that, so I hope that the Minister will reflect on that fact. I want to make only a brief intervention and I had already asked the hon. Member for Somerton and Frome (Mr. Heath) whether I could intervene. I happen to be a Somerset county Member. It would be unfortunate if the Minister, who is aware that the debate could continue until 10 pm, chooses not to allow me to make my brief intervention. I hope that he will feel able to accommodate me.

Mr. Deputy Speaker (Mr. Michael Lord)

Whether hon. Members give way is not a matter for the Chair—it is entirely a matter for the Minister.

Mr. Raynsford

Thank you, Mr. Deputy Speaker. I have made it clear to the right hon. Member for Bridgwater (Mr. King) that I am not giving way, and I shall explain why. He knows that this is a short debate and he is aware of the convention on Adjournment debates. The hon. Member for Somerton and Frome had the courtesy to tell me, before the debate began, that he had received a request from the right hon. Gentleman to intervene. Had the right hon. Gentleman been in the Chamber for this debate, I would have been happy to agree to that. However, he was not here. He did not have the courtesy to come to the Chamber and listen to the speech of the hon. Member for Somerton and Frome. Instead, he has come here 20 minutes after the start of the debate and expects to intervene, even though he has not listened to any of the comments of the hon. Member for Somerton and Frome and shows no interest in listening to what I have to say. I consider that to be a considerable discourtesy. The right hon. Gentleman, who has many years of experience in the House, should know better.

The hon. Member for Somerton and Frome introduced the debate in an intelligent, sensible and courteous way. He made a number of points about standard spending assessments. Since 1990–91, Somerset's overall SSA has increased broadly in line with the average increase for English authorities. For 1997–98, its SSA has increased by 1.9 per cent., which is only just below the average increase for shire counties and is well above the average 1.5 per cent. increase for English authorities as a whole.

The hon. Gentleman reasonably raised the question of the education SSA. He made a valid point, because Somerset's education SSA is relatively low compared with that of other counties—it is 33rd out of the 35 counties. It was an entirely proper point for him to make. However, what he did not say was that, on a number of other SSAs, Somerset does relatively well—for example, on highways maintenance it comes fourth out of the 35 counties, on other services 11 th, and on social services 15th. We acknowledge that the case he made on education is valid, but it is only a partial case that relates to only one service; it does not take account of the broad range.

The hon. Gentleman will understand that the framework for SSAs involves assessments of the need to spend under various headings. Those needs vary from authority to authority. Authorities will do well on some, but less well on others. That reflects the circumstances in their areas and the need for them to spend in relation to other authorities. That is why it is possible for an authority to score relatively low in relation to other authorities on some indicators, but to score relatively well on other indicators. That is the case with Somerset.

Mr. David Heath

I am sure that the Minister agrees that the education SSA and the revenue that derives from it is so large in comparison with the other services provided by a county council that, if the education SSA is wrongly assessed—especially to the degree that I think the hon. Gentleman almost recognised in his comments—that has an effect on every other service, as well as on the level of education that the county hopes to provide.

Mr. Raynsford

The hon. Gentleman makes a perfectly valid point. I have no doubt that, as and when the county seeks to make representations, that will be in the forefront of the issues raised. We shall listen carefully to any representations from the hon. Gentleman, his colleagues in the county council and others.

SSAs are the basis for the distribution of revenue support grant. They are based on measures of spending need that apply to all local authorities and they are discussed with representatives of local government. The SSAs for 1997–98 have been announced. As with total local government spending plans, we have said that they will not be revisited, and we do not propose to do so now.

Having said that, we are committed to a fair distribution of Government grant among authorities, and we believe that there is scope for improvement in the arrangements in future years. My colleagues and I shall look closely at the current SSA system. We shall listen to local government views on how SSAs might be improved, both for 1998–99 and in the longer term.

As the hon. Gentleman feels that the SSA system does not treat Somerset fairly, I should be happy to examine any proposals he has for different methods of calculation. However, as I pointed out to the hon. Member for Oxford, West and Abingdon last week, any system of this nature has to be universal, and any changes would need to apply to all authorities equally. When making any changes, we will, of course, want to be sure that they will produce a sounder assessment of needs.

Mr. Tom King

I want to apologise to the Minister for my earlier intervention. I am grateful to him for his courtesy in giving way now. He, too, is a long-serving Member, so he will understand that there is a problem when business collapses ahead of time. I merely wanted to point out that there is concern about the area cost adjustment. We made representations to the previous Government and a study was set up. Unfortunately, the basis on which it went forward led to an unhelpful result and we were then forced to ask for the study not to be implemented.

I apologise again to both the Minister and the hon. Member for Somerton and Frome for my inadvertent discourtesy in not being here at the start of the debate. I would be grateful for advice on what work is being done. I hope that the Minister or his colleague, the Minister of State, will receive a delegation of Somerset Members of Parliament who wish to press the urgency for a fresh approach to the ACA formula, which is so important in determining the overall level of expenditure for Somerset.

Mr. Raynsford

The right hon. Gentleman makes a valid point and I am happy that I allowed him to intervene. My previous comments related solely to the way in which his earlier intervention arose. I recognise that he has represented the area for a long time and has been involved in the issue of area cost adjustment, which has produced some curious consequences. The issue is complex, like many other elements in the local government finance scheme. Many of us start off with high hopes of achieving significant improvements. We set out our proposals, only to find that the consequences are very complex and often not as helpful as we had hoped.

It is a difficult area. I take the right hon. Gentleman's point about the need to re-examine the issue. If he and other hon. Members seek a meeting with either me or the Minister of State, we shall be glad to hear their representations.

With regard to capping, we again gave clear signals that, although we propose to replace in due course the current crude capping system, it would have to wait for future years. In the meantime, we said that we were proposing to follow the intentions of the previous Government for 1997–98. All authorities, including Somerset county council, knew that when setting their budgets.

The hon. Member for Somerton and Frome said that there was disappointment in the county council at our decision. It may have been disappointed, but it cannot have been surprised, because it was made clear that this year's local government framework was inherited and that the caps would apply.

Mr. David Rendel (Newbury)

I was present at the debate on Oxfordshire last week. I have heard the Minister's remarks so far tonight, although I am afraid that I did not hear all of the speech of my hon. Friend the Member for Somerton and Frome (Mr. Heath). The Minister has said once again that he is relying on the previous Government's plans in respect of both Somerset and Oxfordshire. There has been a strong indication from Conservative Members that, had they remained in government, they would have listened very carefully to representations made by Somerset and by Oxfordshire, and that they probably would have agreed with them. Will the Minister do the same?

Mr. Raynsford

The hon. Gentleman would be showing surprising naivety if he believed Conservative Members' protestations that they would act differently if they were still in government. It is very easy to repent after the event, and I am sceptical about such blandishments. The Government, however, will listen very carefully to the specific representations that we expect to receive from the counties of Somerset and—after last week's debate—Oxfordshire. We shall also do our best to accommodate sensible proposals for changes in the system that may help in future, and we shall listen to the authorities' case on this year's settlement.

Of 436 authorities, only three have set budgets that are significantly over their provisional capping limits. Our decision to designate those authorities demonstrates that we are taking our spending commitments seriously. We have also made it clear that, under our plans for replacing the current capping system in future, we shall retain reserve powers to control excessive council tax rises. Therefore, this year, all three authorities will be required to reduce their budgets unless they can demonstrate to us that they should not.

Under the capping legislation, capping principles apply to classes of authority, and we can consider an individual authority's detailed circumstances only if it budgets over cap. Somerset county council, having been through the process before, is well aware of that principle. The county was granted a capping concession on the previous occasion, in 1995–96—the hon. Member for Somerton and Frome said that it was a unique achievement—when, after making its representations, it was granted a concession of £2.6 million. That concession led not only to relief in that financial year but to a permanent increase in the authority's base budget, from which it continues to benefit.

This year, Somerset was allowed to increase its budget by 2 per cent. On the information available, there is nothing to suggest that Somerset is in a tougher position than counties that have budgeted within cap. The hon. Member for Somerton and Frome made the point that, in his opinion, Somerset was allowed the smallest cap increase of any authority. I do not think that that is correct, however, because many other counties received a 2 per cent. increase, and many other local authorities received 1.5 per cent. Therefore, Somerset was not alone in its increase.

As I said, the Government do not believe that Somerset is in a tougher position than counties that budgeted within cap. Our proposed cap would still allow the county to increase its budget by £5.58 million over its 1996 budget, when it fixed a budget that was within its cap. On the evidence that we have received to date, we think that that is a reasonable and achievable goal. As I said, however, we welcome and will listen carefully to any representations made by the hon. Member for Somerton and Frome or by Somerset county council.

Decisions on priorities between services is a matter for the authority itself. I accept entirely the importance that the hon. Member for Somerton and Frome attaches to education, because the Government have a similar concern for education. I am sure that he will accept, however, that it would be wrong for central Government to say how it believes authorities should divide their spending, because that is a matter for local authorities. It is not for me to suggest where authorities should make any reductions if their cap is confirmed. Local authorities would quite reasonably object if we attempted to dictate in such a manner.

At this stage in the capping process, authorities can accept the caps that we have proposed. When that happens, the cap limit is set by notice, and the authority can immediately set a revised lower budget and recalculate its council tax. Obviously, sending new bills will impose an extra administrative burden, the expense of which will have to be met from within the authority's revised budget. Such expense is a result of the authority's decision to breach the provisional cap, and all authorities are aware of those implications.

Mr. Norman Baker (Lewes)

Does the Minister realise that many Members will find his answer slightly depressing? He and the Labour party were elected to government, by a quite substantial margin, with a mandate for a fresh start. Furthermore, a part of the Labour manifesto dealt with a brand new start with local government, which, for the past 18 years, has been held in a stranglehold. Controls over most of UK local government—unlike controls over most local governments in Europe—have been excessive.

Does the Minister also realise that the local government elections, which were held on 1 May, also comprehensively rejected the Conservatives? The mandate at both national and local level, therefore, is to pursue a policy opposite to that pursued by the previous Government. I therefore do not understand why the Minister is pursuing a Conservative party policy. How can he be so attracted to capping when capping is anathema to equality between local and central Government, and by what right does he feel that he and other Ministers can override the wishes of the electorate and of individual county and district councils? The electorate voted for one policy, but a different policy is being imposed by the Government.

Mr. Raynsford

The hon. Gentleman cannot have been listening to my speech. I made it absolutely clear that the Government are committed to a new relationship with local authorities and to dealing with many of the problems that he and other Opposition Members have highlighted. I have also made it clear that we inherited a financial settlement that came into operation a month before we were elected. We have made it quite clear that, this year, we shall be working within that financial framework. It would not be possible to make such a commitment to the electorate and then to renege on it without being subjected to criticism of being a party that does not honour its pledges to the electorate.

The Government clearly stated what we would do—that we would work within the financial framework that we inherited—and we are doing it. We are, however, simultaneously examining ways in which we can improve relationships between local and central Government and improve local government's future financial framework. We shall improve those relationships and that framework.

Should Somerset wish to challenge its cap, it will have 28 days from the date of designation—until 18 June—to propose an alternative amount and to provide its reasons for doing so. The authority will not only be able to submit its written case, but will have an opportunity to meet me or one of my colleagues to make its case directly. A meeting has provisionally been arranged—for 26 June 1997—with my hon. Friend the Minister of State, Department of the Environment, Transport and the Regions, who has responsibility for housing and local government. We shall consider all the relevant points, including those made in this debate, before reaching our final decision.

Final caps will be stated in an order, which is, of course, subject to approval by the House. Once that process is complete, we shall notify the authority of its maximum permitted budget. If a budget reduction is confirmed, the authority would have 21 days in which to calculate a substitute budget requirement. It would then, of course, have to set a reduced council tax.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Seven o'clock.