HC Deb 23 January 1998 vol 304 cc1327-36

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

2.33 pm
Mr. Edward Davey (Kingston and Surbiton)

I want to begin by thanking you, Mr. Deputy Speaker, for allowing me to raise the matter of the local government settlement for the royal borough of Kingston on the Floor of the House. Despite many years of successive cuts for Kingston council, this is the first time that the issue has been properly raised in the House.

When my constituents voted for a change on 1 May last year, they did not expect the cuts imposed by the previous Government to continue. They certainly did not expect the cuts in essential services which the council is now having to consider.

The underlying difficulty in Kingston may have been caused by years of Conservative cuts, but this year's settlement is all the more difficult because of that history. Kingston has already made its major efficiency savings, and grant settlements that do not meet Kingston's increasing real needs will hurt. They are already hurting badly.

I am intensely keen to help the Government to find ways in which they can alleviate Kingston's problems not only this year but in the future. I applied for this debate in a constructive spirit, which is why I have given Ministers advance notice of many of my questions and concerns, so that we can together work out the problems. It is vital, however, that I disabuse Ministers of the perception of Kingston as some leafy borough, without its share of genuine deprivation and areas of relatively modest means. People who live in Norbiton, Tolworth, Chessington and New Malden are rightly proud of their communities, but in no way do they consider their areas as affluent as the Government seem to believe.

I shall first outline the problem that the council will face if the current settlement remains unchanged. Since 1993–94, Kingston has had to make real budget reductions of almost £21 million, and the coming year will be one of the worst. The proposed capping limit would require real budget reductions of £3 million, out of a total budget of only £106 million. As the council has taken the welcome action of passing in full to schools the Government's woefully inadequate education standard spending assessment increase of 4.3 per cent., as the Government requested, spending in all other spheres will have to be cut by well over £3 million.

In social services, there will be staff reductions in the family support service, thereby limiting day care services for very young children at risk of abuse. There will be a cut in services to children with special needs. According to council papers, other staff cuts will cause more work being dealt with on a crisis basis, with priorities geared only to high-risk interventions. In other words, some very vulnerable children in Kingston will go without the care they need.

The elderly, too—whether they live in Surbiton, Chessington, Tolworth or New Malden—will suffer because of the Government's low grant to Kingston council. Various charges for pensioners will have to be increased way above inflation, with charges for mobile meals set to rise to £2.50—one of the highest in London—representing an increase of over 15 per cent. Home care charges could rise by 10 per cent. Together, the charges will affect about 800 people, many of whom receive both home care and mobile meals. New charges at centres for the elderly, and cuts in respite care, also form part of the grim picture.

The cuts come at a time of huge increases in the number of referrals to community care services. Last year, for example, there was a 37 per cent. increase in learning disability referrals, and community mental health had an increase of more than 26 per cent. Nevertheless, Kingston's SSA has completely failed to take account of that magnitude of change. Kingston's personal social services SSA is well below the average for outer London boroughs, although its expenditure is on a par with those boroughs.

In only four years, cuts of almost £9 million have had to be made because of the combination of demand growth and a reduced real-terms social services SSA. I therefore ask for the Minister's assurance that she will ask her officials to re-examine Kingston's social services SSA, so that it more accurately reflects reality.

In the vital matter of schools, parents and teachers were bitterly disappointed when—despite our large class sizes—Kingston received one of the lowest education SSA increases, at only 4.3 per cent., compared with the national average of 5.7 per cent. I shall let head teachers' letters speak for themselves. The head teacher of St. John's Church of England primary school, Mr. van Schalkwyk, writes: I am so tired of the constant barrage from this and the last government that as a head described as inspirational in a recent Ofsted report I have decided to resign. My salary because of budget restrictions has only been increased once in 11 years. I no longer feel at 48 that the job is worth all the pressure and aggravation we are forced to endure in our schools. As secretary of the joint secondary, primary and special schools group in Kingston I realised that so much of our time has been spent fighting budget cuts and dealing with an onslaught of documentation that little time is left to raise standards. In the secondary sector, the head teacher of Surbiton' s Hollyfield school, Mr. Stephen Chamberlain, told me that successive cuts have led to increased class sizes, a reduction in pupils' choice of subjects, teacher stress, illness and retirement, the slowing down of IT development and the deterioration of existing buildings. Hollyfield and schools like it in Surbiton, Chessington and Tolworth are striving hard to improve, but it is difficult when the Government tie one arm behind their back.

All services in Kingston are affected by cuts. The borough's successful decentralised neighbourhood committees are being asked to bear a disproportionately high share of the budget reductions in order to limit as much as possible the damage to schools and social services. However, the services that neighbourhoods run are still important, whether they are the mobile library service, which is under threat, the public toilets, nearly all of which face closure, or the youth services, the funding for which is being cut.

I pledged to the Minister that I would be as constructive as possible, so I now offer a variety of possible solutions, some of which, incidentally, would not only help Kingston but could provide small but invaluable help to other outer London boroughs such as Hounslow and many northern metropolitan authorities such as Manchester, Oldham and Newcastle.

First, I ask that Kingston's cap be increased from 3 to 4 per cent. The majority of outer London boroughs, including all in Kingston's Audit Commission family group, have been allowed to increase their own cap in excess of 4 per cent. Why cannot Kingston do the same? Ministers would be right to argue that they cannot make special settlements for individual councils, but today I am not asking them to.

As Ministers and civil servants recently told councillors and council officers from Kingston, any increase in the cap for the royal borough would also have to be awarded to other outer London boroughs and metropolitan authorities—most of which are Labour controlled—which have caps set at less than 4 per cent. I urge Ministers to do just that.

The implications to the Exchequer would be minimal, even if a 4 per cent. cap were provided for all those authorities—only a possible £21.7 million additional spending out of a total increase of £1,776 million in the total standard spending. Even that would occur only if all 19 authorities utilised the whole increase. For Kingston, the extra £1.25 million that it could produce would go a long way towards saving some of the most essential services.

I believe that most people in Kingston would be prepared to pay the small addition to the council tax implied by a higher cap in order to see services saved. Indeed, a survey was sent to every household in Kingston, and nearly 60 per cent. of people who responded said that they would want to protect services by paying a council tax increase beyond that which would be permitted by a 4 per cent. cap.

There is a second way in which Ministers could assist Kingston, and it relates to the way Kingston proposes to operate nursery funding after the abolition of vouchers. The abolition is welcome but Kingston is badly disadvantaged by the way it is being implemented, specifically by the use of full-time equivalent calculation of pupil numbers for grant purposes rather than a head count calculation. Therefore, I ask the Minister to review the distribution of this part of the education SSA.

A third way in which the Government could help Kingston ameliorate its immediate budget problems would be by giving an early indication that the estimated total cost of asylum seekers to Kingston of some £735,000 next year will be met in total by the Government.

There are many dimensions to Kingston's budgetary problems, but I want to note Kingston's particular interest in relation to the new review of area cost adjustment. I hope that past distinguished work, especially the Elliott report, will not be overlooked by the new review.

There are many reasonable ways in which the Government could help Kingston this year and in the future. That brings me to my final point of substance—the future of funding of Kingston. What most disturbed many local people about this year's settlement was not just the actual figures but the statement by the Deputy Prime Minister that Kingston was a "leafy borough" and the implication that our social and educational needs were few. If that is really what Ministers believe, people fear that the years of Tory cuts are set to be followed by successive years of more Labour cuts. Today the Minister has an opportunity to allay these fears. I wish to help her obtain a more accurate picture of the social realities in Kingston.

Like me, the Minister may have enjoyed the old television series, "The Good Life", which was set in Surbiton, in the heart of the borough. The series suggested that the area was thoroughly upper middle class and homogeneously affluent. Nothing could be further from the truth. Jerry and Margo are the exception rather than the rule.

Let us consider the key issue of pockets of deprivation within the borough. Using nationally accepted indicators of poverty, there are pockets of deprivation in Kingston that are on a par with some of the most needy areas of inner London. People who live in Norbiton on the Cambridge estate would not recognise their area as leafy. Using the composite indicators of poverty—the so-called "z" scores—Norbiton has a higher level of poverty than any ward in Richmond, Sutton, Bexley, Bromley or Harrow. The people of Norbiton are being short-changed by new Labour if they are to be bluntly classified as living in an affluent area.

Kingston does not justify being labelled as uniquely leafy compared with other parts of outer London. Do Ministers consider that Kingston is more leafy than Bromley or Bexley? The figures would suggest not, yet Bromley received a 5.7 per cent. increase in its permitted budget, and Bexley received a 6 per cent. increase. Why has Kingston done so badly, with an increase of just 3 per cent.? Why has Hounslow received an increase of only 3 per cent.? Why has west London fared so badly?

Kingston's economic structure has changed markedly in recent years. Although unemployment is relatively low, that is due partly to a buoyant retail sector. Consequently, unemployment is far more cyclical, and there were large increases back in the recent recession. Wages are actually quite low, despite relatively high levels of employment now. In 1997, the new earnings survey showed that average earnings in Kingston were below the London average. Such facts suggest that a perception of Kingston as uniformly affluent and leafy is misplaced.

Statistics can prove anything, especially—as with poverty statistics—when they change so often; but some changes can mask reality. An example is the removal of the homeless persons indicator from the socio-economic index. Kingston currently provides temporary accommodation to more than 500 homeless households, so that change affects us. There are currently about 2,500 households on the waiting list, with around 1,300 people applying to be housed as homeless each year. So leafy Kingston has a housing problem and quite substantial numbers of homeless people.

Kingston is in a dilemma. It seems always to be cut off from resources, be they from the Government, Europe, the National Lottery Charities Board or other grant-making bodies, because of the false perception that it has no social problems, and ample local resources. Yet the problems exist, and the resources often cannot be tapped for local use. Indeed, the Government's capping rules are preventing them from being tapped, even when local people are prepared to pay. If the Government now take a role in perpetuating a false perception, the future is not bright.

I end by urging the Minister to do all she can this year to help us. Raising the cap to 4 per cent. would be particularly welcome. I beg her to go away from the debate with an enhanced and more accurate perception of the borough to share with her colleagues, as well as a standing invitation from me to all or any of her departmental colleagues to come and visit us in Kingston.

2.47 pm
The Minister for Transport in London (Ms Glenda Jackson)

I congratulate the hon. Member for Kingston and Surbiton (Mr. Davey) on securing the debate, and on presenting his arguments so clearly and cogently and in a spirit of positive co-operation with the Government.

The hon. Gentleman has raised several important issues relating specifically to the 1998–99 local government finance settlement for the royal borough. Before I refer specifically to the effects of the settlement on Kingston upon Thames, I shall first underline the Government's approach to local government finance and highlight some of the main points of the 1998–99 provisional settlement which my right hon. Friend the Deputy Prime Minister announced in the House on 2 December.

The Government's overriding aim in our approach to the finance settlement has been to introduce greater fairness in the distribution of grant among authorities. The hon. Gentleman asked whether those who voted for the Government on 1 May were aware that we would be working within the previous Government's spending plans. They were. In opposition and during the election campaign, we made no secret of the fact that we were going to inherit tight spending plans. We made it equally clear that we had to work within them. To ensure a fairer settlement, we had to make some hard decisions. In recent years, local government finance settlements—

Dr. Jenny Tonge (Richmond Park)

I accept that you gave that undertaking in the run-up to the election—

Mr. Deputy Speaker (Mr. Michael Lord)

Order. I did not give any undertaking. Will the hon. Lady try to use the correct parliamentary language?

Dr. Tonge

I am sorry, Mr. Deputy Speaker.

We understand that the Government gave an undertaking to keep within the previous Government's spending plans, but they said over and over that they would release the cap on local government. That is what we find difficult to understand. If only we could have a higher cap in Kingston and Richmond Park, we could manage and make things better. We do not know why the Government went back on their promise to allow local government more freedom.

Ms Jackson

I hope that the hon. Lady will bear with me. I intend to touch on that later. I hope to make the Government's thinking on the issue clear to her.

To ensure a fairer settlement, some hard decisions had to be made. In recent years, local government finance settlements have failed to meet that objective or to satisfy the spending needs of the majority of local authorities.

Some authorities will be disappointed by our proposals, but I hope to be able to show that Kingston, along with other authorities, has benefited from the changes to a fairer grant distribution that we have made for 1998–99. We intend to continue with that more just approach. The provisional settlement for the next financial year is a start in achieving that goal. It is fairer in its distribution, it reinforces local accountability by giving local authorities more discretion over local spending decisions, and it is better, in cash terms, than many authorities must have expected based on last year's plans.

Our grant distribution proposals are put into figures for individual authorities through the standard spending assessments. They form the bedrock of the present system of distributing the revenue support grant. We calculate standard spending assessments for individual authorities following general principles that are applied to all authorities, while taking account of local needs. Any differences in standard spending assessments between authorities with the same service responsibilities are usually due to underlying characteristics, which may relate to demographic, economic or social factors.

We recognise that authorities believe that further change could make the formula fairer still. Our aim is to ensure that authorities receive central Government grant fairly. We have made a start in the 1998–99 provisional settlement on overcoming previous injustices. During 1998, we shall continue to review the way in which grant is distributed. We shall also consider whatever new evidence emerges from our regular meetings with local authority representatives or from research. In addition, standard spending assessments and the way in which they are determined or could be improved form an important part of our current review of local government finance.

The Government's main priority is education. We have been able to increase provision for spending on education in 1998–99 by 5.7 per cent.—an extra £1.06 billion. That includes the extra £835 million for schools announced by the Chancellor in his July Budget. We think it only right to impress on local authorities our hope that they will pass on this increase in spending to education in order to begin to reverse years of neglect and enable a start to be made on raising educational standards.

We are also providing £662 million for the education of four-year-olds, both through standard spending assessments and a transitional specific grant from the Department for Education and Employment following the abolition of the nursery vouchers scheme. We have based the distribution of funding for under-five education mainly on the number of full-time equivalent four-year-old pupils, although a substantial element of funding is still distributed using the under-five population. I shall say more about that later.

We have also reviewed the indices of deprivation, applying statistical ground rules discussed with the Local Government Association. Those ground rules now make more explicit how measures of need are calculated. In a similar vein, we have confronted the flaw in the present system whereby visitors and commuters in a particular authority were attributed the same economic and social characteristics as residents. There was clearly something wrong with a system that treated all visitors and commuters to an area as being as deprived as the average resident.

Another important change is to the personal social services standard spending assessment. Following research commissioned by the Department of Health, the elderly residential social services element of the formula has been given a thorough re-examination. It now fully takes into account the introduction, more than five years ago, of community care. We have also been able to find a further £70 million for children's social services—the first substantial increase for three years.

On capital financing, we have proposed a change to the way in which we will deal with the costs of borrowing. In particular, we have changed how we treat debt incurred by local authorities before the present system was introduced in 1990. The previous Government treated all authorities as if they had chosen to use their capital receipts in the 1980s to repay debt, whether or not they had done so. Our proposal is to use actual debt as at 1 April 1990 or notional debt, whichever is the greater, so that we may treat all authorities even-handedly.

Looking ahead to the future of local government finance, we announced last July a local government finance review. A series of consultation papers—which will include, for example, the issue of capping—will be published over the next few months and a White Paper will follow. The Local Government Association has been fully involved in those discussions.

Turning to capping—as I told the hon. Member for Richmond Park (Dr. Tonge) I would—hon. Members will be aware that we remain committed to ending crude and universal capping as soon as possible. However, in the light of our public expenditure plans, capping will remain in place for 1998–99.

The Deputy Prime Minister has announced to the House the provisional capping principles for the forthcoming financial year. For all classes of authority, other than police, those class-permitted increases are substantially greater than last year. Those changes will give local authorities greater scope to exercise the local discretion to which the Government are committed. It will also help them to direct the additional provision for education to the schools.

We recognise that there is potential for council tax increases. However, we expect local authorities to make careful judgments about the need to make budget increases, whether increases in council tax would be fair, and whether taxpayers can afford them. We recognise that many authorities have budgeted below their capping limit in the past. We have now given them more room within which to exercise their discretion, and we expect them to use that greater flexibility responsibly.

On the specific capping point that was raised, I point out that Kingston's provisional permitted capping increase of 3 per cent. for 1998–99 allows it a £3.101 million increase in its budget. That is an improvement on the 2 per cent. increase permitted last year. The position for local authorities has been eased somewhat by the extension of passporting—although perhaps not as much as Kingston might wish.

The Government are constrained by the impact on public expenditure, and any changes will have to be balanced by consequential changes elsewhere. If, as Kingston has suggested, and the hon. Member for Richmond Park has advocated again today, we increase the class-permitted increase to 4 per cent. for outer London, that would increase caps by £5.6 million. However, if we increased the default cap increase for outer London, we would come under pressure to extend the benefit to other classes of authority.

Metropolitan authorities, for example, might reasonably argue that they were in a similar position. That would increase caps by over £20 million. Increasing the class-permitted increase for all local education authorities would increase caps by £130 million. The implications for public expenditure are considerable.

However, those principles are, for the time being, provisional. Firm capping decisions cannot be made until authorities have set their 1998–99 budgets. When firm capping decisions are made, we shall, of course, take all relevant considerations into account, including the points made about the royal borough of Kingston by the hon. Members for Kingston and Surbiton and for Richmond Park.

The hon. Member for Kingston and Surbiton also referred to the effect on Kingston of the changes we have made following the abolition of nursery vouchers. We intend to give local education authorities a duty to provide a place in education for all four-year-olds whose parents want them to have one. In the light of that intention, we have amended the distribution of standard spending assessment for under-five education.

The distribution will be made mainly on the basis of the number of full-time equivalent four-year-old pupils. We think that it is fairer to distribute funding on the basis of provision. It is in line with the use of pupil numbers in other parts of education standard spending assessments. For authorities with low provision for four-year-olds, transitional specific grant is available from the Department for Education and Employment.

The hon. Gentleman was concerned about our use of full-time equivalent pupil numbers, rather than a head count. It is for local authorities to decide the appropriate mix of full-time and part-time education for four-year-olds. The use of full-time equivalent figures should mean that, where full-time provision is appropriate, it will be reflected in the distribution of funds. If local authorities such as Kingston feel that the way in which the data are counted does not fully reflect their circumstances, we will be happy to consider the evidence that they provide.

The hon. Gentleman also raised the area cost adjustment—ACA. I know—indeed, he made the point again today—that Kingston would have liked us to implement Professor Elliott's proposals for 1998–99. However, we are concerned that the specific cost method of calculating the ACA has not been fully investigated.

We want to ensure that evidence on all major options is available before we decide the way forward. We have therefore commissioned research to examine the specific cost approach. When the report is submitted later in the year, we will assess it alongside the other proposals for the ACA, including those put forward by Professor Elliott's review, in consultation with representatives of local government.

The hon. Gentleman has asked for clarification about the work of our researchers examining the specific cost approach to the ACA. We are asking the researchers to examine how a specific cost approach would work, and whether it can be implemented. Once we have had the report on the research, we will consider the proposals.

The hon. Gentleman also referred to homelessness in the royal borough. I believe that he asked me whether we realised—

The motion having been made after half-past Two o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at three minutes past Three o'clock.