HC Deb 20 October 1998 vol 317 cc1061-3
2. Mr. Bill Michie (Sheffield, Heeley)

What representations he has received from (a) local authorities and (b) other organisations in respect of future SSA levels. [54326]

The Minister for Local Government and Housing (Ms Hilary Armstrong)

Since February, I have received many letters from local authorities and others about standard spending assessments. Last month, I also met groups of local authority representatives to hear their views on possible changes to SSAs.

Mr. Michie

I thank my hon. Friend for that reply, and the Government for last year's adjustment, which was most welcome. In considering the area cost adjustment, will she reject totally the Elliott general labour market approach, which in practice will shift resources from poor to rich areas, and instead go for something such as the AC18–AC19, or, if that is too radical, what about an AC14–AC16, or, if that is too narrow, what about an AC14–AC16 with an E4, an E5 and an E6? That way, perhaps some time we shall get rid of this crazy system.

Ms Armstrong

Now, Madam Speaker, you will understand the level of technicalities that people get into when talking about SSAs. In fact, we are considering 90 different options and about 25 of those are concerned with area cost adjustments. The subject arouses a great deal of excitement in various parts of the House. We are considering all the options and expect to report back to the House around the end of November or the beginning of December.

Mr. John Townend (East Yorkshire)

Does the Minister accept that the present methodology for calculating SSAs favours urban areas at the expense of rural areas such as my constituency, which has done very badly compared with Hull, which includes the constituency of the Secretary of State? Does she accept that there is such a thing as rural poverty and that, with agriculture going the way it is, such poverty is getting worse by the month? What plans does she have to redress the unfairness in the system?

Ms Armstrong

I do not accept that the formula is biased towards any area. All areas face difficulties caused by the complexities of the system that the hon. Gentleman's Government left us, and we are considering a range of alternatives. I need no lectures about rural areas, because I live in and represent one of the most rural areas in the country. We are as determined to represent effectively people who live in rural areas, where poverty of course exists, as we are to represent people in urban areas. I remind the hon. Gentleman that more Labour Members represent rural areas than do those Conservatives who are left.

Mr. Bill O'Brien (Normanton)

May I advise my hon. Friend that the Special Interest Group of Metropolitan Authorities welcomes the Government's move towards more accountability to the electorate? Given the three-year freeze on local government finances from central Government, it is important to get the standard spending assessments right. Contrary to the comments made by the hon. Member for East Yorkshire (Mr. Townend), there is a lot of poverty in urban areas, and especially in my authority area. The SSAs should be fairer to those communities that are suffering the most, and I appeal to my hon. Friend the Minister to ensure that that happens.

Ms Armstrong

The Government are committed to a fairer distribution of the grants to local authorities and we are seeking to introduce stability. Local authorities spend a lot of money and we want them to do so as responsibly as possible. We made it clear in the White Paper published in July that we want local authorities to plan their priorities effectively and to spend money on the priorities that the electorate have determined. The three-year freeze on methodology will give the stability that local government needs.

Mrs. Gillian Shephard (South-West Norfolk)

Is the Minister aware of the report published by the County Councils Network last month? Does she agree with its conclusion that it costs more to deliver social services in rural areas than in urban ones?

Ms Armstrong

I read the report and I met the County Councils Network last month. I listened carefully to its representations, and to those of other groups, including the unitaries, the SIGOMA authorities and the Association of London Government. All those authorities have significant representations to make. The right hon. Lady will remember that her Government, when they examined the issue of sparsity, came to the conclusion that the formula was about right in its comparison of the costs created by sparsity and density. The working group—on which the County Councils Network is represented—has not undertaken specific work this year that advances the discussion of sparsity, but I am sure that the right hon. Lady will wish to put her mind to the problem during the three years of stability so that she can propose ideas in the future.

Mrs. Shephard

The point that the County Councils Network will have made to the Minister is not about the formula that existed, but about the fact that she distorted the formula this year by switching £100 million of funding from shire areas to urban ones. I am sure that it will also have made the point that the Minister would have done better not to exercise such a blatant anti-rural bias in the first place. What is she going to do about it?

Ms Armstrong

The right hon. Lady comments more on the actions of her Government than on those of this Government. I remind her that we did not meddle with the settlement on sparsity that her Government set out.