HC Deb 28 January 2000 vol 343 cc755-62

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

2.30 pm
Mr. Iain Coleman (Hammersmith and Fulham)

I am most grateful for the opportunity to raise the issue of the index of local deprivation in this Adjournment debate. Many hon. Members will be well acquainted with the index, but some Members may be unfamiliar with the detail. Although the niceties of the subject are immensely complicated and enmeshed in highly technical detail, the workings of the index are crucial to local authorities. It has far-reaching implications for local authority finance, and in particular the allocation by central Government and Europe of regeneration and structural funding to local councils.

I shall briefly set out the background to the current position. The index is a statistical means of assessing levels and degrees of social and economic deprivation by local authority area. Its purpose is to identify areas suffering from multiple deprivation while also recognising pockets of intense deprivation in areas of relative affluence.

Several criteria referred to as indicators are assessed, which can be statistically combined to produce an overall figure for each local authority area. Those are then used to rank authorities in order of their overall level of deprivation. The rankings provided by the index are used as the crucial basis for allocating regional and structural funds to local authorities and regeneration partnerships.

Central Government funds such as the single regeneration budget and the new deal for local communities are focused on those areas identified by the index as the most deprived and the same is true of the allocation of European funds, such as objective 2. The designation of health and education action zones also uses ILD rankings.

In the allocation of the 1999 round of SRB funding, more than 80 per cent. of the available resources was allocated to those authorities ranked in the first 65 in the index. In practice, therefore, should a local authority fail to be included in that first batch of 65 councils, its potential for receiving regeneration resources through the key central Government mechanism is strictly limited.

In early 1999, the Department of the Environment, Transport and the Regions commissioned a study by social scientists and academics based at the university of Oxford into how robust a calculation of deprivation the index was, and whether it was possible to revise and improve it to ensure that it reflected the true levels of deprivation. The possible implications of that study are the basis of the grave concern felt by many local authorities throughout the country and by Members of the House, especially those representing urban areas.

The calculations used before the current review were based on 12 indicators, including levels of employment, levels of benefit receipt, mortality information, GCSE pass rates and the quality of housing. The Oxford study has concluded that the new index should be based on 32 indicators, forming six domains. There are several new criteria, in particular centring around geographical access to services, while others, including GCSE results and the cost of living in an area, have now—regrettably, in my judgment—been removed. There is also a very significant switch in the methodology used to calculate the index.

This is obviously a highly technical and complex matter, but the new methods of calculation would have, among other things, the effect of masking highly deprived areas that already sit uneasily alongside areas of considerable affluence. Although many London authorities would be especially harshly treated by the new proposals, many other regions would also suffer. The special interest group of metropolitan authorities outside London—SIGOMA—has made it clear in its detailed submission that it is very disappointed about the effect of the proposal and has raised concerns about the methodology and the consultation process. In particular, it has called for the complete removal of the geographical access to services domain.

Bradford, Birmingham, Leicester and a number of other metropolitan authorities have also made clear their hostility to the proposals. However, I hope that my hon. Friend the Minister will understand it if I concentrate principally on the effect that the proposals would have should they be inflicted on the capital city.

Most alarmingly, six London local authorities—Hammersmith and Fulham, Ealing, Hounslow, Kensington and Chelsea, Wandsworth and Westminster—would be dramatically disadvantaged by being pushed under the key threshold for SRB funding to which I referred earlier, while Barking and Dagenham, Brent, Camden, Greenwich, Haringey, Lambeth and Waltham Forest would all drop markedly within the proposed index and that would certainly affect their priority for future funds.

The average fall in the index would be 51 places. There were previously 13 London boroughs in the top 20 most deprived authorities in the United Kingdom; now there would only be six. My borough would be especially harshly treated. It would fall from 18th to 68th in the table. Every single ward in my borough would fall in ranking using the new criteria. There were 14 wards in the most deprived 10 per cent. of local government wards and now there would only be two. There were three wards in my borough in the most deprived 1 per cent; under the new proposal there would be none in the top 350.

As I said earlier, the technical detail of the statistical analysis of the data is staggeringly complicated, but it is quite obvious that there are serious flaws in the way that the calculations have been arrived at. Perhaps the most devastating effect on London would be caused by the new weighting given to the geographical access to services domain. It would be devastating—and I would respectfully suggest to the Minister inappropriate—because in urban areas its effect in practice would be to identify the most prosperous, and not the most deprived, areas.

If we were to apply that indicator, which we believe has proved to be especially heavily weighted, to my constituency, it would produce a bizarre and perverse effect. Easily the most affluent ward in my constituency is Palace ward. It is well known to my hon. Friend the Member for Ealing, North (Mr. Pound) because it is where Fulham palace and Fulham football club are located. In that ward, an average four-bedroomed house with a moderate-sized garden will cost a purchaser anything between £500,000 and £1 million; only 9 per cent. of households are in social housing; and only 2 per cent, of the economically active are affected by unemployment. It is not an area that one could really describe as deprived.

Yet Palace ward, which is the least deprived ward in my constituency on every other possible indicator that we might use, would, under the new indicator of geographical access to services, be ranked as the most deprived. In fact, it would be ranked as more deprived even than Broadway ward in central Hammersmith, where unemployment is more than twice the national average and more than 50 per cent. of households live in social housing. In Broadway, crime rates are high and the physical environment is blighted by chronic traffic congestion on major arterial routes. Indeed, it is on every other indicator the most deprived ward in my constituency.

The geographical access domain also appears to be in complete contravention of the criteria set out in the Government's strategy to combat deprivation. SRB round 6 guidance clearly states that more than 80 per cent. of the resources available will go to the 65 top-ranked ILD authorities. The guidance then sets out the following key objectives: first, improving employment prospects, education and skills of local people; secondly, addressing social exclusion and improving opportunities for the disadvantaged; thirdly, promoting sustainable regeneration, improving and protecting environmental infrastructures; fourthly, supporting and promoting growth of local economies; and, fifthly, reducing crime and drug abuse. There is no mention at any point of geographical access as an objective, so how can it possibly be right to use it as the key determinant of who receives more than 80 per cent. of the funding?

It is impossible to calculate why London has lost out so badly. That is why it is imperative that the full underlying data be released now, so that the Association of London Government and other interested parties can commission a full academic analysis of the study. It must surely be contrary to the Government's stated policy of open government any longer to keep those data secret from those who are seriously affected by their use. I hope that the Minister will give an assurance today that the new data will be released without further delay and procrastination on the part of the Government.

If the new index is to be the pivotal element in the allocation of billions of pounds of public money, it is essential that it can be shown to be robust, thorough and fair. Until such time as that can be demonstrated—it clearly cannot be at present—it is also essential that it is not used to allocate regeneration resources. I hope that the Minister will assure the House that there can be no question of using the new index to distribute funds this financial year.

I am bound to say that employing consultants—even ones as eminent as those who were engaged—to produce a piece of work and then to employ them to be the people responsible for the consultation exercise is, at best, a dubious practice. Surely officials at the Department of the Environment, Transport and the Regions should be responsible for that exercise. Will the Minister assure the House that the consultation exercise will be genuine, thorough and independent?

The process and the outcome of the review lack transparency for the following reasons. First, the time scales to respond were absurdly short: for example, the final technical document, which was immensely complicated, was released without prior notification two days before Christmas, giving local authorities only three weeks to respond—an impossible timetable. Secondly, as I have said, the full underlying data have still not been released, despite repeated requests from the Association of London Government, SIGOMA and others. Thirdly, the outcome is absurdly complex: only vastly experienced trained experts could possibly begin to fathom the detail of the new index. That would appear to represent a total reversal of the policy of simplifying the process of local government funding announced by the Secretary of State for the Environment, Transport and the Regions under the standard spending assessment review.

There was much rejoicing in my constituency when the Secretary of State announced last year that Hammersmith and Fulham's bid for the new deal for communities had been successful. I am pleased to report that work has already begun. I look forward to chairing an enthusiastic and imaginative partnership to deliver regeneration to a deeply deprived area of Fulham. However, it would appear that our bid could not have been successful under the new index. I urge and plead with Ministers to take a step back before introducing the new index proposals.

2.44 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill)

I begin, as is usual, by congratulating my hon. Friend the Member for Hammersmith and Fulham (Mr. Coleman) on having secured a debate on the index of local deprivation. I also congratulate him on his effective speech. I am grateful for the opportunity to inform him and the rest of the House about progress on my Department's review of the index. Before doing so, I shall explain what the index is and what it is used for.

At the heart of the Government's agenda lies our determination to tackle social exclusion and poverty in this country and to provide equality of opportunity. As my hon. Friend knows, that is one of the key commitments in our manifesto. The activities that we have undertaken since May 1997 include the work spearheaded by the social exclusion unit; setting up the new deal for communities programme, which has been so successful in my hon. Friend's constituency; and launching a refocused single regeneration budget. That shows clearly that we are firmly committed to helping those communities that live in the most severely deprived parts of the country.

Ask the average person in the street where the most deprived areas of England are located, and the chances are that he will think immediately of the great conurbations of the north, the west midlands and the inner-city areas of London. In many respects, that view would be right, but it is one that is more likely to be based on general impressions or gut feelings, rather than on a technical analysis. The Government, however, must make judgments on which are the most deprived areas that are based on a technical assessment of the factors that point to an area being deprived. The main measure that we use is the index of local deprivation.

The index is a measure of relative deprivation for local authority areas in England. It combines a number of indicators that are chosen to combine a range of economic, social and housing issues in a single deprivation score for each area. It enables areas to be ranked relative to one another according to their level of deprivation. The current index was published on 11 June 1998. It updated the 1991 index of local conditions, largely with 1996 data, and realigned it to the new local authority boundaries as they stood on 1 April 1998.

The index has been used by my Department to inform the development of policies and to target regeneration funding at the most deprived areas. It is being used increasingly outside the Department as well. For example, it is being used by the Department for Education and Employment for identifying areas for selecting area-based initiatives. Also, the social exclusion unit recognised the index as a key source of information about deprived areas in its report entitled "Bringing Britain Together: a national strategy for neighbourhood renewal".

Despite that background, there was heavy criticism of the methodology used to construct the 1998 index. Also, the data used to compile it were getting rather old, and better data for small areas were becoming available for the first time. To ensure that future policy decisions are based on the most relevant methods and the most recent information that enables smaller pockets of deprivation to be picked up, the Government decided to undertake a fundamental and independent review of the index. In December 1998, my Department commissioned the university of Oxford to carry out this work.

During the summer of 1999 there was an extensive consultation exercise about the indicators to be included in a new index. In the light of that work, and the many valuable points that were made during the consultation, it has been decided that the new index will consist of 33 ward-level indicators of deprivation. These will be organised into six key domains of deprivation: low income, employment deprivation, poor health and disability, low education and training, poor geographical access to services and poor housing.

These indicators and domains are a significant improvement on the existing index, which was largely based on district-level data, mainly from 1996. Where ward-level data were used, they came from the 1991 census. We shall now have 33 indicators that are more up to date, that relate to a smaller area level and that reflect a wider range of dimensions of deprivation than the previous selection.

The importance of obtaining and using data at small-area level to secure effective neighbourhood renewal strategies and programmes is likely to be emphasised by the social exclusion unit in its consultation document on the national strategy for neighbourhood renewal, which is to be published in March.

The 1998 index was generally considered too biased towards urban areas. That is why we have introduced a domain on geographic access to services. That will be based on four indicators, three of which concern people who depend on benefits being able to get to either a post office, a food shop or a general practitioner. The fourth indicator concerns people with children aged five to eight being able to get to a primary school.

Some of those who responded to the consultations claimed that by introducing this domain we are now biasing the index in favour of rural areas. The Government do not share that view. We acknowledge that people who live in rural areas are more likely to experience access problems, but who would disagree that the ability to get to a post office, food shop or GP is a necessity for all poor people? Geographical access has a weighting of only 10 per cent. in the index. My hon. Friend gave a dramatic example from Palace ward in his constituency, and he singled out geographic access. However, I have no doubt that if all six domains are considered together, the findings for Palace ward will be different.

After the Oxford university review team devised an agreed set of indicators and domains of deprivation, it created a methodology for bringing together all the indicators so that we have an index that identifies the location of the most deprived areas. That is far from easy, and we had to try to address the problem that the previous method—chi squared—tended to give higher deprivation scores to areas with larger populations.

The Oxford team consulted expert opinion widely, including eminent professional statisticians who were involved in the whole review. Moreover, in addition to a large interdepartmental steering committee, the Oxford team benefited greatly from an advisory panel, which included academics, statisticians and local Government officers. The Oxford proposals on methodology were put out for full public consultation in December.

The six-week consultation period ended on 17 January and we have received more than 120 responses. The approach that has been taken is supported by the majority. My Department and the Oxford team are now analysing each response. Unfortunately, therefore, I cannot report on the outcome of the analysis today. However, I stress that we shall consider carefully all the points raised in the responses, and undertake any extra work that may be necessary before making any decisions. We aim to publish a new summary index in the spring. That will be followed by a lengthier report from Oxford university, which will appear later in the summer.

It is perhaps an obvious point, but when we change the basis on which the index is calculated, some areas will move up and others will move down the index. We acknowledge that that may be due to the changed methodology and indicators more than to changes in overall patterns of deprivation. However, that should not prevent us from striving to put in place the best possible mechanism for identifying levels of deprivation.

My. hon. Friend expressed anxiety that the draft index may disadvantage some London boroughs, including Hammersmith and Fulham, because they will appear lower in the deprivation rankings under the revised index. However, I stress that the data on which this draft index is based are still being checked. Furthermore, the rankings may change if the methodology is revised in the light of consultation. I should also point out that, in the overall measure of deprivation on the draft index, which is at district level, five of the 10 most deprived districts were London boroughs. Indeed, the worst three districts were London boroughs.

My hon. Friend and others have asked why the new index does not recognise the sheer scale of ethnic minority populations in London and elsewhere. We are confident that the 33 proposed indicators fully cover the problems that ethnic minorities face. For example, we include indicators on income support receipt, unemployment, overcrowding and poor health, all of which are disproportionately experienced by many ethnic minority groups. However, we should not overlook the sheer diversity within the ethnic minority community, as reported by the eminent 1997 Policy Studies Institute report. We therefore believe that it is inappropriate to include a reductionist indicator, which assumes that all ethnic minority people are deprived.

Hon. Members may also have noticed that the index does not contain a crime domain. There is a lack of crime data at the small area level. However, we hope to improve those data for the next revision of the index. The social exclusion unit's policy action team 18, which deals with better information, and my colleagues in the Home Office are examining that. The Association of London Government has examined the index closely and has submitted its comments on methodology. I give the assurance that those observations will of course be considered, along with all other responses.

My Department uses the index to target regeneration funding such as the single regeneration budget and the new deal for communities on the most deprived areas. On 17 December, we launched national bidding guidance for round 6 of the SRB. My hon. Friend and other hon. Members whose constituencies cover local authority areas among the 65 most deprived, according to the existing index, will be pleased to hear that those areas are eligible to bid for funding for comprehensive schemes under round 6. That eligibility will not be affected by their ranking in the revised index.

As my hon. Friend may know, the current index was taken into account in selecting areas to be invited to bid for funding under the second round of the new deal for communities, which my right hon. Friend the Minister for Local Government and the Regions announced on 10 November. He will certainly know that Hammersmith and Fulham is an invited area and I can confirm that, wherever it ends up on the revised index, its eligibility for the second round will not be affected. Furthermore, resources from European structural funds have been allocated for 2000–06 with reference to the 1998 index. I hope that those facts give my hon. Friend the reassurance he is looking for.

Looking to the future, funding for all regeneration programmes, including expenditure on programmes aimed at deprived areas, will be determined by the 2000 spending review, which is currently under way. Decisions have yet to be taken on how the index would be used to target resources at deprived areas and the weight to be given to deprivation scores and other relevant factors in determining funding allocations. We shall also consider the need for any transitional arrangements.

The rankings may change, but that should not prevent us from pressing on with a new index. My Department, other Departments and a range of outside bodies urgently need better information on which to target their policies and with which to address the significant problems that deprived areas face. We accept that the new index would never be perfect while we lacked small area data on some of the measures that we would like to cover. We also accept that it would not provide an absolute measure of deprivation and thus it would be important to use it sensitively and appropriately. Nevertheless, we are confident that the new index will provide us with the best possible means available at the moment for identifying the most deprived areas in England.

Question put and agreed to.

Adjourned accordingly at three minutes to Three o'clock.