Commons Sitting of 30 January 2002

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  INTERNATIONAL DEVELOPMENT
  The Secretary of State was asked—
  INTERNATIONAL DEVELOPMENT

    Tibet
    Norman Baker: What steps she is taking to assist the people of Tibet. [29124]
    The Parliamentary Under-Secretary of State for International Development (Hilary Benn): In Tibet, we are supporting two projects run by Save the Children UK. These are providing basic services to poor Tibetan communities to improve their access to education, clean water and sanitation. We also contribute to the EU's programme in Tibet.
    Norman Baker: I welcome that news. Will the Minister ensure that any projects supported by his Department enhance the political, cultural and economic rights of the indigenous people of Tibet? That is especially important given that China, the occupying power, is very keen to use its western economic development strategy to "crush splittism", as it puts it.
    Hilary Benn: I am aware that the hon. Gentleman takes a particular and keen interest in human rights in Tibet. The House must remember that the poor have human rights too. That is why it is right that we should be involved in the projects that we support. In the longer term, the economic development of China and Tibet provides opportunities to improve the dialogue between us on human rights, for the simple reason that, in the end, a more open society is one in which it is more difficult to abuse human rights.
    Rev. Martin Smyth: I am sure that the Minister will agree that our thoughts are with the people of Tibet as they face the serious illness of the Dalai Lama. However, are the Government doing anything to help the displaced people from Tibet, especially those in India?
    Hilary Benn: I am sure that the House will echo the sentiments expressed by the hon. Gentleman. The Government have been funding a higher education project for Tibetan refugees in Dharamsala in India.

    Natural Disasters (Africa)
    Dr. Nick Palmer: What steps she is taking to support preparations for a rapid reaction capability in Africa for flooding and other natural disasters. [29125]
    The Secretary of State for International Development (Clare Short): My Department is working to strengthen international disaster response across the world by strengthening the capacity of the United Nations system. However, following any disaster, most lives are saved in the first few hours by the immediate local effort. We therefore support work across the world, particularly through the Red Cross, to build up local and national capacity for immediate response.
    Following the floods in Mozambique two years ago, we have been working through the UN to increase the capacity of the Government of Mozambique to respond to disasters. We are making a similar effort in India, following the lessons of the Gujerat earthquake.
    Dr. Palmer: I thank my right hon. Friend for that reply. She may remember that I and many other MPs raised this matter after the Mozambique floods. We were concerned that support infrastructure—helicopters, emergency supplies, and so on—was not available on the continent of Africa, and had to be brought in from Britain and elsewhere. Is there a role for additional continental reaction capability, going beyond the individual countries involved, to enable us to respond to disasters anywhere in Africa?
    Clare Short: We are trying to work through the UN to make sure that stocks are deployed across the world that can be drawn on in any disaster. My hon. Friend might recall that, despite all the arguments that took place about helicopters from the UK, the cheapest and most readily available helicopters came from South Africa. They were deployed very quickly, although we had to provide the fuel. My hon. Friend will remember the little girl who was born in a tree. She and her mother were lifted out of that tree by a South African helicopter using UK-supplied fuel.
    People think of sending material directly from their home countries, but that is usually very slow. My Department has lots of stocks that can be deployed when they are needed, but we are trying to achieve a regional and national response to disasters, as people often lose their lives when resources have to be brought in from a long distance.
    Tony Baldry: A rapid reaction facility such as the Secretary of State has described may well have been of help to the Democrat Republic of the Congo after the recent volcano eruption. However, is it not important that such initiatives do not distract us from the need to ensure sufficient sustainable development? In the Democratic Republic of the Congo, two-thirds of people face malnourishment, and the UN consolidated appeal for the Congo is only 40 per cent. funded. There is sometimes a danger that we focus on the headlines created by initiatives such those described by the right hon. Lady,

    273
    without sufficient attention being paid to the underlying need for sustainable development in countries such as the Congo, and others elsewhere in Africa.
    Clare Short: Clearly, the Goma disaster was very bad. Everyone saw the graphic pictures. But the international response was quite effective. I talked to President Kagame yesterday. People are in need because they have lost possessions, but the situation is under control. The response was pretty good.
    I agree with the hon. Gentleman that there is a disastrous situation in the poor benighted Democratic Republic of the Congo. From colonial times to the present day, people there have never had decent governance. Obviously, we must respond to the humanitarian disaster, but the real disaster is that the conflict is not properly resolved. The country is divided into three parts. We need full implementation of the Lusaka peace accords so that we can establish a full-blooded development programme. The Democratic Republic of the Congo is a heavily indebted poor country, and if we could resolve that problem, the country would get debt relief and we could start to reconstruct what is really another failed state.
    Ms Oona King: I have just returned from Goma in the Democratic Republic of the Congo, the site of that catastrophic volcano eruption. Will the Department for International Development look at improving co-ordination of relief efforts, as a refugee camp that I visited at Gisenye was sadly lacking in that regard? Having said that, I congratulate DFID on the work that it has done.
    Does the Secretary of State agree that behind this humanitarian catastrophe lies a man-made catastrophe that has claimed 2.5 million lives in the past three years? Will she and the Government push very hard to move forward the Lusaka peace process, as she has said?
    Clare Short: I will indeed look into the matter that my hon. Friend raises concerning the situation in Goma and see what more we can do. I agree with her second point. The cameras arrive quickly at a natural disaster, but the long-sustained tragedy of poor governance and endless war, death and loss in the Democratic Republic of the Congo, like the long-standing civil war in Sudan, is of no interest to the media, even though both countries are massive—as big as western Europe. We have an opportunity, if we are sufficiently determined, to bring peace. That will transform the prospects of the people of those two countries and of Africa, and we should make a bigger effort.
    Mrs. Caroline Spelman: After a spate of disasters in Africa, both man-made and natural, will the Secretary of State, like me, send her condolences to the people of Lagos after their recent tragedy? We hear a lot, and rightly, about the reconstruction of Afghanistan, but the spotlight of the world, as the right hon. Lady has said, moves quickly from one disaster to another.
    274
    What plans, if any, are there for the reconstruction of dwellings in Goma? We have discussed water and sanitation before, but what plans are there for the reconstruction of accommodation for the people of Goma following the recent volcanic eruptions?
    Clare Short: I am sure that the House will want to send condolences to the families of the many people who lost their lives in Lagos after the explosion of ammunition that made people think that a war or a coup was starting; there was terrible loss of life, through panic rather than through injuries suffered as a direct result of the explosions. I will write to the hon. Lady about the reconstruction of dwellings in Goma. We will stay engaged.
    I agree that it is the tragedies that do not hit the headlines that are killing more people and destroying more lives. That is where we must concentrate our efforts so that the people of Goma have a better life within a Democratic Republic of the Congo that is properly governed and can start real economic development.
    Mr. John Battle: As well as concentrating on immediate natural disasters, surely it is important to take a long view for Africa. Will my right hon. Friend encourage the Prime Minister to visit Africa and to co-ordinate a Marshall aid-style Africa initiative to ensure that Africa is not locked out of globalisation for the future, and that it does not suffer a reverse, with people dying of starvation on an even greater scale for lack of initiatives being taken now?
    Clare Short: My hon. Friend is right. A third of the poor of the world live in Africa but the poverty is deeper and progress is slower than anywhere else in the world. Across the continent, on current levels of economic growth, there will be growing poverty. We need a massive effort in Africa, which, as my hon. Friend will know, the Prime Minister is to visit shortly. We must resolve some of the long-standing conflicts, and with enough international attention, I am sure that major progress is possible. Then we will need more investment, faster economic growth and more trade access. That is what the New Partnership for African Development, led by President Mbeki, is all about. The Prime Minister is determined to be a partner of that and to mobilise the G7 and the rest of the international community to make an effort to improve development in Africa, which we urgently support.

    Afghanistan
    Miss Anne McIntosh: What recent discussions she has had with her European counterparts on the humanitarian situation in Afghanistan. [29126]
    The Secretary of State for International Development (Clare Short): Last week I attended the Tokyo conference on the reconstruction of Afghanistan, where I met my counterparts from a number of European countries, the European Commission and representatives of other Governments and international institutions.
    We discussed the need for continuing humanitarian assistance and strengthening of the Afghan interim administration's capacity to deliver to its people. We also

    275
    agreed that there was an urgent need to improve security and begin the process of demobilisation of armed factions and the building of an Afghan army and police force.
    Miss McIntosh: Does the Secretary of State share my sadness at the death of the lion in captivity in Kabul, which became a symbol of the struggle in Afghanistan? Will she tell the House what discussions she has held with her European counterparts about the particular problem that arises from the fact that most of the assistance to Afghanistan is announced only one year in advance? Will she push for longer-term commitments to Afghanistan?
    Clare Short: We are all sorry to see a lion die—although I think it was an old lion. I hope that he had led a happier life than many of the people of Afghanistan. I read that in some countries the appeal for funds for the zoo in Afghanistan secured more funding than appeals for the people of Afghanistan. Something is out of proportion if that was the case, although we should care for animals and people.
    I agree with the hon. Lady's underlying point. We must stay committed to Afghanistan for the long term. The country cannot be rehabilitated in a year. That is why we made a five-year commitment. We are working strongly with Commissioner Patten for a long-term commitment from the EC, and although he could not do that formally, he was trying to achieve a commitment to mobilise 1 billion euro rather than merely making a one-year commitment. Some countries took a long-term view; others did not. We must do all that we can to keep a sustained engagement so as to give Afghanistan a chance.
    Mr. Clive Soley: The Secretary of State may be aware that there are many Afghan refugees in my constituency. A significant number of them, many of whom have extremely good skills, would like to return to Afghanistan to help in the reconstruction. However, it is not always easy, especially if they have been out of contact for a long time, to find a point of reference there—someone to whom they can notify their skills and whom they can ask that they be used appropriately. Has there been any thought about that and are any contacts emerging in the new Afghan Government to whom I could refer a growing number of people?
    Clare Short: I, too, have 100 or so Afghan asylum seekers in my constituency, many of whom are highly skilled and educated. I am sure that that is true all over the world. Many skilled and educated Afghans left the country and we must do all that we can to try to assist them so that they can help in the rebuilding of their country. The International Organisation for Migration—a UN body—has set up a register and is asking all Afghans in the diaspora who are interested in helping to register their skills. The organisation is keeping a tally of the skills needed in Afghanistan. We will thus be able to match people up and help them to go home permanently or temporarily to help in the reconstruction.
    Dr. Jenny Tonge: May I ask the Secretary of State again whether she is concerned that the UK contribution to humanitarian aid and the reconstruction of Afghanistan is being met entirely by the Department for International Development? That is
    276
    despite the fact that £100 million has been made available to the Ministry of Defence from Treasury reserves for operations there. The right hon. Lady will remember that during the Kosovo crisis the Treasury reserves contributed £68 million to the efforts of DFID. Will she assure the House that the cupboard will not be bare in the event of another natural disaster? [Interruption.]
    Mr. Speaker: Order. There is far too much noise in the Chamber.
    Clare Short: Thank you, Mr. Speaker.
    I welcome increases in my budget from anywhere in the Government system. If the hon. Lady can persuade the Treasury to contribute more to my budget, I shall welcome it. On the other hand, we have to deploy our resources flexibly—especially resources for disasters, because we never know where disasters will occur. As I explained, we have a contingency reserve within my budget and when that is exhausted we go to the Treasury. I cannot remember whether we received £10 million or £20 million from the Treasury towards Afghanistan, but the rest of the commitment comes from my budget. That means that if there was a series of disasters across the world I should be in difficulty, although, of course, we are approaching the end of a financial year. We cope and we deploy our budget well, but we spend every farthing. More would be welcome and if the hon. Lady could help me with the Treasury I should be enormously grateful.
    Mr. Tom Clarke: Does my right hon. Friend agree that in Afghanistan, as elsewhere, Britain's contribution is both bilateral and multilateral; that her Department has given an excellent lead; and that if, following the events of 11 September, which themselves followed devastation in Afghanistan, we can give the Afghans the same recognition that we gave to the Kurds, that would be a noble objective?
    Clare Short: My right hon. Friend is right. The contributions that the UK is making to the reconstruction of Afghanistan and to development across the world include not only our direct British programme but the contributions that my budget makes to the World Bank and the Asian development bank. Moreover, 20 per cent. of the EC contribution will draw down on my budget. However, it is right that we should have a strong multilateral system that can work everywhere, including countries where we have a particular partnership. We are deploying all those resources and I am really hopeful that if the international community sustains its engagement, we can guarantee the people of Afghanistan a better future and bring good out of bad. We must all work for that.
    Mrs. Caroline Spelman: On Monday, in her statement about the rebuilding of Afghanistan, the Secretary of State said that Britain would assist the new interim administration with what she called a scoping study on security. What does that mean and how long will it take? What is the likely commitment of British resources to that study?
    Clare Short: The scoping study is the initial study that assesses the size of the country, makes the best possible estimate of the number of forces under arms and starts to

    277
    think through the process of demobilisation and work out where to train the armed forces. Obviously, the armed forces need to serve the whole country, so they should be representative ethnically, but then exclusive ethnic groups in parts of the country—there are minorities—would not be properly protected. In other words, it is the initial study, getting the numbers, beginning to think of the process that would take things forward, then sharing the information with the international community, to reach agreement with the interim administration on a process of putting it into action. We have conducted similar studies, in Sierra Leone before we started that work, and in other countries such as Indonesia, where the security sector needs reform. We hope to get that study moving fast, share the information internationally and then, hopefully, start the process of demobilisation and the building of new security forces.

    Electricity Supply (Africa)
    Mr. Gareth R. Thomas: What further action she is taking to improve the access to electricity of isolated communities in Africa. [29127]
    The Secretary of State for International Development (Clare Short): In many sub-Saharan African countries less than 10 per cent. of the population have access to electricity. That means that most rely on wood for fuel, which uses up forest resources and causes much ill health through pollution caused by cooking indoors. Africa needs massive new investment in infrastructure—in electricity, water, sanitation, transport and telecommunications. To achieve that requires a reduction of conflict, and stronger partnerships between the public and private sectors.
    We have therefore been working with other agencies to create a new facility, which is known as the public-private infrastructure advisory facility, to advise Governments on how to create conditions to attract private investment in infrastructure. I am this evening launching an investment fund designed to leverage more private investment into infrastructure in Africa.
    Mr. Thomas: I thank my right hon. Friend for that answer. Does she agree that renewable energy options such as small-scale windpower plant and solar power offer an environmentally friendly, affordable and reliable means of generating power for the schools, health clinics, irrigation systems and other vital services on which those communities rely? What further action will her Department take to promote the roll-out and easy accessibility of such power options?
    Clare Short: I do not particularly agree with my hon. Friend. I am in favour of the deployment of modern technology and as many renewables as possible, but Africa needs basic electricity supplies, telecommunications, water systems and sanitation. Sometimes people bring their greenest agenda to the poorest countries. Yes, let us use the best possible technology, but Africa needs the basics, and we should do all in our power to bring investment in modern infrastructure to countries across the board, not just some nice renewables in odd projects.
    Michael Fabricant: This is a first. For the first time, I totally agree with the right hon. Lady. She is
    278
    absolutely right because the cost of photovoltaic cells and windmills would be prohibitive, particularly in the developing world. Does she agree that the work of many of the British privatised companies, now providing not only networks for electricity but self-contained electrical generating units in portakabins, is possibly the short-term answer for those countries that so desperately need electricity in their rural areas?
    Clare Short: I should like to enjoy agreeing with the hon. Gentleman—I see that he is wearing his red tie today, so perhaps that explains it. Let us be clear that we should all favour the development of renewables, but we should drive forward that technology in countries such as our own, rather than trying to get the poorest countries to pay for the experiments and the development of the new technology. Self-contained generators are used in many poor countries because the basic national systems are so poor and tend to be more expensive, and firms have to use that kind of technology when their national systems do not work. But we really need proper privatisation under good regulation so that we can get private sector investment and better energy provision, and therefore access to telecommunications and the internet, which most Africans lack at the moment.
    Mr. Piara S. Khabra: Will the Secretary of State confirm that the completion of the European Union reform programme will make a difference to the EU development programme for the poor countries?
    Clare Short: I agree with my hon. Friend that an important start has been made in reforming the European Commission's very poor quality development programme, but we have a long way to go until that reform agenda is implemented. New figures are available if we do the calculations. EC funding to poor countries has gone from 70 per cent. down to 50 per cent., and it will be 38 per cent. this year. That is disgraceful, and more EC resources need to be allocated according to need and poverty. I am afraid that we still have a long way to go.
    Mr. Nick Hawkins: In considering access to electricity in isolated communities in Africa, I am sure that the Secretary of State will agree that among the most isolated communities at the moment are those in Zimbabwe that are at the mercy of Mugabe's thugs. What is her view of the way in which electricity is currently being supplied from South Africa? Does she feel that she and her Department have any role to play in exerting effective pressure to stop Mugabe and his thugs grabbing land from those who are the legitimate owners?
    Clare Short: I do not agree that Zimbabwe's isolation is the problem, but it has virtually every other problem, and the situation is disastrous economically and politically. We all have to work as hard as we can for free and fair elections. That looks difficult and we cannot be optimistic, but we have to sustain our efforts. There is no magic answer; we can call for all the tools of international pressure—indeed, as the hon. Gentleman will know, they are being deployed as we speak—but the situation continues to deteriorate. I do not know whether it gives any comfort to the hon. Gentleman to know that President Mugabe finds our Government very much more objectionable than the Government whom the hon.

    279
    Gentleman supported. President Mugabe objects to me in particular because I took the view that land reform should be transparent and benefit the people, rather than be used to give land to cronies.

    European Community Aid
    Hugh Bayley: What steps she is taking in the Council of Ministers to ensure that more EU aid is spent on helping poor people in the poorest countries. [29128]
    The Parliamentary Under-Secretary of State for International Development (Hilary Benn): Poor countries should be given priority in the allocation of European Community development funds. In November 2000, my right hon. Friend helped to secure the first ever commitment by the EC to poverty reduction as the central objective of its programmes. However, that commitment has yet to be put into practice. As my right hon. Friend has just told the House, the percentage of EC aid being spent in poor countries remains low. We also continue to press for a far more effective EC aid programme.
    Hugh Bayley: Does my hon. Friend agree that the most effective aid is that spent on helping poor people in poor countries whose Governments are committed to pro-poor development? Does he recognise that the proportion of EU aid going to low-income countries is not only low but declining, having decreased from 70 per cent. in 1989 to 51 per cent. in 1999? Will he reassure the House that our Government are voicing the strongest possible arguments in the Council of Ministers and in bilateral relationships with other EU member states to increase the proportion spent for poor people?
    Hilary Benn: My hon. Friend is entirely right about the declining proportion of the EU's aid budget that goes to poor countries, which is precisely why all of us have a responsibility to ensure that that changes. As he will be aware from his visit, along with other members of the Select Committee, to Brussels last week, that has been going on for a very long time, and it is to my right hon. Friend's credit that we have told the EC that that needs to begin to change, but it will be a long haul if we are to make progress, and we need to work together.
    Mr. Roy Beggs: I applaud the efforts to ensure that the poorest people in the poorest countries get all the aid that can be made available to them, but does the Minister agree that in Zimbabwe, which should be one of the wealthiest countries in Africa, there are extremely poor people? Does he also accept that a new poor is being created, consisting of those who have been forced to flee from the brutality of the Mugabe regime? Could not our Government give further consideration to assisting those British citizens who have been displaced and forced to return to the United Kingdom?
    Hilary Benn: I agree with the hon. Gentleman about the very difficult situation in Zimbabwe and the effect that it has had on the people whom he mentioned. We are giving humanitarian support, including food aid, which is a measure of how bad the situation currently is.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Laura Moffatt: If he will list his official engagements for Wednesday 30 January.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
    Laura Moffatt: The Prime Minister will be aware that a review of health services in and around Crawley has been taking place. Will he join me in thanking all the people who have taken part in the review, particularly Councillor Brenda Smith, our independent chair, Peter Bagnall and the health campaigner, Christine Earnell? Is that not a fine example of the new ways of working in the national health service that have been so well illustrated in the modernisation board report?
    The Prime Minister: I congratulate all those who have been involved in the review of health services in my hon. Friend's constituency. I understand that they will consider a final report from the review team tomorrow.
    My hon. Friend is absolutely right to stress that the modernisation board report of a couple of weeks ago said that, although there were still major challenges in the national health service, there were real signs of improvement as a result of the investment going in and the reform. That is why we believe it is so important that the continued, sustained investment in the national health service continues, and that it is matched by reform to deliver the national health service that the people of this country want.
    Mr. Iain Duncan Smith: Does the Prime Minister agree that accident and emergency services are in crisis across the country?
    The Prime Minister: No, I do not. The most recent analysis of accident and emergency services appeared in the modernisation board report. It showed that, although there was still a long way to go, as a result of the extra investment, by March this year 75 per cent. of people requiring such services should have to wait four hours or less, and that, by 2004, that should be the case for everyone. That does not mean that there are not real pressures on casualty departments in many parts of the country, but the only answer is the one that I have given before, which is to put in the additional investment that gives us the consultants, the nurses and beds that we need.
    Mr. Duncan Smith: In March 1997, the then Leader of the Opposition said at Prime Minister's questions that accident and emergency departments across the country
    "are in acute and chronic crisis and … many simply cannot make do."—[Official Report, 4 March 1997; Vol. 291, c. 707.]
    Well, at that point, three quarters of patients were seen by a doctor in casualty within the hour. After five years of a Labour Government, only half are seen in that time and a

    281
    quarter are not even admitted within four hours. Will the Prime Minister now accept that accident and emergency services are in acute and chronic crisis across the country?
    The Prime Minister: No, I will not. Let me inform the right hon. Gentleman of the change that has been made by this Government. Whereas his Government used to measure the time that people spent in accident and emergency from when they were first seen, we measure it from when they enter the accident and emergency department. I am afraid that he has got his facts wrong.
    Mr. Duncan Smith: Yet again, the Prime Minister talks a lot of nonsense. In opposition, he was busy crying foul; now in government, it is, "Everything will get better—trust me."
    Last week, the Prime Minister said that he stands by health professionals, so perhaps he would like to listen to the words of the consultant at Kent and Canterbury hospital, who said that
    "the state of A&E is dreadful. People sit there for three or four days in an open corridor. The standards of care are unacceptable. The nurses go round in tears".
    Will the Prime Minister perhaps accept, as he was so keen to do in opposition, that accident and emergency services are now in crisis?
    The Prime Minister: I do not accept that. What I certainly do accept, however, is that there are accident and emergency departments across the country that are under real pressure. What is important is that just as we should not pretend that the national health service is perfect, the right hon. Gentleman should not pretend that the service is rubbish. We know exactly why he is doing that. The answer to the pressure in accident and emergency is extra consultants. There have been 60 extra since we came to power. By 2004 that will have increased by two thirds over the 1997 figures. There are also 600 additional accident and emergency nurses. In addition, as a result of the £120 million package announced last October, improvements are happening across the country, including in Kent and Canterbury. The only answer is to keep that investment going in. Can we now have an answer from the right hon. Gentleman, as we have given our answers: is he in favour of that investment or not?
    Mr. Duncan Smith: The Prime Minister is very keen to ask us about that, but figures available in the past few days show that public investment in public services has fallen below that of the previous Government. Before he gets too sanctimonious, we must first of all ask him the same question: is he prepared to accept, on his own measure and own figures, that he has made a mistake and got it wrong? One minute he says that the public servants leave scars on his back; the next moment he is running to hide behind them when there is a problem. He then turns the entire weight of his Government and their machine on a 94-year-old lady-[Interruption.]
    Mr. Speaker: Order.
    Mr. Duncan Smith: He turns the machine on people who complain because they have nowhere else to go.
    282
    When will he grasp the fact that the problems in the NHS are not the fault of the doctors, the nurses or the patients, but his fault, and that the buck stops with him?
    The Prime Minister: We are putting substantial sums of additional investment into the national health service. The right hon. Gentleman may recall that when we did so, the Conservative party called that extra spending reckless, irresponsible and dangerous. I gather that he is now saying that we never spent enough on the national health service—a slightly curious position for the Conservative party to be in.
    We have made it clear throughout that the national health service faces huge challenges: it is bound to—there are 5.5 million operations a year and 12.5 million or 13 million out-patient appointments, and 270 million people see their GPs. We know there are challenges, but as the independent review by the modernisation board found, there are also real improvements. My point is that we will sustain those improvements only if we keep the money going in and match it with reform. So far, we have failed to get any indication at all from the Conservative party that it supports that investment. We have our strategy on the health service, and the Conservatives have theirs. Our strategy is to rebuild the national health service; their strategy is to run it down so that they can dismantle it.
    Valerie Davey: Communities in Bristol that are experiencing crime and violence that is directly linked to class A drugs are working closely with the police. Their efforts and co-operation are leading to an increased number of arrests, yet the availability of those drugs remains high. What more can the Government do to ensure that those drugs are prevented from entering the country?
    The Prime Minister: I know, as my hon. Friend rightly says, that there are serious problems in her constituency and elsewhere as a result of that particular drugs trade. She will know, however, that Avon and Somerset police are working closely with Customs and Excise and that they recently met the authorities from Jamaica and are constructing a programme to deal with that issue. I very much hope, as a result of the measures that we are taking with the Jamaican authorities, that we can stop a lot of those drugs coming to this country. They cause nothing but misery and mayhem for people on our streets and we have to do everything we can, nationally and internationally, to stop the trade.
    Mr. Charles Kennedy: Why is it that, since the right hon. Gentleman's party came to power, the number of cancelled national health service operations has gone up by 50 per cent?
    The Prime Minister: It is true that the number of cancelled operations is unacceptably high, but it is also true that 19 out of 20 operations happen on time in the way that they are supposed to.
    Mr. Kennedy: The Government's own figures, given only on 23 January this year, show that last year 77,000 people had to put up with the trauma of a cancelled operation. All of us know from our constituencies that bed blocking is a national scandal and that there are elderly

    283
    people in hospital wards who should be in residential care, yet the Government have not yet adequately tackled the problem. Do patients not deserve better than that?
    The Prime Minister: They do deserve better, which is why it is important that we reduce waiting lists and waiting times. Seventy per cent. of people in this country now get their operation within three months, and as a result of the extra nurses and consultants now coming into the health service, we are making progress on every single aspect of waiting lists.
    However, the point that the right hon. Gentleman makes about bed blocking is right, which is why, before Christmas, we put some £300 million extra, over and above the original budget, into bed blocking; as a result, delayed discharges in the past few months have fallen by about 12 per cent.
    Denzil Davies: Has my right hon. Friend seen reports that the European Commission has censured the Government of Germany for straying too close to the 3 per cent. ceiling on borrowing, as set out in the Maastricht treaty? Given that Germany is struggling to get out of a recession, does my right hon. Friend not agree that the Commission's action shows that there is a fundamental flaw in both the 3 per cent. limitation and the absurdly named growth and stability pact?
    The Prime Minister: I know that my right hon. Friend has strong views on those issues, but I must tell him that I am not responsible for the German Government. I am thankful that as a result of the brilliant management of the economy by our Chancellor debt and public finances in this country are in an extremely healthy state.
    Mr. Jonathan Djanogly: If the Government are prepared to spend at least £100 million, or £5 for every taxpayer in the country, on the Saville inquiry into an event that happened at least 30 years ago, how can the Prime Minister justify, on either cost or delay grounds, not holding a full public inquiry into the foot and mouth disaster—an event that happened only 30 days ago?
    The Prime Minister: The answer is that in the events of Bloody Sunday many people lost their lives. With foot and mouth, it is important to learn the lessons properly and direct agriculture forward for the future. That was the purpose of the Anderson inquiry report published yesterday. However, the situation regarding Bloody Sunday is quite different. I do not agree with the hon. Gentleman's implication that we should not have set up that inquiry. Sometimes it is important to get to the truth of what happened, even though it was a long time ago, because what happened a long time ago affects the present day as well.
    Julie Morgan: Is the Prime Minister aware that nearly £300 million has now been committed to objective 1 areas in Wales? Will he make certain that the interests of Wales are represented in the decision on the follow-up programme that will take place
    284
    after 2006, in the same way that he made certain that Wales, the valleys and west Wales benefited from a programme in 1998?
    The Prime Minister: We shall certainly make sure that people are properly consulted on the next phase. It is as well to emphasise one point. As my hon. Friend rightly said, some £300 million is going to west Wales and the valleys, which is boosted by match funding of £400 million or thereabouts. As a result, there will be substantial additional investment in west Wales and the valleys. As a result of the work that has been done and the state of the economy, the hon. Lady will know that, although unemployment remains a severe and real problem in those areas, the fall in unemployment there has been the largest of any constituent part of the UK.
    John Barrett: The Prime Minister will be aware of the widespread concern that exists about deep vein thrombosis and its connection with long-distance flights. Does he share my concern that the World Health Organisation study into DVT has not only failed to begin, but will take two and a half years to complete? What measures will the Government take in the interim to ensure the safety of the one in 10 people who develop blood clots on international flights, which can develop into life-threatening conditions?
    The Prime Minister: We issued guidance on the subject in November, as I understand it. The World Health Organisation report will take some time, but it is as well to wait for what will be a detailed piece of research. That should provide us with the basis for further guidance. In the meantime, people will be well advised to follow the guidance that has already been issued.
    Phil Sawford: I recently visited the new cardiac ward at Kettering general hospital where I saw the new building to house our MRI scanner, which will shortly be in service, and in a few days I shall attend the official opening of the hospital's new creche facility. [Interruption.]Is my right hon. Friend aware of the stark contrast between the situation now and with the public appeals, bingo sessions and car boot sales that we used to rely on to fund health services in Kettering when the Conservative party was in power?
    The Prime Minister: The Conservatives were howling at my hon. Friend because they do not like to hear any good news about the health service. He is right. The MRI scanners that are going not just to his constituency but to other constituencies, and the fact that more than 90 per cent. of people with suspected cancer are seen within two weeks, are important signs of progress, but of course there remains far more to do.
    Mr. Iain Duncan Smith: Will the Prime Minister tell us how much the RMT has given to the Labour party over the past financial year?
    The Prime Minister: I do not know the precise sum, and there is no particular reason why I should. However,

    285
    the right hon. Gentleman will know that we have made our position totally clear on the strikes that are happening: they are not justifiable, which is why we condemn them.
    Mr. Duncan Smith: According to the Electoral Commission, the answer is in excess of £84,000. Of course, the union also gives extra perks to certain members of the Cabinet, whom we already know. Yet that is a union—[Interruption.]
    Mr. Speaker: Order. Let the Leader of the Opposition speak.
    Mr. Duncan Smith: That union is causing misery for millions of rail passengers throughout the country. While passengers trying to get to work are losing money, the Prime Minister's party is still making money from the union. It is not enough for him to say that he condemns the strikes. Will he take a lead, take action and sever his links with that striking union?
    The Prime Minister: I have made it clear that we regard the strikes as unjustified and unjustifiable. In relation to how we deal with them, the important thing is to state that clearly on behalf of the Government, and to make sure that the measures that we take enable the investment and the change in the railways to go through. The worst thing that we could do would be to adopt the suggestion that the right hon. Gentleman made yesterday and ban the right to strike. I do not think that that is the right way forward. Instead, we should state clearly that it is not right for the strikes to take place, and in the meantime to make sure that we put into the railways the investment that is needed.
    Mr. David Crausby: With a majority both inside and outside the House in favour of a ban on hunting with hounds, will my right hon. Friend put us out of our misery by telling us that he will introduce such a measure urgently and ensure that there is enough time for it to proceed successfully through both Houses?
    The Prime Minister: I am afraid that I am not going to put my hon. Friend out of his misery yet. As we have made clear before, and as I said in the House a couple of weeks ago, the House will have an opportunity to vote on the issue. We will announce the date of the vote at the appropriate time.
    Miss Anne McIntosh: Does the Prime Minister agree with York district hospital, York city council, which is run by the Labour party, and the Selby and York primary care trust that their problem is lack not of money but of care home places? The Government have presided over a historic loss of 50,000 care home places in the past five years. In the city of York alone, we are looking for 50 care places. The Prime Minister has increased the costs of private care homes; what does he propose to do about it today?
    The Prime Minister: I do not agree with the hon. Lady's figures, and I do not know her trust's specific position. However, I would be surprised if it claims that the problem has nothing to do with money. Many care homes face serious problems because of the level of fees
    286
    and because they have been under huge and increasing pressure through, for example, bed blocking and other issues that we discussed a moment or two ago. The only method of sorting out better social care for people is through investing in it and reconfiguring our organisation of it, as primary care trusts throughout the country are doing.
    Mr. Andy Reed: Is the Prime Minister aware that participation in community sport continues to fall in this country? My appearances for Burstall rugby club's first team have nothing to do with late recognition of my skills; we simply no longer have a second or third team. Will my right hon. Friend join me and others who have signed early-day motion 702 and ensure that the Chancellor introduces tax exemptions for such clubs in his Budget, which he suggested he would like to do, rather than following the charitable route? That would make an enormous difference to 150,000 sports clubs throughout the country and to the 1.5 million volunteers who give their time for sport.
    The Prime Minister: I suspect that that will be the first of many Budget representations. I understand that the Treasury has issued a consultation document on the matter; we are considering it.
    Annabelle Ewing: Following the revelations of the past few days, will the Prime Minister accept that the Arthur Andersen private finance initiative report on which the Government relied is fundamentally tainted and that his flagship PFI policy has been holed below the waterline?
    The Prime Minister: I refer the hon. Lady to the PricewaterhouseCoopers report on the PFI, which found that it was excellent value for money. She should also talk to people throughout the country who have seen new hospital buildings, GP premises and school buildings, not least in Scotland, built through a partnership between the public and private sectors. It is important to continue to use the private sector to help to lever in greater investment when that will work. Overwhelming evidence, not only from the PricewaterhouseCoopers report but from the National Audit Commission, shows that the partnership provides good value for money. People such as the hon. Lady who oppose that must explain where they would get the money.

    Ministerial Visit (North Ayrshire)
    Mr. Brian H. Donohoe: When he next expects to visit north Ayrshire.
    The Prime Minister: I have no immediate plans to do so.
    Mr. Donohoe: I am extremely sorry to hear that. My right hon. Friend would have been taken to meet some industrialists, especially those in the electronics industry, with which there are genuine problems. Much investment is going to Ireland because of the difference between corporation tax in the United Kingdom and in Ireland, where it is 10 per cent. Although the Chancellor has given

    287
    start-up much encouragement in this country, corporation tax remains at 30 per cent. for the rest of industry. Will my right hon. Friend do something about that?
    The Prime Minister: Again, I am sure that the Chancellor has heard that representation. However, we have made changes in corporation tax since coming to power; we have cut the rate from 33 per cent. to 30 per cent. Although that is high when compared with Ireland, I hope that my hon. Friend realises that there has recently been substantial inward investment in his part of Scotland. We have much more to do to attract more inward investment there, but I hope that he agrees that it is not all doom and gloom. Many good contracts, including a recent contract for £4 million in his constituency, give us hope for the future.

    Engagements
    Mr. Michael Foster: Conservative-controlled Worcester city council appears reluctant to use antisocial behaviour orders in the fight against you culture. Does my right hon. Friend believe that that lack of political willingness is part of the reason why such tools are not used in the fight against crime and antisocial behaviour in cities such as Worcester?
    The Prime Minister: There has been some reluctance to use them, but we must also consider their use critically and whether we can streamline their application. For example, I know that my right hon. Friend the Home Secretary is examining interim orders and methods of cutting the bureaucracy involved in obtaining such orders. Many people's problems are not the heavy crimes that hit the headlines every day, but continuing antisocial behaviour. Antisocial behaviour orders constitute one mechamism, but not the only one, for defeating it. I agree with my hon. Friend that we must do more, and that is precisely why we are reviewing the matter and will take further action.
    Mr. Gerald Howarth: Will the Prime Minister now accept that the Saville inquiry has served only to reopen deep wounds that should have been allowed to heal? Is he aware that, while the IRA's adjutant in Londonderry 30 years ago today struts around this place and raises a foreign flag in this House, the former soldiers of the Parachute Regiment stand accused by a stream of pro-IRA propaganda films on television that have served to pollute the atmosphere in which the Saville inquiry is being held? Surely the £66 million-not £52 million, as he told my hon. Friend the Member for Reigate (Mr. Blunt) last week—that the Government have spent on lining the lawyers' pockets would have been better spent helping the families of those who were bombed at Omagh.
    The Prime Minister: First, I do not agree that the wounds had healed; one of the reasons for having the inquiry was that they had not done so. I believe, for the reasons that I gave at the time, that it was right to have that inquiry. As for the more general position on Northern Ireland, I am sorry that the Conservatives are now effectively taking the view that they do not support the process that we have painfully tried to construct there. Whatever the difficulties involved in that process, it is a
    288
    lot better than what we had before; real progress is being made in Northern Ireland. This is a classic situation in which, if people opt for circumstances in which everything is perfect, we will simply go back to the days when nothing was working, or perfect, at all. With the greatest respect to the hon. Gentleman, I believe that the peace process is right, and that the decision that we took on the inquiry is right; I stick by both of them.
    Mr. Bill O'Brien: My right hon. Friend is known to care for, and provide assistance to, the mining communities, and that is welcome in those communities, is he aware of our concerns about under-achievement in education and the need for greater social care for those who are chronically sick with emphysema and bronchitis? Will he make further inquiries so that we can have the care in the mining communities that we wish to obtain from the Government?
    The Prime Minister: First, I thank my hon. Friend for his acknowledgment that we have put a substantial amount of investment into the mining communities. I have seen for myself that that has given many of those communities a new lease of life and sense of hope. He is right to make the point about payments of compensation to people with emphysema, and so on. We are doing everything that we possibly can to speed those payments up. The problem that we have had throughout is that each case has to be individually assessed. We are, however, looking at further ways of speeding up the process, and hundreds of millions of pounds have now been paid out.
    Mr. David Atkinson: Is the Prime Minister aware that, later this year, the whole world will hear the evidence against Slobodan Milosevic in an open court, but that the United States proposes to try the terrorists associated with Osama bin Laden behind closed doors in a military court? Will the right hon. Gentleman seek to persuade President Bush that justice for the victims of 11 September should be seen to be done?
    The Prime Minister: A decision has not yet been taken about how these people should be tried. Over the past few weeks, we have seen some very unfair reporting in relation to exactly what has happened to the detainees, and in relation to the American position more generally. I ask the hon. Gentleman to remember that this situation arose out of thousands of people being killed in cold blood on the streets of America. The exact status of the detainees has not yet been decided, but it is not the case that they are being mistreated. Representatives of the International Committee of the Red Cross are now based at the camp and are visiting the detainees; they will make a full report to the United States Government. I ask that—in respect of this issue, as of others—people wait until a decision has been taken before they attack it.
    Mrs. Betty Williams: Will my right hon. Friend join me and other hon. Members in supporting No Smoking day, and set an example to the whole nation by joining the campaign to ban smoking in all rooms in the House where we meet?
    The Prime Minister: Fortunately, I am not responsible for what happens in the various Rooms of the House—

    289
    that is a matter for the House itself, I am pleased to say. In respect of the campaign against smoking, the one thing that we should be clear about is that the dangers and health risks of smoking are now absolutely clear. So the point that my hon. Friend makes in general is right, but I am afraid that her particular point is a matter for the House.
    Mr. Bill Wiggin: Is the Prime Minister aware that 16 doctors wrote to me from Herefordshire's local medical committee and Leominster primary care trust to say that they cannot get their patients
    290
    admitted to hospital because there are not enough beds? Is he aware that this will get worse when the new hospital opens, as there will be even fewer beds?
    The Prime Minister: I do not doubt that there are real problems with the number of doctors, nurses and beds, but we shall not take lessons from a Conservative party who savaged the number of beds in the health service when it was in power. I hope that the hon. Gentleman gives his constituents this reply: the only way to get those extra doctors, nurses and beds is to invest in the national health service—not privatise it, which is the Tory plan.

Point of Order
3.31 pm
Mr. Roger Gale: On a point of order, Mr. Speaker. This matter arises out of the operation of the Data Protection Act 1998, which I believe can fundamentally affect the work of Members of Parliament in representing their constituents.
On Monday of this week, I received a telephone call from a Government Department indicating that before it could reply to a letter that I had sent to it on behalf of a constituent, it required a consent form from my constituent. My constituent had written on behalf of her profoundly deaf daughter, for whom she is the carer and whose interests I have sought to represent over 18 years.
That is just one of a significant number of incidents when Government Departments, agencies and other organisations—I am thinking particularly of Consignia—have sought to deny Members information, sheltering behind the Data Protection Act. On behalf of Back-Bench Members, whose interests you, Mr. Speaker, have continuously sought to protect, would you please seek an urgent meeting with the Information Commissioner, Elizabeth France, to clarify fully and finally the manner in which Members of Parliament may be, could be and should be properly allowed to represent their constituents' interests?
Mr. Speaker: I am grateful to the hon. Gentleman for giving me notice of his point of order. I can understand his frustration, but it is not for me to say whether an Act of Parliament passed by the House has been correctly interpreted and applied. I suggest that he pursue his point with the Information Commissioner and the responsible Minister.

SCOTTISH GRAND COMMITTEE
Motion made, and Question put forthwith, pursuant to Standing Order No. 100(1) (Scottish Grand Committee (sittings)),
That the Scottish Grand Committee shall meet at Westminster—
(a) on Wednesday 13th February at half-past Ten o'clock to consider a substantive Motion for the adjournment of the Committee; and
(b) on Tuesday 5th March at half-past Ten o'clock to consider a substantive Motion for the adjournment of the Committee—[Dan Norris.]
Question agreed to.

Police
3.33 pm
The Minister for Police, Courts and Drugs (Mr. John Denham): I beg to move,
That the Police Grant Report (England and Wales) 2002–03 (HC 533), which was laid before this House on 28th January, be approved.
In the White Paper on policing the 21st century, published before Christmas, the Government set out a radical programme for police reform with the aim of reducing crime and the fear of crime. The public want criminals caught and convicted. They want to see crime tackled, the fear of crime reduced, and antisocial behaviour and disorder tackled effectively. The White Paper sets out the ways in which we shall raise the performance of the police service across England and Wales and bring all forces up to the standard of the best.
The funding settlement that I am announcing today will help to underpin the process of police reform. Resources have been targeted to support the modernisation process. More officers will be provided through investment in the crime fighting fund, and the police service will benefit from more effective support from science, technology and information technology through Airwave and the national strategy for police information systems. We are also providing investment to enable police officers to make better use of their time and skills, through the DNA expansion programme, and there is an increased provision for capital investment in works, vehicles, information technology and other equipment.
Police resources will be maximised to put more officers on the beat, and to make better use of them when they are there. That will be achieved by better deployment of the increasing number of police officers, tackling unnecessary bureaucracy, and enhancing the capacity of support staff.
Central to that vision is an increase in the number of police officers. Our target is to achieve 130,000 officers by the end of the coming financial year. In the past two years, the Government have provided for an additional 6,000 recruits, and a further 3,000 will be financed in the coming year—all outside the general funding for police authorities covered by the police grant that we are discussing today. The crime fighting fund alone is equivalent to an additional £221 million on the provision for policing.
Mr. David Heath: Is there specific provision in the figures that the right hon. Gentleman is announcing for the additional security required following the events on 11 September? Undoubtedly, there must be police officers at our ports of entry and our airports. In Avon and Somerset, 10 police officers who could be patrolling our rural areas are permanently lost to provide cover at Bristol airport. How can we recover that funding and make up for the depleted number of officers who police our rural areas?
Mr. Denham: The hon. Gentleman raises an important point. As in any year, the costs of policing terrorist activities and incidents are in part included in the police grant, but the issue of increased costs is under consideration and consultation is taking place with the Association of Chief Police Officers and others. The hon. Gentleman will be aware that we have already made

293
specific provision of some £30 million over and above the police grant in the current financial year. I am not yet in a position to announce the funding for the coming year.
Several hon. Members rose—
Mr. Denham: I would not mind making a little progress, but I shall take one more intervention.
Mr. John Greenway: I want to give the Minister a word of thanks. His Department has reimbursed North Yorkshire police for the extra cost of policing Menwith Hill and Fylingdales in my constituency, and we are grateful for that. The bad news is that North Yorkshire police have still not been reimbursed the £1 million cost of policing the Selby rail crash. This is now an urgent matter, and unless some reassurance can be given before the police committee meeting next Monday, the precept in North Yorkshire, which is already going up by a third, will increase by even more in order to meet that cost.
Mr. Denham: I shall write to the hon. Gentleman as swiftly as I can on the specific issue of Selby. There may be cause to discuss that problem later in the debate. Police authorities are routinely expected to absorb an element of unprecedented and unexpected costs. It has never been the case that every single penny of unexpected costs is reimbursed from the centre. I shall endeavour to get back to the hon. Gentleman regarding the specific matter of Selby.
Mr. Peter Pike: My right hon. Friend talks of unexpected costs. He will recall the disturbances in Bradford, Oldham and Burnley last year, which caused serious problems for the police budgets in West Yorkshire, Greater Manchester and Lancashire. Is he able to give a positive indication that those additional costs will be met?
Mr. Denham: If I may make a little progress, I shall come to that matter in a moment.
As a result of the Government's efforts, we have turned the tide on police numbers. Increases in police funding have brought about a rise in the number of police officers to 127,200, and we shall continue to build on that success this year. We expect to have record numbers of police officers—more than 128,300—in the spring, and 14 forces already have record numbers. After we have reached those record numbers, we shall need another 1,700 officers to reach next year's spring target of 130,000. Financing 3,000 recruits through the crime fighting fund next year should deliver that target.
The number of civilian support staff now stands at 56,644, which is an increase of 2,788 in the year to September 2001. Those extra support officers mean that police can spend more of their time on visible operational policing.
Police authorities and forces have pressed for funds for additional officers for many years. We have provided those funds. Indeed, had we included them in the general
294
allocation of grant this year and next, the increase in resources going directly to forces would have been not 2.9 per cent. but about 3.9 per cent.
Mrs. Anne Campbell rose—
Mr. Denham: I will take one more intervention, but I hope that Members will then let me make a little progress. I suspect that many of the issues that they want to raise will be covered later in my speech.
Mrs. Campbell: My constituents are grateful for the 40 extra officers that the Cambridgeshire police have had since September 2000. The police authority, however, maintains that unless the police rate goes up by 10 per cent., Cambridgeshire stands to lose up to 100 officers. Does my right hon. Friend regard that as scaremongering?
Mr. Denham: As my hon. Friend will know, the Cambridgeshire force is one of those that have already achieved record numbers. The determination of the exact precept is a matter for the police authority, but the settlement commits substantial resources to the police in England and Wales as a whole.
The grant allocation does not include the large amount in the crime fighting fund that will pay not just the costs of recruits in the coming year, but the salaries of those recruited in the previous two years of the fund. When that money has not been taken fully into account in the presentation of figures, the true resources available to police authorities are inevitably understated.
The police funding settlement for the coming year builds on last year's record level. Overall provision for policing will increase by 6.1 per cent., to £9,010 million. That is an increase of over 16 per cent. on the provision for 2001. By 2003–04, police funds will have risen to £9.3 billion. That is an increase of more than 20 per cent., or 12 per cent. in real terms, on provision in 2000–01. Most will be paid to police authorities as grant, either for general purposes or to support specific initiatives.
The police grant report deals with Home Office support for revenue expenditure, but revenue spending is not the whole story. I am pleased to say that we have been able to increase the provision of capital grant and supplementary credit approvals from £157.43 million in 2001–02 to £209.43 million in 2002–03. That is a substantial increase—33 per cent. Most forces will receive more capital grant and credit approval for general capital expenditure than they did this year, and none will receive less. With part of the £209 million, we will establish a £20 million grant fund to improve the police estate. The Audit Commission has remarked on the condition of police properties. The increased provision, and the opportunities for forces to bid for more from the capital fund, will lead to modernised working conditions and improved services for members of the public who go to the police.
Let me now deal with general funding. For 2002–03, the total amount of police authority general expenditure to which the Government will contribute police or rate support grant will be £7,831 million. That is an increase of £217 million on this year's provision, adjusted for the move of the National Crime Squad and National Criminal Intelligence Service to central funding. The increase

295
amounts to 2.9 per cent., but Members should bear in mind the fact that when provision for specific initiatives and capital is included, it becomes 5 per cent.
I have taken account of a number of factors in the grant settlement. On 1 April 2000, the boundaries of the Metropolitan police district were brought into line with those of the 32 London boroughs. That meant that Essex, Hertfordshire and Surrey took over responsibility for the policing of areas that were formerly in the Metropolitan police district.
We have taken account of transitional costs incurred in the last three years. We had intended to discontinue the additional payments for 2002–03, but I have recognised that transitional costs will continue to be incurred, and have extended the payments for one further year. We will therefore be making special payments of grant in 2002–03 totalling £1.1 million in recognition of the additional costs resulting from the boundary changes. Hertfordshire will receive an additional £0.3 million and Surrey an additional £0.8 million.
We accept that the police funding formula is not sufficiently sophisticated or flexible to respond to the distinct characteristics and responsibilities of the Metropolitan police in carrying out capital city and national functions. For that reason, each year the Greater London Authority receives a special payment of grant on behalf of the Metropolitan police authority in addition to that provided through the funding formula.
In recognition of the Metropolitan police service's specific needs, the Metropolitan police special grant will be increased from £191 million this year to £197 million for 2002–03. That is paid as 100 per cent. Home Office grant and is not charged to London council tax payers.
Mr. Graham Brady: The Minister has taken account of the special national role of the police force in the capital. He will be aware that this year Manchester is hosting the Commonwealth games, an important national sporting occasion. Will he undertake not just to provide the £3 million that has already been promised, but to meet the whole of the £7.5 million cost of policing the games? If he does not, he must understand that there will be an unacceptable cost for council tax payers in Greater Manchester, or unacceptable cuts to policing in Greater Manchester.
Mr. Denham: For the record, nothing has been promised yet under this heading. The hon. Gentleman may be anticipating things that I will come to a little later, or Ceefax for the north-west, but I will deal with the Commonwealth games in due course, although the Government have already pledged some £30 million towards the cost of the Commonwealth games.
I turn to specific initiatives for revenue or operational spending, for which provision is made on top of the general allocation of funds to police authorities. The main programmes address particular pressing needs identified by police authorities. They also reflect our concern to develop particular elements of the service as part of the modernisation agenda.
I have already referred to the crime fighting fund, of which the coming financial year will be the third year. A total of £167 million is provided for the costs of continuing to employ the first 6,000 recruits, and £54 million is provided for next year's recruits. That
296
investment is critical to the delivery of 130,000 officers by spring next year. Police authorities and forces have delivered admirably against the first two years' targets for the programme.
Both revenue and capital provision is made for those forces scheduled to take Airwave, the new radio communication system, during the coming year. Capital set-up provision of £76 million is made available for the equipment and facilities that will be required locally for forces scheduled to take the service. We will also provide up to £65 million of revenue support for forces to invest in initial preparation costs and for locally determined menu services. The core service charge payable to the contractor, and likely to cost around £50 million next year, will be met centrally.
Airwave is an important building block in police modernisation. It will replace a variety of existing radio systems with a common system based on modern digital technology. Greater Manchester police was the second force to receive Airwave, in part in recognition of the need to have a modern communication system in place in time for the Commonwealth games. That spending is part of our undertaking to provide up to £500 million over three years to enable forces to adopt the system in the certainty that the main burden of the cost will be covered.
In 2000–01, the Government provided £15 million through a new rural policing fund to meet the particular problems encountered in rural or sparsely populated areas. The fund was expanded to £30 million this year and I propose to continue payment next year. The fund is targeted at rural policing issues. The 31 forces that benefit are encouraged to develop ideas and initiatives that benefit rural communities.
Mr. David Drew: Can my right hon. Friend assure me that that will be part of the negotiation that he will enter into with the Department for Transport, Local Government and the Regions? Whatever new funding mechanism is arrived at, the problem of policing in rural areas must be recognised.
Mr. Denham: I shall say something in a moment about the funding formula, the way in which it may be re-examined and our approach to that. We will want to ensure that we look at the range of criticisms of the current funding formula.
We are particularly aware of the impact that the higher cost of living in London and the south-east can have on recruitment and retention in the area, which is why we have provided additional funding to help forces recruit and retain officers. In the coming year, £33 million will be provided for a 75 per cent. share of the cost of the London pay lead—the payment to Metropolitan and City police force officers who were recruited on, or after, 24 September 1994, and who do not receive housing allowances. Arrangements are also in place to provide an allowance to qualifying officers in other forces in the south-east. In Essex, Hertfordshire, Kent, Surrey and Thames Valley, the allowance is an extra £2,000 a year; in Bedfordshire, Hampshire and Sussex, it is an additional

297
£1,000. Provision is also made for funding free rail travel up to 70 miles from London for officers in the Metropolitan and City forces.
Several hon. Members rose—
Mr. Denham: I shall give way to my hon. Friend the Member for Reading, West (Mr. Salter).
Mr. Martin Salter: Is my right hon. Friend the Minister aware that many of us have lobbied long and hard for the regional cost of living allowance for forces adjoining London? House prices in my Reading constituency, and in many others in the south-east, actually exceed those in many parts of London. Does he not recognise that it is potentially damaging to pay police officers in the Metropolitan police area an additional £6,000—my goodness, they have earned it—while paying only £2,000 to officers in other high-cost housing areas? Will the Minister undertake to review that system, which simply is not working? At the moment, the additional money is not much more than a sticking plaster.
Mr. Denham: I understand my hon. Friend's point, but the allowances, which are a relatively recent development, were properly agreed with the police negotiating body through the negotiating structure—the forum in which those issues should properly be addressed. As a Hampshire MP, I, too, am aware that such issues exist in the south-east, but we must ensure that we take a proper and well-informed approach to them, rather than suggesting that we can make a difference simply by pulling a figure out of a hat. I shall now give way to my county colleague.
Sir George Young: As the right hon. Gentleman has implied, he is not unfamiliar with the problems in Hampshire. The resources that he announced at the beginning of the debate are very welcome, but unless the issue of allowances is addressed, it will be impossible to spend those resources because of the retention and recruitment problem, to which reference has just been made. Will he use such influence as he has to review as soon as possible the £1,000 allowance, which is a real barrier to getting the quality police force that we all want to see?
Mr. Denham: I want to ensure that we identify the problems precisely and tackle them effectively. It is notable that some of the police forces surrounding London appear to have much greater problems with recruitment and retention than others, even though the apparent underlying conditions are very similar. For example, Surrey, which is as geographically close to London as one can get, has very high house prices, but the Surrey force has not suffered the same recruitment difficulty as the Hampshire and Hertfordshire forces. I am anxious to work with forces in the region to identify the precise nature of the recruitment and retention problems, and such work is already in train. I want to ensure that any action taken addresses real, rather than assumed, problems, which is the approach that I tend to take. I acknowledge the concerns that have been expressed, but I think that the approach that I have identified is the right and proper way for the Government to proceed.
298
I want to touch briefly on centrally provided services, which also form part of the police funding arrangements for the coming year and account for about £170 million. Some £23 million is provided for training costs arising from the crime fighting fund, which will cover initial training for additional recruits at national police training centres. Some £61 million has been allocated to the DNA database expansion programme, and £27 million has been included for the national strategy for police information systems—NSPIS.
The planned case and custody applications will provide a number of benefits to the police. Case preparation will reduce paperwork through the creation and use of electronic files. The custody application will provide police custody officers with online guidance on all the procedures to be followed in the booking-in of suspects, and their subsequent progress through the system. The systems will be linked to each other. The accurate details that they provide will eliminate the need for police officers to fill out several different forms, and will be capable of transmission to other criminal justice systems.
All that is part of our effort to prevent the time-wasting duplication of work, and to free officers to concentrate on a job that there is no doubt requires their full professional skills.
Mr. James Paice: What the Minister has said will come as a great relief to the many who have wondered when the Government would be able to introduce a computerised custody system. However, we discussed the matter only a month or so ago when the Home Secretary introduced his White Paper. At that time, the Minister was evasive about when the system would be introduced. He appears today to be saying that that introduction is imminent. Will he give us a deadline by which he expects to introduce a computerised custody system that will reduce the ridiculous bureaucracy in police stations?
Mr. Denham: The provision that I have announced this afternoon reflects our confidence that we will make significant progress this coming year. A full system will not be in place in every part of the country this year, and it will be some time before we can roll it out across the police service as a whole. However, we recognise the need to make progress on this area of IT development. There is no doubt that poor police IT is one of the factors that limits the most effective use of police officers' time. As we identified in last autumn's study entitled "Diary of a Police Officer", the lack of appropriate IT ties police officers to the police station as they cope with unnecessary bureaucratic duties. We are determined to make progress, and the provision announced this afternoon demonstrates our desire to do so.
The National Crime Squad and the National Criminal Intelligence Service form a vital part of a modernised police service in tackling serious and organised crime. Both agencies have an important role to play, internationally and nationally, and the valuable work that they do in turn benefits police authorities at local level.
Provision for the NCS and NCIS was increased in 2001–02, using funds from levies on police authorities. From the coming year, both bodies will be funded directly by the Home Office. That will add to the transparency of their funding, which will no longer be a hidden deduction from the general policing provision.

299
Because of the central importance of the NCS and NCIS in the battle against serious crime, my right hon. Friend the Home Secretary has decided to increase provision for the NCS and NCIS from £165 million to £202 million in 2002–03. I believe that that investment in tackling serious crime will be broadly and widely welcomed.
Mr. George Osborne: Hon. Members from all parties in Cheshire recently met the chief constable of the local force, and heard the disturbing news that our police authority grant is to increase by only 1.9 per cent. in real terms. The reason, as the Minister has made clear, is that the amount being deducted from the grant to meet the allocations for the NCS and NCIS is more than the local police force was spending. As a result of the mechanism that the Minister described, the force has lost out. Will he look specifically at the Cheshire case, as it concerns both Labour and Conservative MPs in the county?
Mr. Denham: I wonder whether the hon. Gentleman understands the question any more than I will understand the answer that I am about to give. However, I assure him that, having been alerted to the concerns in Cheshire by hon. Members of all parties, I am satisfied that we are right to say that the county has received an increase of 2.5 per cent. The adjustments in baselines to reflect the change in the way that the NCS and NCIS are funded do not undermine that argument, and are perfectly consistent with the ways in which adjustments to baseline budgets are always implemented by the Department for Transport, Local Government and the Regions.
I shall be happy to write to the hon. Gentleman to set out the case. However, I took the opportunity to check the matter earlier, and I believe that the funding increase has been appropriately represented by the Government.
A consultation exercise on the funding settlement was held in the normal way. I received 38 representations from 27 police authority areas, as well as from hon. Members, the Association of Chief Police Officers, chief constables and police authorities.
There is always concern about the size of any settlement and how the cake is cut, but, of the overall increase of 6.1 per cent., 5 per cent. will go to police authorities for the CFF, as capital, and for other specific initiatives, as well as the grant. It builds on the 10 per cent. increase in policing provision in 2001–02.
Concerns were raised about the method of adjustment to the 2001–02 baseline, on which I have touched. However, as a result of wider changes to the baseline calculations from services not affecting my Department, but in a more equitable way, we have agreed to fund an additional £5 million to that which was proposed in the autumn to make sure that, on a like for like basis, year on year, every police authority will receive a grant increase of at least 2.3 per cent. In total, my right hon. Friend the Home Secretary has been able to identify some £11 million on top of the original policing settlement to make sure that we achieve an equitable increase for all police authorities.
Llew Smith: The Minister will be aware that for a variety of reasons, pension costs as a proportion of the total police budget are increasing.
300
Indeed, it is predicted that such costs will increase dramatically in the next few years. To what extent has he taken that into account and will he take it into account when considering the funding of the police authorities in the months and years ahead?
Mr. Denham: In the short term, the cost of pensions has been taken into account in the settlement in the normal way. However, we said in the police reform White Paper that we are looking at more significant changes to the police pension system, and we are currently working on that. There are a number of issues to address, such as having a modern benefits structure. We said in the White Paper that we would like to find a way of more satisfactorily insulating police authorities from the predictable costs of normal retirement within the pension scheme. Work on that will be continuing. For the coming year, provision has been made in the usual way and is reflected in these calculations.
Mrs. Annette L. Brooke: Following on from that point, what advice will the Minister give police authorities about their budgeting this year? If they are anticipating a pension time bomb in several years, it might be prudent to put extra money on one side now, but if there is to be a change in a few years, there would be no possibility of putting more police on the beat. What advice will he give the authorities on coping with the future, given the uncertainty of the change ahead?
Mr. Denham: The police authorities should probably approach the corning year as they have approached previous years. If the Home Office felt that there was a need for central guidance which varied from that advice, we would send it out. However, I have said to my hon. Friend the Member for Blaenau Gwent (Llew Smith) that we recognise that pensions are an issue for police authorities' budgets, and we want to deal with that as we look at the future of police pension provision. I would not like to trigger any dramatic change today in the way in which police authorities approach their budgeting for this issue for next year.
Angela Watkinson: Will the Minister acknowledge that the contributions made by police into their pension funds are almost double what many other public sector workers, such as local government officers, pay?
Mr. Denham: I accept that the contribution rate is quite high. Equally, full pension rights can be achieved after 30 years of service, which is not the case in other schemes. Indeed, an issue that arises when considering the future of pension schemes is how to achieve a system that is seen by all sides to be equitable in terms of the cost to the employer and to the police officer, and which continues to reflect the rather special nature of a police career and the duties and responsibilities of police officers. That is one reason why we have the sort of pension scheme that is in place at the moment. These are not easy matters to keep in balance, and we will need to do that as we develop our ideas on the future of the pension scheme.
David Davis: The costs that the Minister has been talking about, and others,

301
put particular pressure on some police forces so that the settlement that the formula has delivered is not enough to cover their costs. Some police forces, such as mine in Humberside and South Yorkshire—of particular interest to the Home Secretary—are badly hit by the formula and have been for some years. In my case, it has meant doubling the council tax precept to cover the costs. Earlier the right hon. Gentleman mentioned changes to the formula. Can he give us any guidance and hope that the formula will be changed in such a way as to help the likes of the Humberside and South Yorkshire forces in future? They are good police forces doing a good job, but they are dying the death of a thousand cuts.
Mr. Denham: I do not accept that either of those forces is dying the death of a thousand cuts. The increases in resources during the past two years were unheard of under the right hon. Gentleman's party, so let us not have loose talk of that sort because it is damaging.
Let us talk about the formula. All that I want to do—extremely tentatively—is to set out the principles. A part of the pension costs arises from predictable costs that occur when people retire from the police service in the usual way. The police service as a whole and individual police forces have no control over that, but the costs can vary unpredictably if, 30 years previously, there was a cohort with an especially substantial intake. When that group leaves the service there can be a disproportionate impact on pension costs and the budget for that year, and that fact will not be reflected 100 per cent. in the damping mechanisms that are currently in the system. My aim—although I am not sure whether I can achieve it—is to have a system that better protects forces from those costs.
Another cost built into pension schemes reflects to a large extent the success or otherwise of police services in effectively managing health and medical retirement issues. We all acknowledge that some forces have dealt with those much more effectively than others. I am not convinced that those costs are central and that we should pick them up, or that it would serve the good management of the police service to say that whatever the rate of medical retirement the cost to the pension scheme would be picked up centrally. The honest answer is that we shall have to get that right, so that we send the correct signals through the system. We must try to protect police authorities against costs over which they cannot possibly have control but which can affect their budget. However, we do not want to send a signal that poor management will be subsidised by the central police settlement. That will be my approach.
I have already referred to our actions in finding additional resources from outside the planned settlement to ensure that each police authority receives a grant increase during 2001–02 on a like-for-like basis of at least 2.3 per cent. The mechanism is part of a system of floors and ceilings that have applied to the local government grant settlement. Although the mechanism has generally been welcomed, some authorities would have preferred a higher floor, while others were concerned that those above the floor were paying for those below it. We have damped that effect with the additional resources found by my right hon. Friend the Secretary of State for Transport, Local Government and the Regions. The introduction of the floors and ceilings system has been useful this year.
302
I want to make a couple of points about the special grant. As my hon. Friend the Member for Burnley (Mr. Pike) pointed out, I have received requests for special grant to support several police authorities who suffered during the disturbances last summer. I am pleased to tell the House that my right hon. Friend the Home Secretary has agreed to meet more than half the extra policing costs that were incurred and to give grant as follows: £2.22 million to West Yorkshire; £1.44 million to Greater Manchester; £0.82 million to Lancashire; and £0.56 million to Staffordshire.
Mr. Paul Truswell: The announcement that my right hon. Friend has made about West Yorkshire will be most welcome and will go some way towards mitigating the £3.4 million that the service spent on policing the Bradford disturbances. Will he bear in mind, however, that the authority, like many others, also faces claims for not damage? In the case of West Yorkshire, the amount is £7.5 million. Will he monitor the situation with a view to being equally generous when the final picture and its impact on the service and on police funding becomes clearer?
Mr. Denham: The amount that I announced is an improvement on the normal special grant criteria. Those criteria would have allowed for only a small payment for policing costs—only about £300,000 for West Yorkshire. I hope that the move to meet almost 64 per cent. of the extra policing costs will be seen as significant.
I can say nothing specific this afternoon about possible claims under the Riot (Damages) Act 1886. We shall have to wait and see what the position is. We are aware that the Lancashire police authority, for example, is determined to resist claims under the Act. I cannot speak for the authority, but it sees no reason why taxpayers' money should be spent on refunding insurance companies. I believe that that is some way in the distance, but I hope that the additional resources will be welcomed by the forces that receive them.
We have also considered the position of Greater Manchester police, which, as I have just announced, will receive £1.44 million to help to meet the costs of the disturbances. The Secretary of State and I have agreed that a grant of £3 million will be paid to Greater Manchester police as a contribution to the policing costs of the Commonwealth games in a few months' time. Until two or three months ago, Greater Manchester police was telling us that the costs would be £4.8 million, so £3 million is a fairly substantial amount. There was a £3 million hike in that cost, of which we were informed in November.
There cannot be a blank cheque for underwriting whatever costs Greater Manchester police says that it will incur. My officials are still in discussions with the police authority to ascertain whether further costs are justified, but comments of the sort that I heard the chairman of the police authority make today, suggesting that people would be put at risk, show a great deal less confidence in Greater Manchester police than I have.
Mr. Brady: The Minister has said that the estimate of the cost of policing has increased since the original estimate was given, but will he give an undertaking that if he is persuaded that the new estimate is accurate and

303
the costs will be £7.5 million, the whole cost will be funded by the Home Office, not dumped on the council tax payers of Greater Manchester?
Mr. Denham: I have said what I have said. Until November we were told that the costs would be £4.8 million, and then someone said that they would be another £3 million. We are in discussions about the nature of those costs and we shall have to see what happens. Clearly, that would be additional substantial Government funding, in addition to the funding that has already been made available to the Commonwealth games. Of course we all want the games to be a success and a safe success, but equally there cannot be a blank cheque.
Mr. Stephen McCabe: My right hon. Friend has been generous in recognising the difficulties faced by many forces, but will he also recognise that when particular areas decide to bid for large events such as the Commonwealth games, it is done on the basis that local people, local business interests and others believe that there will be a financial gain as a result of attracting these events? Should not they also contribute something towards the policing costs?
Mr. Denham: My hon. Friend is right in the sense that we all hope that Manchester, and the north-west region, will benefit substantially from a successful Commonwealth games. I am quite prepared—I believe that this is the Government's attitude—to approach the issue in partnership, which is why there has been significant Government funding and why I was pleased to make the announcement that I made this afternoon. But I am aware of the reality that may have prompted my hon. Friend's question—that money that I find for the Commonwealth games in Manchester is money that cannot be made available to the police service in any of the areas represented by any of the other hon. Members in the Chamber. We must get the right balance between the needs that arise from specific events and the needs that exist in every area of the country, and I hope that we are doing so. That is why we do not like blank cheques, and why we consider issues very seriously and carefully, on the merits of each case.
For the coming year, we continue to set store by stability in the grant system, to help police authorities to plan ahead. As with this year, we have not proposed any changes to the method of police grant distribution for 2002–03. There will be no substantive changes to the operation of the police funding formula for next year, although of course data have been updated as usual. For 2002–03, the average increase in grant-supported expenditure for police authorities will be 2.9 per cent.
The formula has many strengths. It is generally acceptable to much of the policing community; it also has well recognised limitations. It is largely based on the way in which police forces allocated officers to services in the early 1990s, so we are working to update the formula in line with the policing needs of the next five years. We have a working group with the Association of Chief Police Officers, the Association of Police Authorities, the Department for Transport, Local Government and the Regions, the National Assembly for Wales, the Local Government Association, the Greater London Authority and the Metropolitan police. That group is considering a range of options to update the funding formula,
304
particularly with regard to the police activity data that underlies it. The group is also considering how best to deal with the additional costs that may arise from policing especially sparsely or densely populated areas—an issue raised earlier in the debate.
During the consultation on the grant this year a variety of issues have been raised about the formula. Those who raise such issues always assume any change will be to their benefit, even though no change will ever produce only winners. However, my right hon. Friend and I have concluded that this is the time to undertake a serious and wide-ranging review of the formula. As part of that review, we shall want to examine all the issues raised in the consultation and seek to ensure that the grant formula properly supports the police service of England and Wales on its key role of tackling criminality, reducing crime and tackling the fear of crime.
Where possible, I should like changes to the funding formula to be introduced, after consultation, in time for the provisional police funding settlement for 2003–04, but the ability to do that will depend on making good progress in the months ahead.
Dr. Ashok Kumar: I have listened carefully to what my right hon. Friend has said about the annual settlement. I have a briefing from the Cleveland police authority in which I am told:
"The overall effect of the police settlement is that local taxation will have to increase significantly above general inflation to provide essential additional funding for the police service."
Is my right hon. Friend aware of that? The chairman of the police authority has said that the police precept will have to increase by at least 50p a week—about £26 on a band D council tax bill. That is a serious consequence of the settlement.
Mr. Denham: I shall write to my hon. Friend about the position in his authority, but I have set out pretty clearly that this is a good settlement, taking into account not just the grant settlement, but the additional funding, through the crime fighting fund, to recruit additional police officers—plus the 30 per cent. increase on average in capital funding, together with the additional resources from which many forces benefit. Of course, it is for police authorities to set their precepts, and we expect them to do so in a reasonable and prudent manner, but those who are trying to represent the settlement as a particularly poor one are really not reflecting the contribution of the different sources of funds that I have set out this afternoon.
Mr. Roger Williams: I was pleased to hear that the Minister has consulted the National Assembly for Wales on the future of the formula. The settlement has had a mixed reception in Wales, but there is a growing feeling that police functions and police funding should be devolved to the National Assembly for Wales. Has his Department had any discussions with the Secretary of State for Wales or the First Minister, with a view to making progress?
Mr. Denham: I think that I can be absolutely confident in saying that no such discussions have taken place in the six or seven months that I have been in this job, and I am not aware that any took place previously, but we enjoy

305
in the devolution settlement an extremely good working relationship with National Assembly for Wales at official and political level. The Assembly shares absolutely our commitment to tackling criminality, reducing crime and tackling the fear of crime. I have made a number of visits to Wales, as I have to the regions of England. We have a good, effective working relationship, and I hope that we can build on it in the years to come. We are determined to reduce crime and to lessen the fear of crime. The investment that I have announced will help the police to play their key part in tackling crime and disorder.
Paddy Tipping: My right hon. Friend talks of reducing crime, and I am sure that he is conscious of the fact that police numbers are rising and crime is falling in Nottinghamshire, but on any statistical comparison with like authorities, he will find that the Nottinghamshire police appear to be under-resourced. Will he give a commitment that, in the new formula in 2003–04, he will look very carefully at the position in Nottinghamshire? I accept what he says: all cannot be winners; there will be losers, too.
Mr. Denham: I have visited Nottinghamshire, and I am aware that the view in the city of Nottingham in particular is that the Nottinghamshire force faces the typical crime patterns of a major city under what is seen as a shire county funding formula. I cannot tell my hon. Friend what the outcome of the formula review will be, but I hope—this may be fatal optimism—that we will be able to approach the matter in such a way that he and other Nottinghamshire Members will be able to see that their concerns have been considered and addressed. That is an ambitious aim for any review—it will not leave everybody satisfied—but I hope that I can at least say that I listened to people when I made such visits. After many years of such issues not being considered, we are now prepared to consider them afresh.
I have taken considerably longer than I had hoped, but I hope that I have given way to all hon. Members who wished to intervene and that I have been able to respond to many of their points.
Several hon. Members rose—
Madam Deputy Speaker (Sylvia Heal): Order. I remind all hon. Members that Mr. Speaker has imposed a time limit of 12 minutes on all Back Benchers' speeches. Given the fact that a number of hon. Members have risen, they may wish to make their contributions even shorter.
4.21 pm
Mr. James Paice: I shall do my best to enable as many hon. Members as possible, from all parties, to contribute to the debate.
I recognise the courteous way in which the Minister introduced the debate. He has given way, as has been a tradition in this debate over many years, to every hon. Member who wished to put the case for their police force. He and I are the only two hon. Members who have been prevented from doing that, but I assure him that I shall do my best to do so when I come to the appropriate moment in my speech.
306
I welcome the Minister's announcement, towards the end of his remarks, about extra resources for those forces who had to deal with riots, unrest and disturbances in some parts of the country last year. It is right that such extraordinary costs should be recognised, as should the extra costs—I will not enter into the dispute about how much they will be—that Manchester will incur because of the Commonwealth games. I would refer to Cambridgeshire inasmuch as, last year, the then Home Secretary recognised the extra costs faced by the police force in policing the Huntingdon Life Sciences protests, which are a permanent thorn in the side of Cambridgeshire constabulary. I hope that the Minister will look favourably on that issue again.
The debate takes place against a dismal background of acute demoralisation in the police force. Before I consider the settlement, it is right to examine that background. Since the Home Secretary took on his new role just eight months ago, he has used every opportunity to criticise and undermine the police force. He has criticised their sickness rates, wastage rates and clear-up rates, and has generally presented the police force as a bunch of lazy, ill layabouts.
Even before that, however, the police were faced with ever-increasing bureaucracy and paperwork. As the Minister rightly said, that was manifested in the diary of a police officer, which showed how little time the police spend doing what most people regard as the most important part of policing—being out there visibly carrying out their duties.
As I said in my intervention, I welcome the fact that the Minister believes that the computerised custody system will come on stream in the course of next year. I am sorry that he was not able to provide a more definitive date as to when it will be extended to the whole country, as it will not be fully beneficial until then. However, the study entitled "Diary of a Police Officer" showed that it takes about three and a half hours on average to process each arrest. Therefore, any savings that can be made through the use of a computerised system would release a considerable amount of officer time.
Mr. Drew: Does the hon. Gentleman agree that that is precisely the sort of role with which civilians could help, especially retired police officers who know how to process arrests? That would be a good use of their time and would help the police overall.
Mr. Paice: The hon. Gentleman is on to a good point, but he misses the crucial issue, which is the vast amount of paperwork that needs to be done before we address the problem of who does it. I welcome the fact that the Police Negotiating Board has tentatively found a way to encourage police officers who have done their 30 years to stay on in the force and use their experience to deal with custody cases or some other policing activity. That is a considerable step forward, but other things have caused the police to wonder why they bother.
The courts continue to release on bail people who the police know full well will reoffend. Chief police officers have expressed their concern to me about that. The Government introduced the early release scheme, which allowed 200 people who had attacked police officers out of prison early. In addition, the Home Secretary's proposals to make a dramatic change to pay and terms of

307
employment were pushed through the Police Negotiating Board just before Christmas, under the heads of agreement. The rank and file are due to vote next week. The expectation in all levels of the police force is that it will be a no vote and that the concessions on overtime which the Home Secretary made on Monday will be insufficient to alter the result. As one police officer said to me yesterday, they have been knocked about. They feel bruised and battered and just when they needed encouragement, they are kicked again. Anyone with experience of managing people knows that it is necessary to bolster the morale of staff and the work force before setting about asking them to face change.
Let me be clear on this: we wholly support the need for change and increased flexibility in the police force. That is necessary, but the Government's bully-boy tactics are not conducive to making the police force adapt and face up to that change constructively, which is what we need if we are to achieve the necessary results.
The Minister referred to figures. Only two years ago, the Prime Minister said:
"every single promise that we made—on getting waiting lists down, getting class sizes down and increasing police numbers—will be met by the next general election, as we said they would be."—[Official Report, 16 February 2000; Vol. 344, c. 948.]
We know that that did not happen and the promise was broken. It appears that the Government have at last got police numbers back to the level that they inherited, but instead of showing remorse or apologising for four wasted years, the Minister wants credit for getting us back to square one.
Fiona Mactaggart: Will the hon. Gentleman give way?
Mr. Paice: In a moment.
The Minister used the phrase "We have turned the tide." The question has to be asked: who set the tide in that direction in the first place? It was the present Government.
Mr. Denham: The direction of the tide was set by the previous Government who began cutting police numbers in 1993 and they continued to fall steadily. Not only did crime double, but the country was left in such a bad economic state that we had to sort out the public finances, which were in such a mess in 1997, and introduce economic stability to provide the platform for the increase in police numbers. The hon. Gentleman's Government set the tide in that direction when they allowed crime to double.
Mr. Paice: The Minister is absolutely wrong. According to the Government's figures—it is staggering how often they belie what the Government say—between March 1996 and March 1997, the last year of the Conservative Government, the number of police officers rose by 250 in a single year. I do not know where he gets the idea that we set the tide in that direction because the numbers rose to 127,158. I remind the House that by 31 March 2000 the number of police officers had dropped from 127,158 to 124,170—a drop of almost 3,000 in the first three years of a Labour Government.
Norman Baker: The hon. Gentleman is right to draw attention to the drop in police numbers when the
308
Labour Government came to power. Is not the problem the fact that the Government followed Tory spending plans?
Mr. Paice: That is a typical Liberal intervention. The hon. Gentleman knows full well that the Government say that they have followed Conservative plans when it suits them to do so, as an excuse for a lack of effective and efficient economic management. However, when they want to boast about extra expenditure, of course that has nothing to do with the previous Government's spending plans; they claim the credit for themselves.
Fiona Mactaggart: We have got into a debate, since I sought to intervene, about where this all started. In Slough, it started with the abolition of the police housing allowance by the Conservative Government, which has meant that police officers in Slough, who are only four miles away from the boundary of the Met area, are paid £6,000 less than Met officers. Does the hon. Gentleman agree that, in power, his party was wrong to abolish the police housing allowance?
Mr. Paice: No, I certainly do not agree that we were wrong to abolish it per se—[Interruption.] Well, the hon. Lady specifically referred to Slough. I do not pretend to have a detailed working knowledge of the police force in Slough; that is her responsibility, and I do not have that knowledge. If it proves that the policy was not right for circumstances in Slough, she may have a point; I cannot answer that. However, overall, it was not wrong to abolish the allowance in the wider context of London and the Metropolitan police. The £6,000 pay lead to which the Minister referred was a more sensible way of dealing with the problem, coupled with the introduction of the transport allowance. My own county, however, is suffering from the introduction of that allowance; in counties from which it is possible to commute to London, we now find that many police officers are using the free travel to join the Met. It is swings and roundabouts; some police forces may have lost out a little, but overall there has been a significant gain for policing in this country.
The final background issue which I wish to mention is crime. In the five years before Labour came to power, crime fell year on year by a total of 17 per cent, which was the first time in decades that the rise had begun to be reversed. Crime then started to rise; the Home Office, as is traditional in the circumstances, tried to change the figures so that it was difficult to make comparisons. However, after those changes, recorded crime began to rise again, by 3.8 per cent in the following year, only thankfully to fall back by 2.5 per cent. the year after.
Mr. McCabe: Does the hon. Gentleman reject the British crime survey finding that overall crime has fallen by 22 per cent. since Labour came to power in 1997?
Mr. Paice: I find it hard to accept that. The fact is—
Madam Deputy Speaker: Order. I remind hon. Members that we are discussing the size and distribution of the police grant as contained in the report.
Mr. Paice: I appreciate that very much, Madam Deputy Speaker. However, may I respond briefly to the

309
intervention? The simple fact is that much crime, particularly violent crime, has risen dramatically in the past few years. In some London boroughs, robbery has increased by more than 100 per cent. in the past 12 months. For the Minister to chide us that crime doubled over 18 years sits ill with the fact that under Labour, violent crime and robbery in some London boroughs has doubled in 12 months.
Having set the background to the debate, I shall look directly at funding and the police grant. The Minister paraded a great many figures to demonstrate huge generosity. He spoke about 6.1 per cent. and 5 per cent., and at one stage he got to a 16 per cent. planned increase. For the vast majority of police authorities, however, the reality is much less. For 19 authorities, it is the floor figure of 2.3 per cent. The introduction of floors and ceilings is a commendable way of ironing out some of the unfairnesses that arise from the formula, but it seems odd to choose figures which mean that almost half—19 of the police authorities—are at the floor level.
The total standard spending increase of 2.8 per cent. means an increase of £209 million, but according to the Association of Police Authorities, authorities will have to increase their revenue expenditure by £371 million just to stand still. That is because of inflation, last year's pay settlement of 3.5 per cent., and pensions rising by a projected 8 per cent. this year.
We see another turn of the screw on the council tax payer. Already under the Government there has been a marked shift towards funding the police through the council tax payer. That is nowhere more marked than in the Metropolitan police area, where there has been a 141 per cent. increase in the council tax precept per head. In Humberside, as my right hon. Friend the Member for Haltemprice and Howden (David Davis) said, it has doubled. In Staffordshire, too, it has doubled. In my county, Cambridgeshire, it has gone up by 64 per cent. In the county of my hon. Friend the Member for West Dorset (Mr. Letwin), it has gone up by some 60 per cent. The county with the lowest increase is Durham, where the figure is just 23 per cent. I can only conjecture as to why that might be.
We also know that for the coming year, as a result of the grant settlement announced by the Minister this afternoon, police authorities are considering the need for further huge increases. In the case of Cambridgeshire, despite what the hon. Member for Cambridge (Mrs. Campbell) said earlier—she was wrong—the county police authority is consulting on a 20 per cent. increase, just to have a stand-still budget, with no extra for national schemes or local pressures. Despite what the Minister said, Cambridgeshire remains the second lowest in terms of officers per head of population and in terms of average spending per head.
In Cumbria, the chief constable said that the settlement means that there will be some hard decisions ahead. In discussions with other authorities this morning and earlier this week, we found that Hampshire, the Minister's own authority, requires 5.2 per cent. just to stand still, but is expecting an increase of 14.5 per cent. In Lancashire, the projected figure is 8.7 per cent., in Cheshire, 14 per cent., and in Bedfordshire, 12 per cent. A survey conducted by the Police Authorities Treasurers Society showed that a significant number of forces were considering an increase
310
in the precept of 20 to 30 per cent., and others were trying to deal with the shortfall by cutting back on certain elements.
Mr. Peter Luff: In the case of the West Mercia police authority, a further massive real-terms increase of 19.9 per cent. in council tax is predicted. That comes on top of the 7.9 per cent. increase that the county council must levy to meet the Government's spending ambitions—a huge increase for those who can least afford to pay it.
Mr. Paice: Were all counties represented in the Chamber and were I to give way, I am sure that many other hon. Members would tell similar stories to that of my hon. Friend. Every county that we have telephoned has given similar stories. We just chose a few at random.
Will the Minister tell the House what rise he realistically expects in the average council tax precept by police authorities, just for a stand-still budget? It is important to know that because, as the chief constable of Cumbria said with reference to the crime fighting fund,
"the rules which govern the appointment of these officers require that they are in addition to normal recruitment—which in the light of the overall position cannot be guaranteed."
As the Minister reminded us, the Government are committed to having 130,000 officers by the end of the approaching financial year, yet some authorities clearly doubt whether they can afford to maintain the normal recruitment pattern. That would mean losing access to the crime fighting fund. The Minister makes great play of the target for a record number of officers, and we shall be pleased if he achieves it. However, the cup may be dashed from his lips because authorities cannot afford the extra officers without further substantial increases in council tax. In the first four years, council tax payers have had to pay considerably more for, in the main, the same number of police officers.
The Minister mentioned pensions in his concluding remarks. I appreciate the difficulty of wrestling with that issue, but I hope that he realises the urgency of reaching a conclusion on the problem. It is a running sore for police authorities and a huge and increasing drain on their resources.
The Minister referred to the distribution formula, and I was interested to hear that he and the Home Secretary believe that the time is right to undertake "a serious and wide-ranging review of the formula". That would be good news if the Government had not embarked on a similar review three years ago in 1999. We have received no results from it. Year after year, the Minister and his predecessors have promised to change the distribution formula; we continue to await results.
Top-sliced funding is also important. This year, the Government have increased the amount of money that they top slice from the police budget by some 51 per cent. for special initiatives. I admit that each initiative is a worthy item of expenditure; £120 million extra has been taken for them, another £203 million for the National Criminal Intelligence Service and £167 million for centrally provided services. The figures for last year are not directly comparable because they are shrouded in Home Office mystique, but there appeared to be an increase of 143 per cent. in the amount of money that was top sliced and retained by the centre. That is a worrying trend.

311
The Home Secretary reportedly said that he wanted an initiative a day, but a clear picture is emerging: he does not trust chief constables or police authorities with the initiatives. The trend towards central control of funds, coupled with the swingeing extra powers that he proposes to take in the Police Reform Bill, are the signs of someone who trusts nobody. His stance appears to be, "We can have as many initiatives as we like as long as they are all mine." That is the opposite of local control, to which the Government pay lip service.
It is worth recalling the words of the White Paper, which was published before Christmas. On page 137, it states:
"The importance of police authorities in the governance of the police service is recognised and their role in providing local oversight of police forces is key … This new role creates a much higher set of expectations of police authorities".
Yet their power to act is increasingly curtailed.
We can divine two clear messages from the settlement and those that preceded it. First, there is a huge shift in the cost of policing, which is borne increasingly by council tax payers, presumably in the hope that they will not notice, that they will blame the police authority or, even better, the local authority that levies the tax. Secondly, we can forget about local control or initiatives. Policing will be exactly what the Home Secretary determines. His instincts about the need to improve policing are right, but his methods are wrong.
Increasingly centralised control of our police by funding or authority may seem attractive to a Home Secretary who wants change fast, but it is dangerous to put so much power in the hands of one person, and he should think again.
4.44 pm
Mr. Stephen McCabe: I welcome the announcement, particularly from the point of view of the west midlands. I spoke earlier today to some of the officers, including the chief constable, of West Midlands police. They were certainly happy with their settlement, which is the average 2.8 per cent. That is worth £368 million in revenue for the west midlands, and I welcome that. It is clear that the police need more officers, more resources and more support. It strikes me, however, that they are not immune to reform. Like any other public service, they must be prepared to respond to changing needs and to changing public demands.
Despite the tale of woe and denial from the hon. Member for South-East Cambridgeshire (Mr. Paice), it is a fact that the latest British crime survey records that overall crime figures have fallen by 22 per cent. since Labour came to power in 1997. That is a mark of the strength of the Government's policing strategies and funding strategies, and we should celebrate that. In particular, we should celebrate the initiatives that have reduced house burglary and vehicle crime.
We should also be prepared, however, to criticise when we come across the statistics that suggest that 24 per cent. of all recorded crime goes undetected, and only 9 per cent. ends in a conviction. That suggests that we should try to do more. A key to that is obviously to have more officers, and the additional funding that has been announced, plus the crime fighting fund, will achieve that aim. In the west
312
midlands, the number of officers rose from 7,113 in March 1997 to 7,432 by September last year, so there can be no doubt that there has been an increase.
That increase could well have been greater if we were not suffering from problems of transfers and retention in the west midlands. The current proposals on police pay will give the average officer about an extra £1,000 a year, which is welcome in terms of helping with retention. If regional allowances are having a positive impact in some parts of the home counties, it should be worth considering whether a similar arrangement could be made for a big force such as the West Midlands police, which is suffering from a seepage of trained officers to surrounding forces.
I also welcome the proposals to reduce red tape. I was astounded by a case that I encountered recently in Birmingham, in which the chief constable delegated powers for the making of an antisocial behaviour order to the superintendent of the operational command unit. He omitted, however, to delegate the powers to consult with the relevant associated agencies, and the magistrates court refused to make the order, even though it was based on a well-founded application. That is the ultimate absurdity in red tape, and I hope that efforts will be made to sweep that kind of nonsense away at the earliest opportunity.
I want to comment on two topical issues confronting the police, which relate to how we spend resources. First, I want to explore the possibility of making greater use of people such as community support officers, and the proposals for the accreditation of other agencies. This is not necessarily a bad thing, and in some areas such provisions could complement police work. It must, however, be made clear that community support officers will play a supporting role that will not be regarded as second-hand, or cheaper, policing, and that their use will not be used to disguise police numbers.
Many hon. Members will have seen the letter in The Times today from the former Deputy Assistant Commissioner of the Metropolitan police. He made the telling point that a community support officer may deal with certain activities but does not have the capacity to deal with more serious incidents. If one of our—
Madam Deputy Speaker: Order. I have already reminded hon. Members that we are discussing the police grant report.
Mr. McCabe: I am extremely grateful to you, Madam Deputy Speaker. The point that I was trying to make is that we must use the funding appropriately, and that we do not want to create two-tier policing. Although it is important to get the maximum benefit from the resources available to us, if a uniformed element appears as a quasi police force without appropriate powers, we risk undermining public confidence rather than reinforcing it.
Will the Minister assure us that any moves towards accreditation or community support officers will be fully discussed and negotiated, and that they will not be imposed on police forces throughout the country?
I should like to touch on a point raised by the hon. Member for South-East Cambridgeshire about the tendency to centralise. He was talking specifically about the top-slicing of certain resources for central elements. This Government have established a new approach to policing under the Crime and Disorder Act 1998, based on pooling resources and energies within local

313
partnerships with a view to tackling crime together. It would be a mistake to go about top-slicing budgets and creating too many centralised targets and initiatives that distract from the work in a local area.
Some of the Home Office targets—those on house burglaries and vehicle crime spring to mind—have been immensely successful. However, it would be a dreadful mistake if we were to attempt to micromanage the police from Queen Anne's Gate. It would fly in the face of the recommendations in the Audit Commission report, which argued strongly for devolving resources—operational power and, more importantly, budgets and finance—to basic command units.
Will the Minister ensure that we do not undermine the work that has been done in establishing basic command units and local partnerships, because they are the key to tackling the crimes that most members of the public are afraid of. They are also the key to tackling antisocial behaviour, and they are unlikely to be aided by central targets or central management. They will certainly not be aided by centralising budgets. I hope that the Minister will pay due attention to that issue.
I am conscious that several other Members want to speak in this debate and I do not want to take up more of the House's time. Let me stress, however, that although there are concerns about the level of funding in the west midlands, I have yet to encounter a police officer who has told me that the police are unhappy with the settlement announced today. In a hard-hitting article in the force's own newspaper, the chairman of the west midlands branch of the Police Federation was critical of certain Government proposals but concluded that the other two parties had absolutely no ideas on crime or policing. When we are paid that sort of compliment, we must assume that we are on the right track.
4.54 pm
Norman Baker: This is a dry topic on the amount of grant and other allocations given to police authorities, but the impact of that grant is important in terms of the number of police officers in our areas and on our streets. That is how the public will measure the success of the Government's proposals this afternoon and subsequently.
The hon. Member for South-East Cambridgeshire (Mr. Paice) talked about police numbers and, from my understanding, the figures that he gave are correct. It is a great pity that we have only just got back to the position in 1997, when the Government were elected on a pledge to increase police numbers. The reason is clear. My view, which is shared by the chairman of the Labour party, is that the Government were wrong to stick to the Conservative Government's spending plans for the first two years of the last Parliament. If they had not done so, we would be further forward now.
I welcome the Minister's statement about extra costs for Greater Manchester police for their policing of the riots and for the Commonwealth games. I hope that he will be equally clear about money for the Metropolitan police to cover the costs that they are incurring to deal with the threat of terrorism, ahead of the precept which will be announced without much further delay.
The headline figure that the Government have been keen to trumpet in the paper that they have published is 6.1 per cent. That follows the headline figure of 10.1 per
314
cent. last year, so the Government will be keen to say how much more is going into local policing. It is worth noting that the figure has fallen, and according to the comprehensive spending review will fall again next year to only 3.1 per cent., which is close to the inflation rate.
Mrs. Brooke: Does my hon. Friend agree that residents of Dorset, who currently pay the third highest precept, will not be terribly impressed with that headline figure, given that they are not seeing more police on the streets, which is what they want, despite paying those high levels and facing large increases in the precept?
Norman Baker: That is right. The hon. Member for South-East Cambridgeshire touched on the issue of the precept, as will I. The Government are presenting us with a pool in which the water looks crystal clear but when one sticks a piece of wood in it and stirs it around all sorts of muck comes up from the bottom, and it is less clear when the detritus has risen to the surface. There are a number of hidden problems with the 6.1 per cent. increase.
By the Government's own admission, the amount being paid directly to local police authorities averages only 2.8 per cent. That allows for an anticipated precept from the police standard spending assessment, which will come through. Therefore, of the 6.1 per cent. increase, more than half—3.3 per cent.—will be allocated for central funding proposals. Even on the Government's figures, only five of the 38 police authorities will get 3 per cent. or more. That is hardly a huge increase. Some increases are as low as 2.3 per cent., which is the Government's baseline inflation figure.
The pay award in 2001–02 was 3.5 per cent. Therefore, the base figure of 2.3 per cent. fails even to keep up with the pay award. The pay award for next year is anticipated to be along the same lines. Authorities such as North Yorkshire anticipate a shortfall of £1.1 million this year as a consequence of the Government's formula. Last year, it received £2.014 million in the rural funding element, which provided 60 new officers. That is very good: we are all in favour of 60 new officers in rural areas. As a rural Member, I know that they are badly needed.
This year's rural funding formula produces £2.018 million, which is an increase of only £4,000, but the authority has to pay the increase in the salaries of the 60 officers whom it took on last year in good faith. Therefore, the authority will immediately face budget problems. It estimates a shortfall that will have to be met by savings of 5 per cent. on non-operational budgets and big precept rises, which is the point that my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke) made. The Association of Police Authorities has said that 2.8 per cent. is insufficient, and that 5 per cent. is needed just to stand still.
I draw the Minister's attention to a recent press release from Cleveland police, which stated:
"A potential cash crisis is putting police services in Cleveland under threat.
Despite the Government's much trumpeted 6.1 per cent. increase in funding nationwide the reality is … earmarked by the Home Office for the Cleveland Force is 2.85 per cent.—which fails to even cover pay award rises.

315
As a result the Force is facing a £6 million deficit—the equivalent to losing 240 police officers—and a host of plans to improve services for local people and make life more difficult for criminal may go on ice."
The picture, then, may not be quite as rosy as the Minister would have us believe.
Let us consider the direct grant—never mind the standard spending assessment and the capital figure. According to the House of Commons Library, the direct grant for every police authority in England is now less than it was last year, if we allow for an increase in inflation. In other words, every police authority will have experienced a real-terms decrease in the grant provided by the Government—which is, after all, what we are discussing. Last year, every authority experienced a real-terms increase, except Surrey, which is a special case because of the London arrangements.
That has a number of implications. For one thing, there will be a greater reliance on the precept, as the hon. Member for South-East Cambridgeshire pointed out. That means big increases in Sussex and in other police authorities up and down the country, which in turn means that people will pay more council tax without necessarily seeing more police officers as a consequence.
Dr. Kumar: The hon. Gentleman is criticising the Government for what I consider to be an excellent settlement. What allocation would he make? I have not heard him mention a figure.
Norman Baker: I am surprised by what the hon. Gentleman says, because I took his earlier intervention to be critical of the settlement. In any case, we are here to discuss the Government's settlement: it is they who are presenting the proposals. We made it clear at the last election that we would increase police resources significantly, and that remains our position.
What we would also do is ensure that police money was allocated in a way that was supported by police authorities and, as far as possible, by the police themselves. Can the Minister say whether chief constables are happy with the settlement, and, perhaps more importantly, with the division of it? It is not just a case of budget uncertainty; there is more and more money to bid for. There are more and more central funds, which makes it difficult for police authorities to set precepts. They are not sure of the parameters, or of how much will be provided. It is the same problem that local authorities have had for years. It is getting worse for them, and now it will get worse for police authorities.
Another problem is creeping centralisation. The Government's own figures, also provided by the Library, suggest that while the increase for police authorities directly will be 2.8 per cent., the increase for centrally provided services will be 83.1 per cent. The increase for specific initiatives will be 51.4 per cent., and the increase in central capital funds will be 33.6 per cent. The increase for the National Criminal Intelligence Service, which is now centrally controlled, will be 23.8 per cent. We are seeing huge percentage increases in all the pockets of money that are centrally controlled—huge increases in areas in which Ministers themselves give discretion. Police authorities, however, which are locally accountable, will receive an overall rise of 2.8 per cent. I do not believe that chief constables will support that.
Mr. Denham: I assume that the hon. Gentleman would include in his definition of centralising projects the
316
development of a national DNA database, or the development of the Airwave communications system. Do the Liberal Democrats believe that there should be no national DNA database? Do they think that the money should simply be devolved to police authorities so that they can decide whether they want to make better use of DNA in detection?
An element of reality in the hon. Gentleman's comments would be helpful. If he does think that the examples I have given should be central priorities, he is not making a great deal of sense.
Norman Baker: A lot of money that is spent centrally could be devolved. It is not clear why the crime fighting fund, for instance, has not been devolved. That is a huge amount of money. Nor is it clear why the rural policing fund is to be held centrally. These are the big figures; the DNA database, in terms of—
Mr. Denham: I do not think the hon. Gentleman understands. The rural policing fund constitutes a recognition by central Government that the existing police formula did not adequately represent the needs of sparsely populated areas. Extra money could be provided for such areas only if central Government created a fund allocated to police authorities, but what the money is spent on is determined by the police authorities.
Norman Baker: That money is still outside the normal police authority funding settlement. A special fund has been set up that does not need to be administered centrally. As the hon. Member for Birmingham, Hall Green (Mr. McCabe) said when he was in the Chamber, that fund could be wrapped up in the formula that is applied directly to local police authorities. It is not at the moment.
Mr. Luff: It is not my style to help the hon. Gentleman but in this case I would like to. The formal response from West Mercia police authority to the Home Office consultation states:
"The additional resources allocated via a number of specific ringfenced initiatives are welcome but the Police Authority views the growth of ringfenced initiatives per se as regrettable. It leads to uncertainties in medium term financial plans, disrupted spending patterns and undermines the local democratic process."
Norman Baker: I am grateful to the hon. Gentleman for intervening. He makes the case very well. The Minister will have to address that point. Ring-fencing of funds centrally is not popular as a long-term strategy, but there is an increasing tendency towards that. [Interruption.] The Minister may laugh but people in my police authority—police officers in Sussex, local councillors and others—do not like the creeping centralisation that the Government have embarked on. It is dangerous.
As the hon. Member for South-East Cambridgeshire said, there are proposals from the Home Secretary to take for himself sweeping powers to sack chief constables. In Sussex, we have been at the rough end of that already—one local chief constable has already been sacked via a press release by the Home Secretary. It seems that he wants to go further.
Madam Deputy Speaker: Order. I hope that the hon. Gentleman will now confine his remarks to the grant.
Norman Baker: I am happy to do so. I was making the point—I am sorry if I did not make myself entirely

317
clear—that the way the grant is allocated determines the level of local accountability within the police service. Centralisation of grant money and funds by the Home Office gives it extra leverage over the independence of local police authorities and forces, which is mirrored by the proposal to allow the Home Secretary to sack chief constables.
Mr. John Burnett: Centralisation is an arbitrary process. Does my hon. Friend agree that it does not give certainty in relation to future planning, especially for police forces in rural areas where the sparsity factor is not properly included in the calculations?
Norman Baker: I agree. The history of such centralisation has not been a happy one in local government. We need to start moving away from it rather than increasing the tendency towards it.
As for the effect that the grant will have on the number of police officers, the Government are moving in the right direction and I pay tribute to their efforts in the past couple of years to increase the number of police officers. I accept that they are succeeding in increasing the recruitment of officers, but they are not ensuring that they are retained, which is a different matter. I am sure that the Minister will try to address that.
The Minister will know, for example, that in the past year resignations in the Metropolitan police increased by 29 per cent. over the previous year. The number of officers who transferred to other forces increased by 63 per cent. Resignations in the west midlands force increased by 32 per cent. over the previous year. The figure for Greater Manchester is 29 per cent. The Government are doing good work on recruitment but they need to find a way to ensure that officers are retained because it is obvious that that is not happening. If that pattern of loss were to continue at length, we would have a preponderance of new officers without sufficient training, because it is the experienced officers who are leaving. That is bad for the balance within the police force.
What assumptions have been made in the budget proposals set out today about community support officers. How many does the Minister assume will be in place in 12 months? He must have made that calculation in order to work out the grant. When he made that assumption, he will have had an assumption about what those persons will do—clearly, the functions that they are given will determine how many are required. If they are to carry out non-controversial functions, such as dealing with untaxed vehicles, which I think all hon. Members would support, that represents a different order of things. Among the more controversial suggestions from the Government, however, are those relating to powers of detention and so on.
I welcome the overall 6.1 per cent. increase, but I am concerned at the way in which it is being divided. It is unfortunate that there is more centralisation and ring fencing, and I hope that the Government will try to reverse that trend in years to come.
5.10 pm
Mr. Martin Salter: I welcome the opportunity to address the thorny issue of police funding, and I also welcome the Minister's announcement of an increase in resources of 6.1 per cent., coupled with the important agenda of reform. Listening to the hon. Member for South-East Cambridgeshire (Mr. Paice), I was a little confused as to whether the Conservative party embraces the reform agenda or is merely cherry-picking bits of that difficult procedure for its own party political advantage.
Time is short, so I shall address three specific areas: problems relating to retention and recruitment, particularly in the south-east; policing and the consequences for police resourcing in Reading; and the fundamental fault line that runs through the heart of the police funding formula. Governments of all persuasions have recognised the need to review that formula, and such a review cannot come quickly enough.
In talking about policing or any other public service, one should set out one's credentials. As a child of the 1960s, I did not always enjoy an enthusiastic relationship with the police. In fact, I first encountered my current area commander when he was a special patrol group officer on the Grunwick picket line. I am not sure whether he is personally responsible for a rather large scar on my right shin, but we have moved on and we now laugh about that encounter over a beer. I am honoured and privileged to be about to graduate from the police service parliamentary scheme, which I commend to other hon. Members. It gives fascinating and invaluable insight into the work of our police officers.
Ministers are well aware of the huge problems, to which reference has already been made, faced by all public service providers in high-cost housing areas in the south-east. However, under the crime fighting fund, which I welcomed with open arms, the Thames Valley police force received funding for only 200 additional officers for the period 1999–2001. Despite record recruitment levels in the force and nationally, and despite the additional £2,000 regional cost of living allowance for which many of us lobbied, in real terms the Thames Valley force has not one extra police officer. In fact, we are losing officers to other forces as fast as we can recruit them.
What does the absurd notion of splitting operational independence from budgetary independence mean? It means that, in effect, our council tax payers—including those represented by Opposition Members, and by my hon. Friend the hon. Member for Slough (Fiona Mactaggart), with whom I have worked closely on this issue—are funding a recruitment agency for other, better policed forces. I hope that the Minister and other hon. Members will address that point.
As a result of the shortages that we face, Thames Valley officers are squeezed from both ends. Overtime levels are at a record high and, in the short term, officers like that situation, but it leads to increased stress in the long term. Having to work overtime just to put a roof over their heads is stressful. The problem is doubly bad in urban areas such as Slough and Reading, which attract many thousands of people from other areas, and that requires extra policing.
The Thames valley—I hope that my hon. Friend the Member for Slough will forgive me if, in discussing policing in Reading and the Thames valley, I mention her constituency from time to time—is a growth area with an

319
expanding population. Its police force has to protect the royal family and many other dignitaries. Some of them deserve such protection, but in the case of others the matter is open to debate. The area has extensive defence industries and major motorways. In short, it has a huge policing requirement, yet according to a Home Office table, in terms of the number of officers per 100,000 population, Thames Valley police force has been the third worst in the country since 31 March 2001. The best is Merseyside, with 351 officers per 100,000 people. Not unsurprisingly, that is followed by the Metropolitan police, which has 209 officers per 100,000. The Thames Valley force comes 41st out of 43, with 175 officers per 100,000 people, and the West Mercia force has 171. The hon. Member for Mid-Worcestershire (Mr. Luff) represents an area covered by the West Mercia force. As he is an Opposition Whip, he is banned from speaking, so I shall speak for him. At 43rd in the list is the Suffolk constabulary, with something over 160 officers per 100,000 people in its area.
Interestingly, my research leads me to believe that the hon. Member for South-East Cambridgeshire was churlish not to thank my hon. Friend the Minister for the increase of 84 police officers that has taken place in his force over the past 12 months. I am sure that, on behalf of the people of Cambridgeshire, my hon. Friend will be pleased that that information has been read into the record.
Fiona Mactaggart: Does my hon. Friend share my anger at the low number of police per 100,000 people in Slough? The force covers a large area, but it is not just a rural force, as it also has to cover the urban area of Slough. The basic crime unit family includes other bits of police forces, all of which are in the Metropolitan police area in inner London.
Mr. Salter: My hon. Friend is right. Slough has all London's policing problems, yet it does not get the resources it needs. That is having a knock-on effect on neighbouring authorities. There are fundamental flaws in the way the crime unit families are constructed, in the notion of operational independence versus budgetary independence, and in resource allocation.
I turn now to the standstill—or modest increase—in police numbers over the past 10 years. Figures provided by the chief constable of the Thames Valley force—not by the Home Office, or Millbank—do not make good reading for Conservative Members. They show that on 31 March 1997, the force had a total of 3,695 officers, an all-time low. That was under a Conservative Government. Under the Labour Government, the force reached an all-time high of 3,765, although that is nothing to boast about. As a result of the crime fighting fund, the force now has 0.5 of an officer less than in 1999. The fund therefore has achieved no growth in police numbers at all.
The allocation of these meagre resources to the Thames Valley force has had an effect in the area. Admittedly, the boundaries involved have changed slightly in the period to which I want to refer, but the scale of the problem remains the same for Slough. In 1990, it had 585 officers, whereas now it has 237. Reading had 526 officers in 1990, and that number has fallen to 342.
The total resource allocation formula used to arrive at the figures ripped off Reading and Slough in a quite disgraceful way. That decision was taken under the
320
devolved powers given to the local police authority. I repeat: there is a world of difference between budgetary independence and operational independence.
There are many challenges involved in policing a regional centre. Reading has expanded out of all recognition. I have dug out the figures for crimes committed in the town centre. I assure my right hon. Friend the Minister that many of his constituents shop at the Oracle centre in Reading. We regularly bump into people from Cardiff, Bristol, Banbury and all over the place. We welcome them to our town, but their presence creates policing problems.
Between April 1999 and March 2001, shoplifting in Reading town centre rose by 16 per cent. In the same period, the number of robberies in the town centre rose by 61 per cent., and crimes of violence against the person rose by 60 per cent. There have been massive increases in incidents involving not, violent disorder and affray in Reading, with the figure rising from 1,400 in 1998–99 to 3,800 in the last full year.
How does the police funding formula address those issues? The answer is that it fails spectacularly to do so. I accept that no funding formula is perfect, but it would be difficult to devise a system that was less advantageous to towns such as Reading and Slough, which provide a huge range of services for tens of thousands of people who live in, and pay taxes in, communities many miles away.
I took the trouble to dig out the Library notes on the police funding formula. The factors used in the formula are worth quoting, as they include daytime population, resident population, unemployment, household renting, area cost adjustment and built-up road lengths. People asleep in bed or busy at work are not a major factor in the creation of crime, nor are lengths of built-up roads. These funding formula factors do not take into account the fact that in a town such as Reading 20,000 public entertainment licences are granted. Similar figures apply in Slough, Oxford and elsewhere. The night-time economy creates a tremendous strain on the police force.
I am delighted that the working group is meeting to consider the funding formula. I hope that a new formula can be devised and introduced by 2003–04 and that it will take into account the need for the policing requirements of a night-time population to be addressed.
I conclude with a parallel. It is a supreme irony that, prior to becoming Home Secretary, my right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) was Secretary of State for Education and Employment. In education, the funding formula is very straightforward—the funding follows the pupil. In my town of Reading this year, as a result of boundary changes and other anomalies, we are expecting some 1,400 year 6 pupils to seek secondary education across the boundaries in west Berkshire or Wokingham. There is no problem with that because the funding follows the pupil—how could it be any other way?—yet does the funding follow the policing requirements of the night-time population of Slough or Reading? Does it heck!
I hope that the Minister has found this analysis useful. I look forward to meeting him to discuss the very real policing problems that we have in Reading and Slough and to addressing some of these important issues. It cannot be acceptable for the Government to put money in

321
and for my constituents not to see the benefit of the additional resources to which they have contributed in their taxes.
5.21 pm
Tony Baldry: I hope that the Minister pays particular attention to the speech of the hon. Member for Reading, West (Mr. Salter). I agree with much of what he said, not least his concern about the haemorrhaging of police officers from the Thames valley area.
Like the hon. Gentleman, I welcome the Home Secretary's police grant allocation to the Thames Valley force, which polices my constituency in north Oxfordshire and Oxfordshire as a whole. The Home Secretary is a generous man. The Thames Valley police will now receive the fifth highest allowance from the Government, an appropriate amount that seemingly reflects the Home Secretary's funding formula of more money to those who need it most. Good stuff. However, it begs the question, what will the Thames Valley police do with the new grant? That is where we encounter a very real problem. The grant looks good on paper and in isolation, but it looks bad when one considers the detail of the Thames Valley's grant in comparison with other forces in England and Wales.
The Thames Valley's resources look meagre. Moreover, given the chronic problems of recruitment and, in particular, retention of police officers in the force. Home Office figures show that police strength within the Thames valley area has fallen year on year since 1997, and I hope that sooner or later the Home Office will wake up to that fact. The Thames Valley simply does not have the police officers to match the aspirations that come with such a grant.
Let us start with the basics of the funding formula for police grants. I alluded earlier to what the police grant report somewhat grandly refers to as the Home Secretary's principal formula. Also like the hon. Member for Reading, West, I have examined the principles behind the formula and have noted two interesting facts. First, paragraph 5.2 rightly says that the main determinants in the principal formula are the resident population and the day-time population. It says that cost adjustments are built into this formula for the socio-economic circumstances and the cost of provision between areas.
I do not dispute that Government principle. There is no doubt that the allocation of police grants should be made on the basis of the area's population demand on police officers and the cost of providing police officers. That principle means that the Thames Valley is allocated one of the country's highest grants.
The second Government principle, which I find interesting, is in paragraph 4.4, which states:
"The Home Secretary has decided that the greater London Authority on behalf of the Metropolitan Police Authority should receive additional funding in recognition of the Metropolitan Police's distinct national and capital city functions."
That justification is acceptable when the principle relates to population: there is no doubt that London officers have more people to police. However, the principle is less convincing if applied to the area costs for police officers in London against other forces in the south-east. Unfortunately, that is exactly what happens.
322
Why do the Government suddenly apply such a principle to police pay only if the officers work in London? It is clear from future funding allocations that the Government are still failing to tackle the core cause of crime in the Thames valley: the failure to recruit and—more important and of greater concern at present—the failure to retain police officers through a serious lack of resources for police pay. It is no good for the Government to trumpet what is after all only a marginal increase in money from the comprehensive spending review when they persistently refuse to recognise the need for additional resources for the south-eastern region.
Thames Valley police officers are in the worst of all possible worlds. Their cost of living, including housing, is high, yet they do not benefit from the additional allowances paid to London police officers. I suspect that almost every force in the country must look more attractive to police officers than the Thames Valley force.
Police officers in the Metropolitan force receive an annual London weighting of £1,773, with an additional London allowance of £1,001 and, on top of that, a further London allowance of as much as £3,327 each year. That means that a police officer in London could earn about £6,000 a year more than a police officer in the Thames valley for doing exactly the same job.
Furthermore, police officers in London also have free transport, so it is not uncommon—I am told by senior police officers in the Thames valley—for Thames Valley officers to see fellow police officers on railway stations on their way to work in London, where they will be paid significantly more, and being given free travel to do it. That is plainly unfair and unjustified.
Police officers in the south-east have to cope with a cost of living that the Government's principle does not seem to take into account when it comes to paying them. Last year, a survey by the Halifax found a massive 17 per cent. increase in house prices in the south-east, but only a 7 per cent. increase in the rest of England and Wales, yet the Government do not pay officers so as to reflect that difference. The Government recognise the "cost of provision" in police grants but completely ignore the same principle—the same costs—when paying police officers.
Moreover, we need to consider the difference in house prices in the south-east compared with London. The Land Registry's latest quarterly survey observes that house prices in London are rising more slowly than those outside the capital in the south-east region. Indeed, the Halifax survey also found that although house prices have risen by an average of £4,000 in London, they have risen by a staggering £26,000 in Oxfordshire over the same period. Why are the Government not funding police officers in north Oxfordshire as adequately as in north Acton? Why do the principles outlined in the report suddenly morph into thin air when it comes to police pay?
It is no wonder that police retention is at an all-time low in the Thames valley. A large number of officers resign for non-medical reasons. The consequence is often all too clear: there are too few officers to police towns such as Banbury and Bicester and the villages in my constituency. In the whole of north Oxfordshire, in towns such as Banbury and in the surrounding villages, there are often no more than four police officers on duty at any one time.
If the Government do not pay police officers in the Thames valley properly, the force will continue to haemorrhage experienced officers to other forces where

323
they can either earn more or live for less. London and the east midlands, on the borders of the Thames valley, offer both prospects to police officers, so why should officers come to the Thames valley?
As the hon. Member for Reading, West pointed out, the Thames Valley police force merely acts as an expensive training area for officers who move on. Even more important, when the beat inspector in Banbury sends out a team to police north Oxfordshire, it often includes a large proportion of new recruits. We lack the experience of senior officers who have moved elsewhere.
It was particularly insulting of the Under-Secretary of State for the Home Department, the hon. Member for Stretford and Urmston (Beverley Hughes), in response to an oral question that I asked on the matter, to claim that Thames Valley officers must be paid less because the Government believe that it reflects
"the different circumstances and pressures"—[Official Report, 19 November 2001; Vol. 375, c. 10.]
that they face, compared with the circumstances and pressures that they would face if they were doing the same job in other forces around the country. This is nonsense.
The Home Secretary's recent statement on police reform outlined that officers in all forces face the same problems in policing. Surely the fact that the Thames Valley is in the top five police grant receivers based on "resident population" and "socio- economic characteristics" would in itself indicate that police officers working in the area face at least the possibility of more pressure.
I have taken the liberty of leafing through the Home Office's own figures of recorded crime for 2001. They reveal that that possibility is very much a reality. Let us consider violent crime dealt with by each police force over the last year, which is a yardstick that, I hope most hon. Members would agree, presents officers with the "different circumstances and pressures" to which the Under-Secretary was presumably alluding. I found that police officers in the Thames valley had to deal with nearly 15,000 cases of violent crime—the 11th highest figure for the 41 forces. If it is the Government's principle to pay Metropolitan officers more because they deal with more cases of violent crime, why are police officers in north Wales paid the same as Thames Valley officers, when officers in north Wales have to deal with a third of the violent crimes that Thames Valley officers have to? Why is the apparent Government principle of paying less to officers doing a supposedly less important job ignored when it comes to Humberside police officers, who deal with 5,000 fewer violent crimes than those officers who work in the Thames valley?
The House might also like to note that the Halifax building society estimates that the cost of the average property in south Humberside is £46,700, whereas the same property in Oxfordshire would cost £162,450. It is little wonder that police officers are leaving.
It is pretty obvious why north Oxfordshire—and the Thames valley as a whole—continues to lose officers to other forces in England and Wales. Thames Valley police officers deserve sufficient pay to live on so that they can deliver to local people the peace of mind to which they are entitled. It is audacious of the Government to announce in their latest White Paper "Policing a New Century" that
"a fairer and better system is needed for paying police officers. As a general principle"—
324
I should like the House to note that phrase—
"the Government will be looking for ways of recognising and rewarding those who are at the frontline of public service, and in particular those shouldering the most difficult and demanding tasks".
For all those warm words, I do not find that "general principle" reflected in the pay awarded to uniformed police officers in the Thames Valley compared with uniformed officers in Humberside, North Wales or 30 or so other forces. The same lack of "general principle" is applied by the Government to officers, whether sergeants or inspectors, uniformed or detective.
I very much hope that the Government will take on board what Thames Valley police and Members of Parliament are saying this afternoon. I strongly suspect that the Minister will hear similar sentiments expressed by the hon. Member for Slough (Fiona Mactaggart).
I recently received a copy of a letter that a police sergeant from my constituency wrote to the Home Secretary. At one point the officer made the observation that
"last week we had another murder in Oxford. The duty inspector phoned round off duty officers to find two to do a 12 hour duty on double pay to guard the scene—no takers! All already working".
It strikes me, therefore, that while the Thames Valley strives to achieve the Government's objectives, it will simply not have the resources to reach those targets without the almost superhuman efforts of existing officers.
The officer also asked the Home Secretary:
"do you really think that you are going to attract talented, professional people to the service, with the kind of output, that is apparently designed to undermine Police Officers' case to maintain their standard of living, coming from the Government recently? … those of my staff who have children rely on their overtime to keep their heads above water, financially."
Madam Deputy Speaker: Order. The hon. Gentleman's time is up.
5.34 pm
Ross Cranston: I welcome the record level of funding that has been announced, and, in particular, the amount allocated to the West Midlands force. I am also pleased with the crime fighting fund, now in its third year; later I shall discuss how the West Midlands force has benefited from the fund.
The 12 per cent. real-terms increase in funding between 2000–01 and 2003–04 is welcome because it means that the police will be in a better position to fulfil the task that we, as a society, expect of them. In addition to the revenue grants covered by the report, there are capital amounts. I welcome the amount that will be used to establish the DNA database and a computerised custody system.
I want to address some of the centralisation issues and swingeing powers, as they were called by the hon. Member for South-East Cambridgeshire (Mr. Paice), and to try to show that there is nothing unusual in demanding accountability in the police as in other public services. It is axiomatic that the grant of money has a corollary—a responsibility to account for its use. Of course, there is the biblical parable of the three servants who were entrusted by their master with equal sums, and the one blessed was the one who used the money wisely in the master's absence. So there is nothing wrong with asking the police to account for the money granted. That accountability runs alongside the accountability that

325
operates at local level through police authorities and local partnerships. The issue is how to measure accountability, and one way to do so is through police performance.
Hon. Members are concerned that performance varies around the country, as is shown, for example, in recorded crime detection rates. I am pleased that the operational command unit in Dudley, North has the highest number of crimes detected per officer in the West Midlands force. I pay tribute to the police officers in my area for the sterling work that they do. That is a comfort to me as the local Member of Parliament, but I cannot be happy that recorded crime detection rates vary dramatically throughout the country. For example, the figure is less than 8 per cent. for burglary in some areas, whereas it is more than 43 per cent. in others. In some cases, the figure for robbery is as low as 15 per cent.; in others it is 50 per cent. No doubt, that variation can be explained in some cases by social and economic factors.
I recently received a strong letter from a constable in my constituency who told me that there was a vast difference between policing in the intense urban conurbation of the west midlands and policing in some of the more relaxed rural shires. There is a certain truth in what he had to say, but performance can and must be improved, so I welcome proposals, which we are not debating this afternoon, such as the creation of the standards unit, which will work alongside the inspectorate to identify and ventilate best practice.
Let me return to the theme of responsibility for using the grant wisely, and then accounting for performance. I raise that issue because the view has been expressed in some quarters that the police are in a different position from other public services. The hon. Member for Lewes (Norman Baker) referred to the proposed arrangements to exercise a power to remove chief officers on grounds of inefficiency. Some of the other proposals have attracted fire on the basis that, somehow, the police do not have to account for money granted in the same way as other public services. I do not accept that.
At one level, accountability involves compliance with standards—for example, the performance standards to which I have referred: detection rates. At another level, accountability flows from the extent to which the police can be called to account for their behaviour—for example, police complaints procedures. Again, although this is not the subject of this debate, the new independent police complaints commission should enhance satisfaction with the way in which complaints against the police are handled. Incidentally, I hope that my right hon. Friend the Minister will be able to respond at some point on the issue of the complaints procedures operating internally. I have written to him about the extent to which the Public Interest Disclosure Act 1998 should apply to the police.
A third level of accountability for the money granted is political accountability. One dimension is the extent to which we ask questions about how the police operate. For example, my hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe) mentioned the issue of retention rates in the West Midlands force. To some extent, that parallels the issues raised by the hon. Member for Banbury (Tony Baldry) and my hon. Friend the Member for Reading, West (Mr. Salter) because, like the Thames Valley force, the West Midlands force has suffered from an attrition of officers. Last year, 101
326
officers left to join other forces. It was the worst year since 1997, when the ratio of leavers to new recruits was also 4:1. One explanation is that other areas have benefited from the crime fighting fund and can now recruit as they could not in the past. Therefore, people who have been trained in the West Midlands force are now going back to their home areas.
Another point mentioned by my right hon. Friend the Minister in correspondence is that the attrition rate in the police force remains low compared with other public services. I also take that point into account. I hope that, in the coming year, he will address issues such as the discrepancy in allowances, to which hon. Members have referred this afternoon. Certainly, the Police Federation in the west midlands has raised with all hon. Members who have constituencies in the area the issue of a special housing allowance, and the fact that that was abolished in the 1990s.
Accountability in terms of asking questions about how the money is spent can be carried out in the House, and it can also be done locally. I shall see my chief constable in the near future and I shall raise with him the issue of allocation of officers in the West Midlands force. In terms of figures on crimes recorded as opposed to officers allocated, I shall make the point—it may have a detrimental effect on other constituencies—that Dudley, North should have more officers.
Another dimension to the issue of accountability for the money granted is the argument, which was echoed in the opening remarks of the hon. Member for South-East Cambridgeshire, that the police are somehow unaccountable and independent. Some very old legal authorities say that police officers are independent officers of the law, and are not servants of anyone—they are only answerable to the law itself. That analysis is deeply flawed.
Norman Baker: Is not the prime method of accountability the local, elected and accountable police authority? Does not taking more power to the centre weaken that accountability?
Ross Cranston: I hope that the hon. Gentleman has followed the flow of my remarks. Accountability operates at a range of levels—there is local accountability and national accountability. Hon. Members must be able to raise questions in the House about what happens.
I reject the notion that the police are different and do not have to be accountable. It is certainly a constitutional imperative that there can be no interference in their individual case decisions. That would be monstrous. However, it is perfectly consistent with constitutional principle that the police grants that we are considering should be conditional on the police acting accountably in terms of their behaviour and their performance.
5.44 pm
Mr. Keith Simpson: I wish to address the problems faced by Norfolk police. Governments of both persuasions have historically provided a relatively low level of funding for our police. I would not claim that our problems are as intense as some of those faced in inner-city conurbations, but I hope that the Minister will take my points on board.
The Minister knows that expenditure on policing per head of population in Norfolk is the 10th lowest in England and Wales. It is the second largest county, but it

327
has the fourth lowest ratio of police officers to population, and the police face increased demands for their services. Norfolk's population rose from 759,000 in 1991 to nearly 800,000 last year. More than I million tourists visit the county in the course of a year. Although we welcome them, they place an additional strain on policing. Like other areas, Norfolk has a royal residence, at Sandringham, and significant military bases. Those are vulnerable to terrorism and the Norfolk police force is involved in their protection.
The number of 999 calls to the force control room in 1996–97 was 63,000. It is anticipated that by the end of this year the number will have risen to 110,000, an increase of 72 per cent. Even with the use of civilian resources, that places an additional strain on the police service. There has also been an increase in certain types of crime. Crime has decreased in many parts of the country, but the Minister knows that there is a fear of crime in rural areas. In Norfolk, we had the high-profile case of Tony Martin, and there has been an increase in robbery and vandalism in many rural communities. We now have the prospect of the damage caused by raves, especially on farms. Like other hon. Members, we have a problem with travellers who, two Christmases ago, descended on Great Yarmouth, which put an enormous strain on policing.
Next year's Government grant for Norfolk represents a 3.6 per cent. increase, which is the second highest budget increase after Derbyshire. Other hon. Members may well ask what I have to complain about. The increase is warmly welcomed, but it does not begin to meet the requirements of the Norfolk police. The reality is that it brings the police authority to a standstill. It requires an increase of at least 4 per cent., and even at that level, according to the police authority, recruitment and current service levels could not be maintained.
The standstill budget will not enable the police force to reach its target on the recruitment of officers. As the Minister knows, Norfolk already has one of the lowest officer to population ratios.
David Taylor: Will the hon. Gentleman give way?
Mr. Simpson: No, I am sorry, but I have limited time.
Indeed, the Norfolk police force has identified that it needs an additional 340 officers fully to meet all anticipated requirements in the medium term. The increase will not enable investment in necessary information technology infrastructure. To give but one example, Norfolk is one of only two forces still on Holmes I—it sounds like something out of Arthur Conan Doyle—which is an obsolescent and largely discarded computer system for use in major incident inquiries. Nor can the increase provide dedicated air cover. Geographically Norfolk is one of the largest counties with a long coastline, but its police force is one of only four without dedicated police helicopter cover.
Those specific examples of serious weaknesses in police cover in Norfolk would be bad enough in the context of a standstill budget had the Government not already rejected specific bids by the county. In December last year, Norfolk police force learned that its bid for funding to help to pay for a £13.5 million upgrade in the county's police technology under the capital
328
modernisation fund had been unsuccessful. The bid was essential for the development of the force's information and communication technology infrastructure to enable implementation of the national strategy for police information system applications that the Government require all forces to employ. The chief constable advised the Home Secretary that that left Norfolk police in the position of having either to fund those infrastructure requirements by taking money from current activity, or to slow down—or even to halt—some aspects of the implementation programme during the next four to five years.
The Home Office has also been unhelpful in Norfolk's bid for Government funding for a helicopter. Norfolk police asked the Home Office for £1 million to cover the full cost of buying a reconditioned second-hand helicopter. They explained that a helicopter could save hundreds of thousands of pounds every year, as well as facilitating the arrest of criminals. They gave the example of Dyfed-Powys police, who saved £22 million over three years by using a helicopter rather than police on the ground.
The Home Office, however, said that the money could be provided for a helicopter only on a 50:50 basis, with half coming from the Government and half from the police force. At a meeting in December, the police explained to the Home Office that half-funding a new helicopter would cost the Government £1 million—enough money to buy a second-hand helicopter outright—but the Home Office said that funding rules could not be changed and that Norfolk police would have to use their own budget. Reluctantly, Norfolk police withdrew their bid as they needed what money they had to recruit extra police personnel and upgrade force technology.
Norfolk police, like many other police, find themselves in the worst of all possible binds, from which it appears that there is no way out. They are bidding against other police forces. The biggest irony of everything that I have just identified—the lack of money to spend on new technology or provide a helicopter—is that next week Her Majesty the Queen opens a new purpose-built police headquarters south of Norwich, provided under the Government public-private partnership scheme. However, like many other Government PPP schemes, such as the recently opened Norfolk and Norwich hospital, it leaves much to be desired. The new centralised police headquarters which, if properly equipped and manned, would save money and deliver better policing, is likely to be a largely empty box. It will not have new information technology, the need for which the Home Office itself has identified, and it will not be able to communicate with police personnel on the ground. The chief constable has already admitted that he does not have enough police men and women on the ground. A further bind is that money is not available to provide a helicopter.
I hope that the Minister will recognise that Norfolk, despite receiving what appears to be a headline-worthy good grant, has a standstill budget. Will he look again, both at Norfolk's bid for funding for an upgrade of the police ICT infrastructure and the rules for funding the purchase of a second-hand helicopter? Otherwise, Norfolk police will be unable to provide a proper service to meet current requirements, let alone future ones. At the end of the day, the police men and women who have to deliver that service will decide, not that there is a better police force to go to, but that there are better jobs.

329
Last Sunday, there was a new episode of "A Touch of Frost". The irony of that programme is that there is a contradiction between two types of policing—Inspector Frost is the old lag who cuts corners, bends the rules and is concerned with tackling crime on the streets, and Superintendent Mullett is the managerial policeman, who is primarily concerned with paperclip counting. Modern policing requires both characteristics in the same man or woman; I regret that, although the funding provided so far appears generous, we will not end up with the kind of men and women whom Norfolk requires.
5.54 pm
Mr. David Drew: It is always a delight to follow the hon. Member for Mid-Norfolk (Mr. Simpson); his analogies about how television cops relate to real life gives us a spirit of realism. I shall try to keep my remarks brief so that other Members can contribute to this important debate. It is traditional that I take part, and I usually do so with the Under-Secretary of State for Health, my hon. Friend the Member for Salford (Ms Blears), but since she has been elevated to the Front Bench, it looks like I will be the one to keep going from year to year.
The Government's action sends out some good signals. I congratulate them on listening to people on three issues. Simply getting more police out on the beat is a measure of the effective role played by my right hon. Friend the Minister. That increase is being achieved in my area, despite a difficult position; we are experiencing retirements and are approaching a particularly difficult time in a few years as the big police increases under the last Labour Government have an impact on retirement, creating the need for further recruitment. The revenue that the police have received will result in capital spending, and I shall say more about that in a minute.
I congratulate the Government on keeping Gloucestershire constabulary; there was a movement to get rid of small police forces and amalgamation was held to be the way forward. I am pleased that we have been listened to locally; we have come up with a sensible compromise, involving better working arrangements with other emergency services, principally ambulance and fire services, which has resulted in the tri-service initiative that the Government helped to fund. Gloucestershire police will move to a new headquarters, which has changed attitudes radically, although not without problems, as my right hon. Friend the Minister will know. However, it is a good sign that there are improvements and that we are being listened to.
I do not wish to rehearse arguments that have already been made, but there are drawbacks to being a relatively small force. We have talked a lot about budgets. Ours is not one of the areas that is singing from the rooftops about what it has received, and it has misgivings about ring fencing, but genuine increases have been made and we will work within our budget. As a smaller force, the implied savings cut us to the quick. I had a meeting with the chief constable recently, and I hope that my right hon. Friend will pick up our plea for dispensation, not necessarily now, but when it comes to renegotiating budgets. Having efficiency savings year on year is an attractive notion, but they are difficult for smaller forces
330
to achieve. Can some dispensation be allowed? Although we have to be efficient, that should not be at the cost of good, effective services. That issue has not yet been brought out in our debate.
I welcome what my right hon. Friend said about the sparsity factor which, I hope, will play a part in future negotiations and help us to achieve an even better budget settlement and a sensible replacement for the standard spending assessment. However, I am sure that that argument has been heard; our debate can only enhance it.
Every year, I discuss the impact of the pensions time bomb, but the problem is more acute this year than in previous years, and I urge my right hon. Friend to recognise it. It is not of our making; the deal was done under the Thatcher Government to keep the police on board, coincidentally or not at the time of the miners' strike. Police officers make a considerable contribution to their pension, but it is virtually impossible to improve the provision that they have. We are trying to negotiate with the Police Federation which, I understand, is listening; we shall have to come up with a sensible compromise, but that is not easy. I am sure that that is behind the vote which, I hope, is in favour of modernisation.
Whenever I talk to the police, they moan about the contribution that they have to make, but they also think about their future, as they retire on a good pension, probably the best in the public sector, if not any sector. It is difficult to improve that provision, but we must grasp the problems that it presents because, if it is affordable now, it will certainly not be in five or 10 years' time. I am a bit worried that there is already evidence of backtracking. Even if change is painful in the short term, the Government have to see through the transition to a more sensible system.
I am pleased with the capital arrangements which, although not generous, are helpful to Gloucestershire. They have helped the tri-service arrangements and the movement towards the Airwave system. In Gloucestershire we have some difficulties—I shall be careful how I phrase this, as an inquiry is going on—getting the planning applications through for the masts so that the system can be put in place. I always try to explain to people that, although the introduction of such systems must be measured and the precautionary principle upheld, in a couple of years we will lose the analogue system. If we do not have a digital system in place, there will be no police communications. The ambulance and fire services will no doubt also seek to digitalise and use Airwave equipment.
I ask my right hon. Friend the Minister to bear in mind that if we are a little slow getting there, that does not mean that we do not want help from the Government. We just need some time to convince people that the system is the right system, that we are very careful about the siting of masts, certainly away from schools, and that we try to make sure that all the equipment goes on the same masts. We want the system put in place and we want it funded, as the existing system is unacceptable. It causes enough difficulty, as I know from going out with the police. The only thing that would be more unacceptable is no communications system at all. We must push the new system through.
Other hon. Members have touched on the need to recognise the changing nature of policing. It is a bureaucratic nightmare, but that is the nature of the

331
society in which we live. The police are expected to account for the decisions that they take, and arresting people is probably one of their more important tasks. I shall not rehearse my exchange with the hon. Member for South-East Cambridgeshire (Mr. Paice), but if we can help with the process and minimise the amount of paperwork, that would be useful. The process must be transparent, it must be funded appropriately, and people must have confidence in it.
David Taylor: With reference to reducing the paperwork burden on police officers, as a public institution and a public service, the police force, second only to this place, needs significantly higher levels of investment in information and communications technology to support its day-to-day work. If my hon. Friend speaks to police in his authority, particularly detective sergeants and police constables, they will tell him what proportion of their time they spend on such unproductive work.
Mr. Drew: My hon. Friend almost reads my mind, but not quite. I accept his point, but the problem is not an internal police matter. It involves the relationship with the Crown Prosecution Service, whether that relationship is conducted through computers or by human beings talking to one another. I have some misgivings. We have moved on from the impasse a few years ago involving who spoke to whom and how that was done. It is a resource issue and also a matter of cultures. Communication is improving, but it would help if there were computer systems that could talk to each other better. That will be expensive and take time, because technology does not seem to do what we want it to do at the appropriate moment.
I am assured that the situation is improving. It would be nice to think about local solutions, but it merely exacerbates the problem if police forces get their own systems and the CPS does not do all that we want it to do. There must be some centralisation, although I know that my chief constable and the Association of Chief Police Officers are a little worried about the apparent loss of independence. They are worried about the pressures on them to deliver policing in their area.
Effective centralisation is the only way forward. We must recognise that policing at the level of divisions, not even at the level of a county force, is where decisions have to be taken and priorities outlined, so that people have confidence in their police and policing is carried out in the most appropriate way.
I am happier this year. In the negotiations that are taking place nationally, the Government's position is clear. I wish that progress could be made more quickly, but I do not want any confrontation with the police. They are my friends, and I go out with them regularly in my constituency, so I see the problems that they have. We need to move on to make sure that the police are effective and deliver value for money, as we all want them to do.
6.5 pm
Mr. Andrew Lansley: I am grateful for the opportunity to contribute to the debate.
Several hon. Members have spoken about the proportion of the overall increase of 6.1 per cent. in the provision for policing that is being made available
332
through total standard spending to enable police authorities to meet their responsibilities, and the proportion being allocated by the Home Office for its own purposes or governed by the Home Office for initiatives that must be delivered as priorities by police authorities. I shall begin with that, and then touch on particular issues relating to Cambridgeshire, to which other hon. Members have already referred.
Of the overall 6.1 per cent.—£550 million—only about 40 per cent. is being allocated to total standard spending. So much of it is being allocated by central Government that the ability of police authorities to meet their responsibilities is being undermined. The Home Office sets its priorities for police authorities. Happily, after years of neglecting such matters, it is beginning to talk about important issues such as visible policing.
For police services such as my own in Cambridgeshire, visibility of policing is intensely difficult to achieve, given the relatively low numbers of police. Cambridgeshire has the second lowest level of funding per head of population of any police authority in the country. It is all very well setting an overall level of provision for policing, but if, as a consequence of Home Office priorities and control over spending, local police authorities cannot meet their responsibilities, there will be a deterioration in the visibility of policing, the prevention of crime and the ability to detect crime and follow it up.
We are beginning to see that in Cambridgeshire. The number of incidents has gone up by 20 per cent. in the past few years and is projected to increase at a faster rate. The number of 999 calls is going up dramatically. The ability of the police to respond to and follow up crime and to act proactively in local communities is being diminished.
The Home Office may assume that it makes provision for its own priorities, but that is not the case. In Cambridgeshire, some of the demands have to be met from the police authority's budget, and go beyond what is provided centrally by the Home Office for its own priorities. For example, £1 million is required from the local budget for the Airwaves project, £734,000 in the coming year for the implementation of the action for justice programme, £308,000 for the DNA programme, and £234,000 for the new national crime recording system. The police authority must meet those needs from its budgets, and that diminishes the sum available for its own priorities.
The situation is even worse than that. The police authority has to meet pay and pension pressures far in excess of what has been provided by the Home Office. The Home Office has said that standard spending should rise by 2.6 per cent., but grant has risen by only 2.3 per cent. There is a national settlement of 3.5 per cent. for police officers, and pension costs for the authority are rising at about 6 per cent. After the pay, inflation and pension costs have been absorbed, there is no room for any response to other local pressures. All the Home Office priorities, in addition to those that I mentioned, are biting deeply into the authority's ability to provide policing.
What is the net result? We have a modest increase in police numbers after a decline and years of trying to attain the same number of police as in 1997. However, with a modest increase in the precept for the council tax precept, the prospect for next year is that we will not meet the gateway criteria for the crime fighting fund, and will

333
therefore lose the additional 24 police who should be available through it. That is contrary to the views of the hon. Member for Cambridge (Mrs. Campbell), who is no longer here to hear the facts. If the police authority implemented a precept of 10 per cent., it would lose the gateway criteria and the 24 additional police. It would no longer be able to maintain its normal recruitment, and the net result would be a decline in the number of police in Cambridgeshire.
To fulfil the requirement for a 4 per cent. increase in the budget, the police authority would have to increase its precept by 20 per cent. to respond to the pressures and demands of policing in Cambridgeshire, and we are relatively underpoliced compared with the rest of the country and the police authority has to consult on a possible 30 per cent. increase in the precept in the council tax. Other increases are also being considered, including a possible 9.3 per cent. by the county council, and the district council has to consider an increase of 40 per cent. in its previously modest precept. That adds up to substantial pressures on individuals through the council tax.
The Home Office is chasing a headline figure of 6.1 per cent. and it has not accurately related it to the pressures that it places on police authorities. It is indifferent to the fact that some police authorities will have to increase the council tax dramatically, and it did not attempt to cut its coat according to local cloth. In future, it would be better for the Home Office to start by considering the policing that it wants to achieve locally and provide for greater devolution of budgets and discretion to enable local police authorities to fulfil their responsibilities.
The obvious candidate for such devolution is the crime fighting fund, and rural policing should also be taken into account in future formula allocations in order to provide properly for it. We should also take proper account of the cost of living. Other hon. Members have talked about inadequate consideration of the cost of living and the provision of a service in places outside London, such as the Thames valley.
If I have an opportunity later, I may speak about the area cost adjustment in more detail. However, people in the Thames valley should note that they will receive an 8 per cent. uplift in their allocation through the area cost adjustment, which is not available to Cambridgeshire. Yet housing costs and labour market pressures in Cambridge are at least as great as those in north Oxfordshire.
Earlier, I asked about the net result. An authority and a police service in Cambridgeshire, which have historically been poorly funded by Government, will receive an increase in grant of only 2.3 per cent. this year. Whatever other priorities may exist, the net result for my constituents will be a large increase in council tax simply to maintain existing levels of policing. They want more police to deal with the greater incidence of crime, the greater number of 999 calls and the recent increases in recorded crime.
6.13pm
Dr. Ashok Kumar: I shall be brief. I congratulate the Government on the settlement for the police force in my
334
area of Cleveland, which received an increase of 4.47 per cent. If we take into account the crime fighting fund, the rural fund and the capital increases, and compare the figures with those for last year, we have received an increase of 4.9 per cent.
The figures are much higher than those under the previous Government. They appear to be increasing under our Government because of the great success of the dynamic economy that they have created. We have thus been able to allocate more money to constituencies such as mine.
The rural part of my constituency—60 per cent. of it is rural—will benefit most, because the targeted money will help greatly. We have made good progress through the crime fighting fund: under it approximately 74 officers have been allocated for 2000–03. We recruited 20 officers under that fund last year; we hope that we will be allocated 36 new officers by the end of this year; and we hope to have a further allocation of 18 officers for 2002–03.
We have also made progress on recruitment. Police numbers have increased from 1,407 in March last year to 1,434. The Government's spirit in tackling crime and ensuring that there are enough police officers to deal with it is a credit to the Labour party.
My right hon. Friend made the allocation of 4.47 per cent., which I and other Members of Parliament who represent the area appreciate, but there is a discrepancy. I understand that the Government based their calculations on tax band D and reached a figure of 7p a week for the police precept. The police authority tells me that the precept that it expects means approximately 50p a week. Its method of calculating the required amount for fighting crime and that of the Government have led to two different figures. I should be interested to know what my right hon. Friend considers to be a sensible figure. Ultimately, we must have the support of the communities that we represent and ensure that they are willing to back the increases in the police precept.
I should also be interested to know whether my right hon. Friend believes that the local authority should consult the people of Cleveland before it sets the police precept. We are considering accountability and carrying the agreement of the people, so it is important to note that the four boroughs are not keen on the increases that the police authority has mentioned, and they therefore need a steer. They told me that the police authority can impose whatever figure it wishes. I do not know whether that is true and I await my right hon. Friend's response.
I am satisfied that the Government have made great strides in tackling crime and I look forward to hearing my right hon. Friend's views.
6.17 pm
Mr. Elfyn Llwyd: I shall try to truncate my remarks because other hon. Members wish to speak.
On the earlier remarks of the hon. Member for Brecon and Radnorshire (Mr. Williams), devolving policing responsibilities to the National Assembly for Wales is becoming a live issue. All the parties in the Assembly support that, and I hope that it will happen.
The Welsh total constitutes a 0.8 per cent. increase on last year, although it represents a decrease of 0.6 per cent. for North Wales police authority. It is interesting to note

335
that although Wales has a higher police grant, the Welsh proportion of the overall budget decreased slightly. However, the figure is back up to 4.9 per cent. this year.
The proposed settlement provides for an increase of 2.8 per cent. in police authority funding to support local services next year. However, many areas are pegged to the floor at 2.3 per cent. We know about the pressures on budgets, which have already been mentioned, and which include pay awards for police and support staff at 3.5 per cent., the police pension, which is a big issue, and the local cost of implementing national priorities.
A letter from the chairperson of the Association of Police Authorities to the Home Secretary on 14 January 2002 states:
"Our concerns are heightened by the approach adopted by the Welsh Assembly. Police authorities in Wales operate within the overall framework for policing set by the Home Secretary, including decisions on the allocation of police grant. However, local taxation is a matter for the Welsh Assembly, which has given a very clear indication of its expectations that police authorities in Wales should keep the increase in council tax to an overall maximum of 5 per cent. This stance is inconsistent with the overall policy intentions set by the Home Office, and with the practical implementation of issues such as the Crime Fighting Fund, where police authorities need to ensure sufficient funding to maintain baseline recruitment targets in order to access the Crime Fighting Fund."
The letter goes on in a similar vein. That important issue has already been mentioned, so I shall not dwell on it now.
North Wales police feel aggrieved at the settlement. The Treasury gave the Home Office an additional 6.1 per cent. to spend on the police, but the amount that the Home Office has given directly is only about 2.8 per cent. The rest has gone to central schemes that hon. Members have already mentioned, and to rural forces. It is, of course, welcome that £30 million has been made available under the rural policing fund, and £65 million under Airwave for 2002–03. That is all well and good, but police forces have to bid for those funds, and there is no guarantee that they will receive them.
This settlement does not guarantee the protection of the present spending commitments of the North Wales force. There is a real danger here, because 80 per cent. of the police budget goes on people, and if North Wales police are unsuccessful with their bids, there is a big possibility that they will be forced to downsize, leading to job losses. Overall—not just in the police strand—north Wales has received a 2.3 per cent. increase from the Home Office, of which 2 per cent. will go on pensions. The rest, apparently, will be expected to form the revenue budget for this year.
Of course, not all police funding for Wales comes from the Home Office; 22 per cent. comes from council tax receipts, and 32 per cent. from the National Assembly, from non-domestic rates receipts. The Assembly has given the police authority an increase of 4 per cent. this year, because that is what was expected from the Home Office. The Assembly has pledged to stick to that figure, even though the Home Office has made an increase of only 2.3 per cent. That will, therefore, leave a considerable shortfall. North Wales police need a 5.9 per cent. increase just to stand still. With the settlements from the Home Office and the Assembly, they will receive a 3.5 per cent. increase, so it will fall to local council tax payers to bear the burden of the shortfall. This is made worse because the National Assembly has said that it will cap any increase if it thinks it necessary to do so.
336
The university of Bangor recently conducted a survey of 500 people. Sixty-six per cent. said that there were too few officers in the area; 64 per cent. said that North Wales police were delivering value for money; and 75 per cent. agreed that they were prepared to pay more council tax to have more police. The local authorities in north Wales find themselves between a rock and a hard place. If they substantially raise the precept to ensure access to the crime fighting fund, they will be capped by the National Assembly, so they are in real difficulty at the moment.
South Wales police—and other police forces in Wales—are relatively happy with their settlement, but they echo what North Wales police have said about inflationary costs. Furthermore, much of the money that the Treasury has given to the Home Office will be held centrally. Although some of the central schemes are very good, they will have to be part of the bidding process. According to the crime and police figures, there were 6,592 officers in Wales in 1997. By 2000, there had been an increase of roughly 200. The manpower figures seem to be improving slowly but surely.
I am acutely aware that other hon. Members wish to speak, but I am the only Welsh Member in the debate. I shall come to a close fairly swiftly, to be fair to other colleagues. Welsh police forces are doing a splendid job; their detection rate of 41 per cent. is better than the English average of 24 per cent. In the Dyfed-Powys area, for example, the rate is 63 per cent., and in Gwent it is 57 per cent. Those areas are the best by a long shot.
On Tuesday this week, there was a debate in the National Assembly for Wales on devolving all these matters to the Assembly, so that it could be on a par with the Scottish Parliament. Such a move is overdue, and the funding problems—the perennial banging on doors and desks—would come to an end if the matter were dealt with centrally in Cardiff. I do not often quote the Labour First Minister of the Assembly with any degree of confidence, but he has said that that is the "next natural step."
Interestingly, several senior police officers in Wales openly support such a move. At this late stage, I must declare an interest. My brother is a serving police inspector in the North Wales police force—not that my speech is likely to affect his life very much! If, as the Government say, this settlement and the previous ones were so fantastic, I doubt that senior police officers would be showing support for devolution of this power.
6.25 pm
Patrick Mercer: I shall try not to iterate the points that have been so much better made by a number of other hon. Members, and I shall confine myself entirely to Nottinghamshire. I am grateful to the hon. Member for Sherwood (Paddy Tipping) and to the Minister for teeing me up—being my warm-up act, if you like—on Nottinghamshire, whose constabulary, it has rightly been pointed out, has urban proportions of crime but shire funding and shire manning.
My hon. Friend the Member for Mid-Norfolk (Mr. Simpson) referred to the now infamous Tony Martin case. That is a style of crime that my constituency—which covers Newark and Retford—mercifully sees only occasionally. The two boys in the case—one was killed, the other wounded—came from the Hawtonville estate in Newark. Crime that ends in a fatality is mercifully rare in

337
my neck of the woods. Much more typical are the comments that I get two or three times a week from the likes of James Clark from Hawtonville, who told me that he is pestered all the time by mobs of youths, or from the residents of the parish of East Drayton whom I met last week, who told me that they do not see a police car for months on end. Also typical are the comments of the people of Retford, who told me that when there was a slight traffic accident in the town, the police switchboard was completely blocked.
I find myself acting as an apologist for the police, not because of their conduct—which I universally admire—hut because of the funding issue, to which we must return each and every time. Stephen Green, the chief constable of Nottinghamshire police, has put out a press release today, in which he describes the challenges that he faces. I have known him for 25 years—we were at Sandhurst together—and he is very open in his comments to me. It is clear to him that his force has to cope with the same level of recorded crime as Merseyside, although it is funded and manned only at the level of a shire force.
To refer back to a point that the Minister made earlier, the chief constable can deal with crime in Nottingham—just. Perhaps, at a pinch, he can deal with crime in places such as Mansfield. But he cannot deal with conurbation crime while also dealing with the market towns of Newark and Retford, and with the many villages in between. He cannot do both tasks with the men and women at his disposal. He must identify the main effort, and he does so—rightly, in my opinion—where the serious crimes occur.
In Newark and Retford, we largely face petty crimes. With the A1 running through the constituency, we have a lot of speeding and motor-related crime. Yet, suddenly, Newark has had five armed robberies in as many weeks, and people are beginning to run scared in an area that should be a sleepy hollow, but which is rapidly turning into a bit of a hot spot.
I am grateful to the Government—I shall try not to be churlish, as there have been comments on that from Labour Members—for the police numbers that the chief constable deploys today. He says that he will have 177 extra officers on the beat in the next year. That is great. Eighty-nine of them, however, will have to be found from within his own resources. That means that he will be taking people out of desk jobs and putting them back on the beat, so far as he can. I understand how difficult that will be in such an institution.
There will be 52 new recruits—rookies—coming in, and it will take some time for them to become effective. In addition, 36 experienced hands may be taken from the Thames Valley force and lured away to Nottinghamshire. Who can blame them? One would hope that life would be much better in the quieter parts of rural Nottinghamshire, so long as there are enough people to keep a lid on the rapidly changing situation.
The funding, however, is a completely different issue. I have already asked the Prime Minister why £3.3 million is being added to Nottinghamshire's funds in the next financial year. That is a 2.5 per cent. increase in cash terms, but no increase whatever in real terms. Once the costs of police pensions, equipment, recruitment and the like have been added, Nottinghamshire police face a real-terms funding decrease.
338
The chief constable, Stephen Green, told me that he will make up for that decrease in funding and will fund the new officers—I repeat that I am grateful for them—by adding to the council tax precept in constituencies such as mine. Newark and Retford face an increase of over 20 per cent. in the council tax precept, yet given the increase in crime in Nottingham, I suspect that we shall see very few extra officers. We have been promised a new police station. We do not really want a new police station, because that neither deters nor detects; it is merely there to represent power. We need officers on the beat.
My final point to the Minister is this: 60 per cent. of my postbag revolves around law and order issues in my constituency. Police funding in Nottinghamshire has caused my constituents to begin to resent the police. The police find it almost impossible to recruit special constables—the no-cost option for local policing—and more and more people blame the police officers, rather than the funding and resourcing, for the way in which crime is being tackled.
As I said earlier, I try to redress that by explaining to my constituents that Nottinghamshire constabulary, particularly Newark and Retford police, do a fine job. However, if the Minister continues to underfund forces such as Nottinghamshire, which have extremely difficult decisions to make, he will continue to set the police against the population.
6.32 pm
Mr. David Cameron: I am grateful for the opportunity to take part in the debate. I shall shorten my remarks and concentrate purely on the position in the Thames valley, as my constituency is in that police area.
Funding for the Thames Valley force is being increased by just 2.6 per cent. That is one of the lowest increases in the country, but I suppose we should be grateful that it is an increase at all. I want to set that figure against the particular situation that we face. We heard a powerful speech from the hon. Member for Reading, West (Mr. Salter), who told us how he had been bashed over the head by a policeman when he was on the Grunwick picket line. It seems to have done little harm to his thinking, because he got the point absolutely right: a cold look at the figures shows that the Thames Valley is hard done by.
Figures on the Home Office website show that there are, on average, 183.9 constables per 100,000 of the population. The Thames Valley force has the third lowest number in the country—just 135 constables per 100,000 of the population. I should be grateful if the Minister would explain the reason for that when he winds up the debate. It is certainly not because of the crime rate in the Thames valley, where the number of offences per 100,000 of the population is 8,883. That is much higher than the national average and higher than the average for the south-east or the south-west.
The position seems to have worsened. The figures for police strength show that in the 12 months to September 2001, police numbers fell by 1.1 per cent. in the Thames valley, whereas they are increasing in other areas. The Minister said that he was turning the tide; in the Thames valley, the tide seems to be ebbing rather than flowing. The problem is not helped by the fact that last year Thames Valley police recruited an extra 50 special constables but lost 114 through wastage.

339
Part of the problem is revealed when we look at the situation on the ground, rather than at the figures in the blue book. Oxfordshire in the Thames valley has some of the highest house prices and the highest cost of living in the United Kingdom—perhaps that is why some of our officers find their way on the road to Nottingham. The Thames Valley police area abuts the Metropolitan police area. As the hon. Member for Reading, West and my hon. Friend the Member for Banbury (Tony Baldry) said, Met officers receive a cost-of-living allowance totalling some £6,000 a year, whereas the maximum available to Thames Valley officers is just £2,000.
House prices in Oxfordshire are close to the average for Greater London and much higher than in many London boroughs. Figures from the Library show that in 2001 the average price of a house in Oxfordshire was £180,000, compared with £94,000 in Barking—to choose one London borough at random. Is it any wonder that officers are leaving to go to the Met for more money, or to go to the south-west or the north for lower living costs? The Government are going in the wrong direction by not addressing the problem of police numbers in the Thames Valley force.
On Friday night, I went on the beat with the police in Witney. It brought home to me the fact that, whatever money they get next year, we must ensure that it addresses the real problems that they face. An officer took me through a common assault case with which he had been dealing. The paperwork, which I have in my hand, consists of 18 sheets of paper on which the defendant's name had to be written over and again. Even at a cursory glance, many of the forms appear to be duplicated.
When we went out on the beat, the officer showed me the radios, which are truly local: if a problem arises in Oxford or Banbury, police officers cannot radio other officers in Witney or talk to their base because the radio waves are clocked. If somebody is arrested, there are not enough custody sergeants—I assume that some of them have gone to Nottingham—so the cells in Witney police station are often shut.
Thus the problem is a lack of officers—that problem is getting worse—and not enough specials to support those officers; poor local communications for making arrests; and far too much paperwork when an arrest is made. If an arrest is made, the suspect must be taken all the way to Banbury when the cells in Witney are shut.
It is a sorry tale and a poor way to treat public servants who do a magnificent job. They deserve more than they are getting at the moment.
6.37 pm
Angela Watkinson: I am a Member of a Metropolitan police family, so not surprisingly I rise to speak in support of them and their need for increased manpower. I would suggest targets far in excess of the modest ones that the Government have set.
When Gilbert and Sullivan said that a policeman's lot is not a happy one, they were right and they are still right. At a time of increased pressure from the rise in certain types of crime, particularly drug-related violent crime, robberies and vandalism, the Metropolitan police are 600 men down on their 1997 figure.
The public perception is that criminals are getting away with it and that there is no point in reporting crime. Nobody knows the real crime levels because of
340
that unreported element, but the public perception is universally that we need more policemen. In London, one is five times more likely to become a victim of crime than somebody who lives in New York.
Morale is pivotal to recruitment and retention. The recent recruitment through training centres is extremely welcome, but we must also retain experienced officers. The proposal to offer a £1,000 incentive to delay the retirement of experienced officers is welcome. It is also a very good deal for the police because that £1,000 will be repaid many times over by the unpaid pension payments. The high level of early retirement on health grounds is an indication of poor morale within the police force.
Mr. Denham: If the hon. Lady believes that that is an indication of poor morale in the police service, does she agree that police morale was much worse five years ago, when the level of ill health retirement was much higher?
Angela Watkinson: That is not my experience, and it is not what the people I have spoken to tell me.
Will the Minister clarify a response that I received to a written question about the Metropolitan police training schools? I understand that there is now an almost 100 per cent. pass rate. Indeed, that is necessary if the targets on police resources are to be met. Will he compare that with the 1960s, when there was an almost 50 per cent. pass rate? I hope that the improved figures are due to a higher standard of recruit and not a lowering of entry requirements.
The London borough of Havering is a low crime area by London standards. It has nine fewer officers than in 1997, and the overall crime rate has increased by 23.7 per cent. The council tax is rocketing, and the Mayor of London has levied a precept of an additional 35 per cent. He claims that the extra money is required to fund the 1,050 additional police constables needed in the metropolitan area, but only £17 million of the £166 million raised will be used for that purpose. The lion's share of the funding for those 1,050 will come from the crime fighting fund. We can only speculate on what Mayor Livingstone intends to use the rest of that money for.
Havering, as an outer-London borough, often has to provide additional support for security in the capital, and it needs extra police for that, because it often leaves Havering's numbers depleted. In the borough, Romford has the highest concentration of night-time leisure and entertainment centres and nightclubs outside the west end of London, and 13,000 people converge on those nightclubs every night. That puts enormous strain on Havering police, who do a good job but are stretched to the limit. The other parts of the borough are often left virtually unpoliced because of the demands of the nightclubs in Romford.
I have lost count of the number of constituents who have said to me that they want visible policing. They want to see police on the beat. I know that that is not the modern method of policing, and it is considered to be ineffective and inefficient, but that is what the general public want. An enormous increase in manpower would be needed to enable Havering police to beat police the entire borough with three shifts. Modest increases are not enough. If we are to satisfy public demand for beat policing, we need huge increases in manpower. That is

341
what the public want. What the police want is the backing of senior officers, the Government and the Crown Prosecution Service.
6.43 pm
Mr. Paice: With the leave of the House, Mr. Deputy Speaker, I should like to make a few comments in response to the debate. I know that the Minister wants to respond more fully, and I do not intend to take long.
Few hon. Members, other than one or two Government lackeys, have been entirely satisfied with the totality of the police grant. In particular, many hon. Members—not just Conservative Members, but Liberal Democrat and Labour Members—have expressed concern about the trend towards centralisation, to which I referred in my speech. The hon. Member for Birmingham, Hall Green (Mr. McCabe) took that view, followed by, among others, the hon. Members for Lewes (Norman Baker) and for Reading, West (Mr. Salter) and my hon. Friend the Member for South Cambridgeshire (Mr. Lansley).
The Minister rather disingenuously suggested in an intervention on the hon. Member for Lewes that by expressing concern we were against any form of centralised funds. Of course some centralised funds will be required, such as that for the DNA database. The concern that I and others have expressed is about the huge increase in centralised funds year on year.
The rural fund is only £30 million, which is small as a proportion. One can make a case for it being centralised at the moment until the Government change the distribution formula, but there is no justification for the crime fighting fund being centralised. There is no reason why that could not have been disbursed to authorities for their own purposes. The only defence of centralisation came from the hon. and learned Member for Dudley, North (Ross Cranston). I accept his argument about local accountability, but if he wants to defend the Government, I suggest he read clause 7 of the Police Reform Bill, which shows just how far they want to go in controlling what the police do, and it is quite frightening to most people.
A number of Members raised the issue of wastage. The latest figures show that wastage rose by some 5 per cent. in the year to September. That is not a large figure, but it is of some concern. If we strip out the retirements, deaths, transfers and dismissals, we discover that straightforward resignations rose by 18 per cent. in that year. That shows the widespread loss of morale in the police service. Police officers do not like the way that they are being treated.
Many hon. Members have referred to the Thames valley and the cost of living allowance. The hon. Member for Slough (Fiona Mactaggart) has come back into the Chamber. I maintain my view that getting rid of the housing allowance was the right way forward. If there is a problem—I am happy to accept her word and those of other hon. Members—I suggest that it can be dealt with through the cost of living allowance.
Fiona Mactaggart rose—
Mr. Paice: I shall not give way, if the hon. Lady does not mind. I want to give the Minister time to respond.
342
Addressing the cost of living allowance is exactly the course of action suggested by my hon. Friend the Member for Witney (Mr. Cameron) and others. My hon. Friends the Members for South Cambridgeshire, for Newark (Patrick Mercer) and for Upminster (Angela Watkinson) referred to the importance of visible policing. There is no doubt that that has suffered seriously during the past few years. Police numbers fell dramatically in the Government's first three years in office. Of course we welcome the fact that we are now back to where we were—73 above to be precise—and in response to the accusation that I am being churlish, I welcome the extra police officers in Cambridgeshire. However, we have only got back to where we were, and have not made significant progress.
Several of my hon. Friends referred to the special constabulary. Under the Government, there has been a cataclysmic decline in the number of specials of some 40 per cent. It would be wholly wrong to lay the blame for that entirely at the Government's door. People's lifestyles have changed and they may be less willing to undertake voluntary work. However, a decline of 40 per cent. cannot be completely attributed to a gradual change in people's lifestyles in the past few years. I am disappointed that in the White Paper, which has raised its head several times in the debate, the Government did not set out any strong proposals substantially to revitalise the specials, other than making nice warm noises about the need to increase the special constabulary.
The principal issue remains that of the shift towards the council tax, and it was raised by a number of hon. Members. I wish the Minister would be straightforward with the House and say whether it is the Government's intention to shift the bulk of the cost of policing towards the council tax payer. That is what is happening. I gave figures, which hon. Members supported with figures from their own constabularies. It looks as though many authorities will be raising their council tax precept by 20 or 30 per cent. just to stand still. Others may decide not to raise it by that amount, and to face up to having to make cuts.
I come back to the Government's targets for the number of police officers. If some forces are not able to access the crime fighting fund this year because they have had to cut their recruitment and do not meet the gateway criteria, does the Minister realistically expect to meet his target of 130,000 officers by next year? If he does, will he tell the House what he expects the rise in council tax precepts to be on average for police authorities across the country? He cannot have it both ways: either council taxes will have to rise dramatically or he will not get the police officers he and all of us want by this time next year.
6.49 pm
Mr. Denham: With the leave of the House, Mr. Deputy Speaker, I should like to reply. I thank the hon. Member for South-East Cambridgeshire (Mr. Paice) for leaving me 10 minutes or so. I hope to deal with the main themes of the debate in that time, although I shall not be able to respond in detail to each point. I am sure that hon. Members will understand.
This has, in general, been a helpful debate, although inevitably there has been a degree of special pleading and some presentation of creatively argued cases from police authority treasurers determined to show the situation in the worst possible light.

343
A number of speakers from, I think, both sides of the House drew a contrast between the average grant increase of 2.8 per cent. and the overall spending increase of 6.1 per cent. That, as a number of other speakers made clear, is not the point. The missing amount has not been whipped away for nefarious central purposes. A substantial extra amount, over and above the grant increase, will be spent by police forces in local areas on delivering policing to communities. The crime fighting fund, the rural policing fund and the capital fund—which, as I have said, is being increased by more than 30 per cent.—will be spent in local police force areas. That alone amounts to an increase of 4.34 per cent. in England and Wales.
Mr. Cameron rose—
Mr. Denham: May I make a little progress? I gave way to every intervention earlier, and I have not much time. I will give way later if I can.
Thames Valley police have featured many times today. If we take account of the increases in the crime fighting fund, the rural policing fund and capital, they are receiving 5.18 per cent. When set against an average increase of 6.1 per cent. across the country, that is not at all bad. There is a good case for some of the central funds and central initiatives to which some Members have objected.
The hon. Member for Upminster (Angela Watkinson) rightly said that the public wanted more police, and wanted to see more police on the beat. I have chided the hon. Member for South-East Cambridgeshire for the decline in police numbers set in train by the last Government in 1993, and he has chided me for the fact that it took us a couple of years to sort out the economy and enable the numbers to start rising again. The fact is, however, that without a mechanism like the crime fighting fund, which ring-fenced resources for the recruitment and salaries of additional officers, the numbers would not be going up now.
If Ministers are to be accountable for the overall number of police officers, I shall want to ensure—as will my right hon. Friend the Home Secretary—that there is a mechanism to translate the money we are investing into the officers that the hon. Lady and my hon. Friends want to see patrolling the streets, and providing intelligence-led policing in communities.
Mr. Paice: Is the Minister saying that if he gave the money to police authorities they could not be trusted to spend it on policemen?
Mr. Denham: I certainly believe that if we had not ring-fenced it, we would not have seen such a rapid increase in the number of police officers. I will defend that judgment, although it required a degree of central direction. As we would be held to account if the public did not benefit from seeing us head for record police numbers this spring and 130,000 officers next spring, I think we have a right to take the measures that are necessary to ensure that that happens.
The hon. Member for Witney (Mr. Cameron) spoke of going out with the police and observing that they could not communicate properly because their radios did not work. That is the reason for the Airwave initiative. Our
344
police service has a history of failure to implement coherent approaches to information technology and the development of communications technologies because of a series of 43 separate, unco-ordinated decisions made by 43 separate police forces in 43 separate police authorities.
It is all very well defending, as I will, the key role of police authorities in the tripartite partnership, but if the police service in England and Wales is undermined by the inability of forces to talk to each other—if, to preserve their own safety, they cannot communicate in the event of a motorway crash on the border of two counties, or an armed incident, because their radios do not work—there must be a central national initiative, and that is what Airwave is all about. Similarly, there is no point in having a database enabling scene-of-crime samples to be checked against DNA records if half the country's police forces cannot take advantage of it.
We are talking not about some overbearing centralisation, but about an arrangement that is supported by the vast majority of chief constables and others who recognise that, while we take tremendous pride in the identity of local and community policing and policing by consent, tackling modern criminality involves issues that must be dealt with on a coherent national basis. I believe that we have the balance right in the settlement, and in the overall approach set out in a police Bill for whose Second Reading we have heard some rehearsals today.
Most Members also mentioned recruitment and retention in the south-east. Let me repeat some of what I said earlier. We realise that that is important, which is why—unlike the last Government, who abolished the housing allowance—we have presented proposals for low-cost home ownership and low-cost loan schemes. As we said in our White Paper, we want to establish a link with the NHS low-cost housing co-ordinator. I think there is scope for more partnership schemes involving housing associations and others.
As well as introducing regional allowances, we want to address such important issues. We must, however, ensure that we are doing the right things in the most effective way. We need a much better understanding of why some forces in the south-east have a much lower wastage rate than others, and why some have a much more effective recruitment rate. We must see what is good, and build on the best. I do not rule out any approach beyond that, but before saying "Here is an obvious simple solution" let us do what we are doing now. Let us work with the forces that are doing extremely well and also with those that appear to have a problem, and see what we can do.
I do not understand the reasons for this, but 60 per cent. of Thames Valley recruits come from outside the Thames valley area. The force can attract recruits, but there is a built-in tendency for people to return to their home areas. It would be interesting to know why such a high proportion are from outside; home-grown recruits would be less likely to drift away. We are determined to tackle all the issues, but I want to do that on the basis of an understanding of what is really going on.
The last Conservative Administration set in train a decline in the number of police officers that we have had to reverse. Crime doubled under that regime. The Conservatives introduced huge delays in youth courts, preventing young offenders from being brought to justice quickly. The level of resources that we are discussing now was undreamt of under that Government.

345
We have presided over a period in which crime has fallen. According to the British crime survey, last year's fall was the biggest in the survey's history, and the chance of being a victim of crime was the lowest since it began in 1981. I am in no way complacent, however. Crime levels are still too high, and there are serious problems—such as street robbery, which has been mentioned a number of times—that we are determined to tackle. Although I am pleased with what we have achieved so far, I realise that there is a great deal more to do.
Police forces and officers do a tremendous job, which is why we were happy to negotiate heads of agreement with the Police Federation that would make the vast majority of officers better off, benefiting from a fairer pay system. They deserve and will receive our support. We will reform the police service to free its time. Former chief inspector Sir David O'Dowd is leading the battle against red tape and bureaucracy. We need to give more support to police officers by investing in capital. That is why part of the capital we have announced this week will be spent on improving working conditions for police officers and visiting conditions for the public in police stations.
We want to free officers' time so they can be out in the community—not wandering the streets, but patrolling in an intelligent, targeted way to tackle antisocial behaviour and persistent offenders. We are determined to support the police better in the job that they do so well for us already. The resources that we have discussed today will enable them to do just that.
Question put and agreed to.
Resolved,
That the Police Grant Report (England and Wales) 2002–03 (HC533), which was laid before this House on 28th January, be approved.

Local Government Finance
7 pm
The Minister for Local Government (Mr. Nick Raynsford): I beg to move,
That the Local Government Finance Report (England) 2002–03 (HC545), which was laid before this House on 28th January, be approved.
The subject before us today, important as it is, is just part of the means by which we establish a sound working partnership between central and local government to meet the needs of all the people served and represented by local government. Councils are in the front line, providing services to their communities. We should remember just how wide ranging those responsibilities are: the quality of the local environment that each of us experiences; education to raise standards and expectations; care of some of the most vulnerable members of our society; housing; transport; street cleaning and lighting. All those and many more depend on the work of councils.
It is Government's job to provide the framework within which councils have the incentives and opportunity to deliver high-quality services and effective community leadership. That is why our White Paper on local government set out our approach to the respective responsibilities of central and local government. We will work with the Local Government Association to clarify what Government can expect from local government, and vice versa.
We will establish a national framework of standards and accountability for the delivery of high-quality services. In some areas, there will need to be agreed national minimum standards, with local flexibility on how those are delivered—and, we hope, exceeded. In other areas, particularly where councils have a proven track record of high-quality performance, we will give them a freer hand to determine and to deliver priorities locally.
We will help all councils by cutting red tape, reducing central prescription and increasing the support that they receive to improve their overall performance. There will be rewards for the best performers and carefully targeted measures to tackle poor performance.
Simon Hughes: Can the Minister deal with an issue that follows directly on from the point about performance? My borough, which he knows well, has the largest publicly owned housing stock of any in London—it has about 50,000 properties. A lot of that needs capital investment. How much do the needs criteria—there may, for example, have been a stock assessment—overrule performance criteria? If the treatment of a council is always going to be governed by its performance historically, it may never get the money that it needs.
Mr. Raynsford: The hon. Gentleman raises important issues that go deep into the performance management system that we are introducing. I shall not detain the House too long by describing that because it is only tangential to the report before the House, but may I explain the three main elements of the performance assessment? First, best value performance indicators; secondly, the inspections carried out by the housing inspectorate of the performance of specific elements in the housing service; thirdly, an overall corporate

347
assessment of the authority's ability to cope with the many corporate pressures that it faces. That will be handled by the Audit Commission, independent of Government. The commission will come to a judgment, based on that basket of indicators, of the overall performance of the authority.
The hon. Gentleman specifically raised the subject of housing. He will know that we have made very substantial increases in the capital allocations available to local authorities for the renovation and improvement of existing stock. I appreciate that in an area such as his, which has a huge backlog of poor-condition property, there is a need to look creatively at additional means of attracting finance. I am sorry that, at the Aylesbury estate and elsewhere, opportunities for raising substantial additional sums have not turned out to be feasible because of tenant opposition, but I hope that the authority and tenants in the area will continue to work constructively to find ways of levering in additional finance, on top of that which the Government have already contributed to the authority.
Simon Hughes: That is very helpful. I pick up the last point. We have had a vote on the Aylesbury estate, a very large estate. We are facing decisions on the Tabard Garden estate, another big estate, and possibly others around the Elephant and Castle. Can the Minister give an assurance that, in terms of meeting the need, carrying out the repairs and so on, no disadvantage will follow from a specific decision by tenants either to stay with the local authority or to transfer to another landlord? Will he confirm that there will be no prejudice in terms of money coming in if they decide to remain local authority tenants?
Mr. Raynsford: The hon. Gentleman is tempting both me and the House by moving from the subject of this particular debate—the local government finance report—to the issue of housing finance, which is separate, but clearly if the option of additional private finance to support the public money already offered by the Government—we had made some substantial offers in relation to the Aylesbury estate—were turned down, I could not guarantee that alternative sums would be available for Southwark in addition to the public finance, but we certainly do not wish to penalise areas that choose to retain the housing under local authority control. We have always believed that there should be options for tenants, and that tenants should decide in their best interests, but clearly some of those options will have greater financial potential than others. That is the nature of the operation.
Mrs. Gillian Shephard: I apologise for intervening immediately after the hon. Member for Southwark, North and Bermondsey (Simon Hughes) but the point is pertinent because the Minister is raising the question of performance. I know that he sets great store by the performance of local authorities, as indeed we all do. I am extremely concerned about the position with regard to school places in Norfolk, which has certainly had increases in funding. Of Norfolk's 52 secondary schools, only 22 can take extra pupils at the moment. That has a knock-on effect on every aspect of Norfolk life. I draw that to the Minister's attention and
348
ask him to look into how that situation, which is unparalleled in my 30 years' experience, could possibly have arisen.
Mr. Raynsford: The specific issue of Norfolk is obviously important. The right hon. Lady will be aware that the grant to Norfolk has increased by 6.8 per cent., which recognises the needs of the area. I have no doubt that my colleagues at the Department for Education and Skills will be only too pleased to deal with the specific point that she has raised. I will ensure that it is passed on to them. She will appreciate that, as it is a specifically educational point, it is ultimately their responsibility. I shall ensure that she receives an answer from them.
Several hon. Members rose—
Mr. Raynsford: I would like to make a little progress because literally only one sentence of my speech has related to the local government finance report. I have been happy to take questions in relation to education and housing, but I would like to make a little progress and I will then give way.
Over the past five years, we have been tackling a backlog of under-investment and inadequate general revenue funding. For 2002–03, total revenue support from Government will amount to £47.4 billion, an increase of £3.3 billion, or 7.5 per cent. on this year. The general grant formula distributes £40.3 billion of that, including the police grant. which the House has just debated. Excluding police grant, the remaining formula grant for 2002–03 will total £36.5 billion, an increase of £1.8 billion or 5.3 per cent. on the current year. Those are very substantial increases at a time when underlying inflation is running at under 2 per cent.
During consultation, local authorities impressed upon us that they still face financial problems this year, particularly in the case of social services. We considered those points and we will continue to discuss the needs of social services authorities with representatives of local government. We have already demonstrated our willingness to respond to the evidence presented by social services authorities in the initiative agreed late last year by the Secretary of State for Transport, Local Government and the Regions, and the Secretary of State for Health to respond to bed-blocking pressures.
Mrs. Angela Browning: On social services, the Minister will be aware of the case made by Devon county council. The high number of retired people in Devon has created a problem with its social services budget. I hope that the formula that the Government intend to change in time for the following year will equalise the per capita allowance for retired people, because there is a considerable differential. Devon receives a much lower rate than other parts of the country, and we are also disadvantaged in terms of sparsity. On sparsity and the way the formula for retired people is calculated, will the Government seek to achieve equalisation?
Mr. Raynsford: I will discuss a little later our proposals for changing the standard spending assessment formula in future years, but the hon. Lady will recognise that we are operating the same methodology this year as in previous years. She will be pleased to learn that Devon

349
county council has received a 6.6 per cent. increase in Government grant. That is a substantial increase that is well ahead of inflation, and compares favourably with that received by many other county councils, so this year's settlement in no way disadvantages Devon. I accept, however, that there may be issues relating to the construction of the SSA formula—of course, it was devised when the hon. Lady's party was in government—that we will need to address in our review in the coming year. However, as I said, so far as this settlement is concerned, Devon has not been disadvantaged.
Mr. David Clelland: Despite the generosity of this year's settlement when compared with those of the previous Conservative Government, several points have been made about the general settlement. Reference was made to the crisis in social services, but we should also remember the unfairness of the population-based calculation, anomalies in education grants and the rules governing them, and late changes to the area cost adjustment, all of which impact heavily not only on metropolitan authorities in general, but on Gateshead council in particular. Has my right hon. Friend any good news to impart in that regard?
Mr. Raynsford: I have a number of items of good news to impart, including the future review of the SSA formula, to which I have already referred. I recognise that areas with declining populations have particular problems, and that savings cannot always immediately be made to take account of such decline. There is a difficulty, in that areas that face extra pressures because of population increases naturally feel such pressures immediately, and want compensation as soon as possible. Given that the impact of such population increases is immediate, devising a system that allows a time-lag before the consequences of population decline are felt clearly involves a funding gap, which must be filled by some means or other. We understand the problem and we will address it in the review, but there is no instant and easy solution to it.
With regard to the area cost adjustment, in that and every other aspect of the settlement we are committed to using the most up-to-date and accurate information. Last autumn, it became clear to us that figures published by the Office for National Statistics in July, which were based on data from the new earnings survey, did not give an accurate picture of the changes, because a significant proportion of the sample was omitted by mistake. When, late in the process, the error came to light, we felt it only right and proper that the figures be adjusted to take account of the correct data. Otherwise, we would have knowingly proceeded on an incorrect basis. We have made similar late adjustments in relation to a number of other factors, and as part of the settlement it is always our policy to implement the most recent, up-to-date and accurate data that we can.
Mr. Paul Burstow: The Minister will know that the gap between council spending on social services, and the spending that is necessary according to the Government's SSA, has widened in the past 10 years to 12 per cent. What advice can he give to his Labour colleagues who serve on my local authority in the London
350
borough of Sutton? Their concern is that, as a result of the settlement, the gap has widened to 13.5 per cent. Will that gap be closed through an increase in charges or in council tax, or will there be sufficient grant? It is clear that, at the moment, the grant is insufficient.
Mr. Raynsford: As I thought I had acknowledged, we recognise that there are very real pressures on social services, and we have been discussing them for some time with social services departments and authorities, and with our colleagues in the Department of Health. I mentioned the specific additional finance, some £300 million in total, that was made available last autumn—the bulk of it will take effect in the coming year—to help relieve bed-blocking pressures. We have made it clear that in our view the SSA formula, which has fallen behind in a number of ways, is not an accurate reflection of the current position. It has become increasingly unrealistic in terms of actual spending patterns, and we need to change it. That is why we will conduct an extremely thorough review to try to put in place a better formula with effect from next year.
I hope, however, that the hon. Gentleman recognises that it would have been wrong to rush forward with an inevitably defective stop-gap measure that required further amendment. It is clear that local government should not have to operate according to formulae that change year on year. We need more certainty, and the ability to plan ahead with reasonable confidence in the likely level of support. Obviously, certain variations will be needed to reflect changes in demography, but constant changes in methodology are simply dispiriting to those who must plan ahead.
Mr. Harry Barnes: The first Standing Committee of which I was a member considered what became the Local Government Finance Act 1987, which introduced the poll tax and the standard spending assessment. We got rid of one of them, and thankfully we are now able to get rid of the other. Will the consequences of that Act—it has resulted in cumulative loss in many areas, but a cumulative bonanza in various others—be taken into account? The position of authorities such as Derbyshire, which were deliberately targeted by that legislation, needs to be corrected.
Mr. Raynsford: We are well aware of the problems that my hon. Friend and his Derbyshire colleagues have encountered. I hope that he agrees that this year's settlement, which, I suspect, gives Derbyshire a more substantial increase than was initially expected, has gone some way towards redressing the balance. Of course, he will recognise that we cannot overcome the legacy of many years of inappropriate calculations at one fell swoop. However, through settlements agreed in the past five years, we are seeking to increase local government resources in general and to redress the balance. During the coming year's review of the SSA formula, we will try to establish a proper and fair basis for the future. There is a difficulty, however—I will discuss it later—in that everyone expects to do better out of the review. It is the nature of politics that we are all conscious of the defects

351
of the settlement arrangements and the formula as they impact on our own authorities. Everyone expects that those defects will be put right, and that the settlement will benefit them in future years.
Although I have many abilities, I cannot perform magic—the new arrangement cannot magically improve the allocations to every local authority. We will try to devise a system that is fairer, better and above all more comprehensible than the current one. One iniquity of the current scheme is that it is virtually impossible for anyone other than a local government finance anorak to understand how the system works.
Mrs. Theresa May: On the SSA review, will the Minister clarify one point for hon. Members' benefit? In his pre-Christmas statement on the local government settlement, the Secretary of State said that the revised SSA would come into force from the 2003–04 financial year. If the review to which the Minister has referred takes a whole year, the new SSA will not be available in time for the 2003–
Mr. Raynsford: I am very happy to put the hon. Lady's mind at rest. The review is already progressing, and will be completed in the course of the coming year so that it can be implemented from the start of the financial year 2003–04. This time next year, therefore, we will be debating a different formula—a different basis for allocation—that will apply from 2003–04.
However, this is a complex matter. The hon. Lady will be well aware of the complexities involved. The change will take time, and it will be several months into the year before we are in a position even to begin to consult about the overall framework.
Mr. Clive Betts rose—
Ms Julia Drown rose—
Mr. Raynsford: I shall give way again when I have completed this response.
The hon. Member for Maidenhead (Mrs. May) will appreciate that a number of separate components are involved, such as education, social services, the environmental, protective and cultural services block, or whatever. Each of those components has to be satisfactory to the people concerned, and there must be consistency when they are put together. Account must also be taken of the overall impact. All that has to be done in an intelligent way, and models must be designed to determine the consequences. In that way, it is possible to avoid the unforeseen consequences of what might appear, on the surface, to be an entirely rational approach.
The process is complex, and will take time. We are not going to rush it. That is why, as I indicated in my response to the hon. Member for Sutton and Cheam (Mr. Burstow), we did not make a change this year. Any such change would have been rushed, and we did not consider that to be satisfactory.
Mr. Betts:I thank my right hon. Friend for giving way, as I want to return to the issue of social services, mentioned by the hon. Member for Sutton and Cheam (Mr. Burstow). The Government are looking at the problems facing local authorities, but those authorities
352
still have choices. Will my right hon. Friend comment on—and join me in criticising—the actions of the Liberal Democrat council in Sheffield? Over the past two years, it has managed to find an extra £1 million for its corporate publicity budget, and it has just increased senior executive officers' salaries by 30 per cent. However, when an elderly person who cannot get in and out of the bath wants a shower to be installed instead, help with the necessary adaptation is refused if that person can manage to have a strip wash. Those are the Liberal Democrat priorities in Sheffield.
Mr. Raynsford: My hon. Friend makes a very fair point about the importance of local government focusing on delivering services to people in need. Certainly, the whole purpose of our performance assessment and management framework is to put real pressure on local authorities to deliver services and not spend money on items of lesser priority. When that performance management and assessment system is introduced, I hope that my hon. Friend finds that it has a desirable effect. We are conscious that the settlement gives an increase for social services, but we are clearly aware of the pressures, as I said. We will keep the matter under review.
As hon. Members will recall, 2002–03 is the last year in which we will use the system of standard spending assessments. I have already said something about the changes that we intend to make in the calculations for future years.
A number of fire authorities, and honourable Members, have made representations about the continued use of the fire calls indicator in the SSA formula this year. We recognise that it is a perverse incentive, which penalises authorities that do effective fire prevention work, and it will not be part of the new grant formula. However, to be fair to all authorities, we cannot make exceptions here or there to the decision that we rule out changes in the methodology. That decision also covers the suggestion that we use data on fire calls differently by averaging over a longer period.
On 4 December, my right hon. Friend the Secretary of State announced our intention that, for 2002–03, all authorities would receive a grant increase at least matching inflation. That increase, and other comparisons that I shall make, are on a like-for-like basis.
In line with the Government's priorities, authorities with education and social services responsibilities will receive at least 4 per cent.—up from 3.2 per cent. last year. I can confirm today that we will put some £52 million of new money into revenue support grant, so that-as was not the case in 2001–02—no authority in this group below the ceiling will have its increase reduced to pay for the floor.
It became clear in consultation that the fully adjusted basis that we had used to make like-for-like comparisons from one year to the next was not regarded as fair by shire district councils. That was because the main adjustment was in respect of education, a service that shire districts do not, of course, provide.
As my right hon. Friend the Secretary of State told the House on 18 December, we therefore agreed to introduce an alternative baseline for 2001–02 that, in effect, only adjusts for transfers of service for which shire districts are responsible. In order to guarantee a minimum 2.3 per cent. increase for all shire districts, on a like-for-like basis,

353
we will give each district whichever increase is the greater for it: 2.3 per cent. on the original baseline, or 2.3 per cent. on the alternative. The grant allocations now proposed for shire districts take full account of that guarantee.
Following the close of consultation, we have decided to extend that guarantee to police and fire authorities. Together with my right hon. Friend the Secretary of State for the Home Department, we have agreed to put extra resources into the settlement to fund that guarantee, without imposing an unduly high scaling factor on grant increases for authorities above the floor.
As a result of representations made in consultation, we have also decided to change the way in which adjustments to the base year were made for the transfer of regulation and inspection functions from social services departments to the new National Care Standards Commission. The adjustments do not now take account of new money transferred from SSAs to the commission. That will give authorities at the floor or ceiling a higher base position, and thus higher cash increases. Again, we have ensured that other authorities do not lose as a result. Taking those initiatives together, the Government have put some £73 million of new money into the settlement to support the cost of floor increases for all authorities.
I confirm that I intend to promote capital investment by excepting from the floor and ceiling limits grant increases that result from new capital allocations. I also confirm that, where grant increases for authorities that are neither at the floor or the ceiling are scaled back to help pay for the floor, this will only apply to that part of the grant increase above the floor. That should help solve the problem that was characterised last year as
"the nearly poor paying for the really poor".
Mr. Steve Webb: According to some measures, such as primary SSA, my authority of South Gloucestershire is at the bottom, so we hope that any new formula will move us in the right direction. However, our nightmare is that the new formula will be more generous but that it will be phased in through tight ceilings over many years. My constituents are angry and feel a sense of injustice after years of unfair funding, and their fear is that that unfairness will continue for years. Can the Minister offer my constituents any assurance that the new system, where it addresses long-standing injustices, will not be phased in so slowly that those injustices effectively persist?
Mr. Raynsford: I hope that the hon. Gentleman will welcome the fact that we have been able to give Gloucestershire an increase this year of 6.9 per cent.
Mr. Webb: That is not correct.
Mr. Raynsford: I was referring to the county of Gloucestershire. However, if the hon. Gentleman is referring to the district council—
Mr. Webb: The unitary council.
Mr. Raynsford: I am sorry, I meant the hon. Gentleman's unitary council. I shall refer to that unitary
354
council separately, when I can find the right page. The hon. Gentleman will know what a nightmare it is constantly to be looking for the respective figures for individual authorities. However, I assure the hon. Gentleman that we recognise that the new formula will cause there to be both gainers and losers. I made that clear in response to an earlier intervention. It would be only fair, therefore, to continue the floors and ceilings framework, as that will prevent local authorities—especially those facing potentially large losses—from facing excessive changes as well. It would be quite unreasonable for authorities in that position to have to deal with both matters at one fell swoop. That is why we want to ensure the continuation of a floor and ceiling framework. I think that most people would regard that as fair.
Mr. David Kidney: My right hon. Friend the Minister does not get many bouquets at the Dispatch Box, but he deserves to be congratulated on these refinements to the floor and ceiling framework. After all, the concept was introduced for the first time only this time last year.
However, will my right hon. Friend say what proportion of this year's distribution of revenue support grant will be held back by Departments for ring-fenced grant? Have central and local government agreed a target for a smaller proportion in future years?
Mr. Raynsford: My hon. Friend offered some kind words to begin with, then threw a dart. We recognise that there is real concern in local government about the increase in ring fencing. There are good reasons for ring fencing in certain circumstances, when there are no other means of ensuring that certain outcomes—hugely important, and regarded as national priorities—can be delivered. However, we believe that circumstances have now reached a point where it is necessary to rein back on ring fencing. We made clear our commitment to do that in the White Paper. In the course of the coming spending review, we will obviously be looking to reach agreement with our colleagues in other Departments on an appropriate framework for the future. That framework will ensure that, although the benefits of ring fencing are not lost, local authorities will be able to expect to benefit from the greater flexibility that will arise when a greater proportion of grant is available through general grant, rather than ring-fenced grant.
Mr. Don FosterWould it not be helpful if the Minister answered the question asked by the hon. Member for Stafford (Mr. Kidney)? I suggest that his answer might be that the proportion of total Government grant going to local councils that is ring-fenced has increased from 5 per cent., when the Government came to power, to nearly 15 per cent. today.
Mr. Raynsford: I do not want to quibble with the hon. Gentleman, but I think that he exaggerates slightly; the figure is probably nearer 14 per cent. However, I will not hold that against him.
I have flicked through my papers and can reassure the hon. Member for Northavon (Mr. Webb) that the increase for South Gloucestershire, which I am sure that he will welcome, is 6.7 per cent., almost exactly the same as for the county of Gloucestershire, which has 6.9 per cent.
Ms Drown: I represent an authority that hopes to gain by the new formula, and refer my right hon. Friend to

355
next year's settlement. Is he aware of the frustration of some of the lowest funded authorities, such as Swindon, which face more challenges than many other authorities in terms of raising standards in education and social services? However, an unfair formula distribution is further exacerbated in that Swindon's increase has been less than the average. We are looking at some difficult choices locally, and I would be grateful for my right hon. Friend's assurance that he will continue to work with the council to ensure that valued services, particularly in education and social services, will be preserved as the council goes through a difficult round of decision making.
Mr. Raynsford: We have ensured, through the floors and ceilings mechanism, that every local authority has received an increase this year that at least matches that of inflation. No authority will have to cope with an increase that is less than inflation, and most benefit from substantially larger increases than that.
We shall review the system in the coming year. As part of that review, it will be our objective to ensure that the new framework is fairer and reflects the circumstances that lead to real needs for spend for all authorities. I hope that my hon. Friend can take comfort from that. I appreciate that in certain cases, where there have been changes as a result of local government reorganisation, the patterns of spend have not necessarily fully reflected the need to spend. It is our wish, through the review of standard spending assessments, to have a better framework for the future.
With the good grant increases that we have provided this year and the prospect of stable grant settlements, all authorities should be able to deliver improvements to public services while setting reasonable council tax increases. This year, we have made changes to what must be shown on council tax bills. [Interruption.] Liberal Democrat Members seem to think this a matter for humour. Their electorate will not find it humorous if their authorities impose unreasonably large council tax increases when there has been an overall 7.5 per cent. increase—three times the rate of inflation—in Government grant to local authorities. We expect local authorities to make full use of the generous settlement that I am announcing this evening and to ensure that they do not impose unreasonable increases in council tax on their council tax payers.
Mr. Don Foster: I do not find the situation humorous. What I found humorous were the shakes of the head from many Labour Members in response to the Minister's statement that councils will be able to deliver improved services as a result of this settlement. On the increases in council tax, what is the right hon. Gentleman's estimate of the average increase that is likely to result from today's settlement?
Mr. Raynsford: This is a matter for local authorities rather than for the Government. It is not for me to make an estimate. I hope that local authorities will discuss this with their council tax payers and come to a sensible and appropriate conclusion.
There is already evidence that a number of authorities are making decisions showing their awareness of the need to be moderate in their demands. Liverpool city council, for example—a Liberal Democrat-controlled council—has indicated that it does not expect to increase its council
356
tax at all. I welcome that. I wish that a number of other Liberal Democrat councils that are talking about large increases would follow suit. A number of other authorities have indicated to us the likelihood of modest increases. The treasurers of the Special Interest Group of Municipal Authorities predict an average increase of some 4.5 per cent.
I put it to the House that given a settlement of 7.5 per cent. in increased grant, it should be possible for all authorities to budget for the coming year with moderate increases. I do not welcome the alarmist figures that have been put around by some commentators and some hon. Members, nor the behaviour of one or two local authorities which appear to be stoking up unreasonable expectations. I cite only the Mayor of London, whose proposed 34 per cent. increase in budget rightly aroused real concern among members of the Greater London Assembly, who have sought to scale down that figure. I welcome moves to achieve a more reasonable settlement in London.
Mr. Kevan Jones: I note what my right hon. Friend says. Durham county council is a very well run and moderate council, as my right hon. Friend the Prime Minister, who represents Sedgefield, also knows. Durham is facing a critical situation this year because of having one of the lowest settlements of the shire counties. Some £2.7 million has been taken away or lost because the education support grant received last year is not being provided this year, and the council faces imposing an increase in council tax of between 10 and 17 per cent.
Mr. Raynsford: I am aware of the pressures faced by Durham county council. My hon. Friend has spoken to me about this and I have responded by looking at a number of issues relating to Durham county. Under the settlement for Durham the overall increase of 5.6 per cent. is more than double the rate of inflation. Durham has also benefited from a number of initiatives, such as the one that I referred to earlier on bed blocking. That has secured an additional £1.8 million for Durham county.
I do not underestimate the pressures on social services. I acknowledged those when meeting my hon. Friend and in my earlier contributions to the House. I hope that when Durham county comes to fix its council tax for the coming year, it will have regard not just to the need to maintain its services but to economy and to what it is reasonable to expect council tax payers to contribute.
Mr. Christopher Chope: Will the Minister give way?
Mr. Raynsford:: I will give way for the last time. I really must make progress.
Mr. Chope: I am grateful to the right on. Gentleman for giving way. He is being uncharacteristically coy about giving a prediction for council tax increases in the coming year. Can he confirm that the council tax increase at standard spending, which is the increase if a council spends at standard spending next year and is doing so this year, will be more than twice the rate of inflation? Why is he so coy about mentioning that in public?
Mr. Raynsford: The hon. Gentleman, who has been a Minister, will know that there is no question of a standard

357
increase in council tax for an authority spending at standard spending. The reality of the system, as he will know, is that there are huge variations between actual patterns of spend and SSA. That is one of the reasons that we are conducting a review of SSA. For authorities that are receiving an increase in grant which averages 7.5 per cent, there is no reason why unreasonably large council tax demands should be made. We expect authorities to approach this in the sensible way that a number are already doing, and I have highlighted one or two examples. I hope that all authorities will be prudent, because the public do not expect unreasonable demands to be made in council tax.
To encourage this, we have made changes in the current year to what must be shown on council tax bills. Voters will see clearly which of their councils are responsible for any increase in council tax that they are required to pay. Bills will show clearly how much different tiers of authority are charging. They will also show how much in percentage terms each tier has increased its part of the council tax compared with the previous year. Any substantial increases will therefore show up clearly on bills. If some councils set substantial increases, their council tax payers and local electorate will have every reason to question their council's decision.
Although we have reserve capping powers, the Government do not operate a system of crude and universal pre-announced capping—unlike the previous Government. Decisions on council tax are primarily for local authorities to take after consulting their local electorate and tax payers. Given this very good grant settlement, councils will find it hard to justify any unreasonable increases.
The Government have taken the necessary steps to set up a proper framework for partnership between local government and central Government. We have listened to the points made to us in consultation and we have responded. The local government settlement that I have outlined continues the trend under the Government of steady and substantial investment in local government and in the services that it provides, and I commend the motion to the House.
7.40 pm
Mr. Malcolm Moss: We have heard the same record playing this year as in each of the past four years of the Labour Government, and it is is getting rather worn and thin. Every year, Ministers promise a generous settlement for local authorities and every year they say that there is no reason for high council tax rises; but every year council tax has risen by three times the rate of inflation—not just this year or last year, but in each year that the Labour Government have been in office.
In December, the Secretary of State claimed that there would be an increase in Government grant and business rate of 7.4 per cent. He said that there was no reason why we should see large increases in council tax next year.
Last year, the Government announced a 6.7 per cent. increase in revenue support. The then Minister for Local Government, the right hon. Member for North-West Durham (Ms Armstrong), pledged:
"I am confident that councils will be able to implement reasonable council tax increases, lower than last year's".—[Official Report, 27 November 2000; Vol. 357, c. 659.].
358
She used the same word that the Minister has used this year: "reasonable". Despite that, in 2001–02 the average council tax in England rose by 6.4 per cent. —three times the rate of inflation.
I noticed with interest that the Minister ducked the question put by the hon. Member for Bath (Mr. Foster) as to the right hon. Gentleman's predictions for council tax rises in the coming year. Let me give the right hon. Gentleman some help. It comes from one of his Labour colleagues—Mr. David Wilcox, the secretary of the county councils Labour group. He wrote to one of his colleagues:
"Coming local elections are causing some concern with Labour authorities that perhaps should be going for increases of around 10% but that consider they may have to cut the rise back in an election year.
So far the highest proposed rate rise that I have been notified of comes from a jointly controlled council and is at 12%, although it could come down below 10% at the end of the day."
Then comes the killer punchline:
"At this moment 9.9% feels like safe ground with 8.9% looking attractive."
That was a letter from the Minister's colleague.
Mr. Raynsford: The hon. Gentleman referred to a gramophone record at the start of his speech. Does he not think that we are hearing exactly the same record that he played yesterday in the House? Does he recall that when he quoted the same letter I told him that I regarded that figure of 9.9 per cent. as unreasonable? Does he acknowledge that that is the Government's position?
Mr. Moss: Making the same point twice does not undermine the fact that it is a good point. If the Minister thinks that the figure is unreasonable, perhaps he should take issue with some of the Labour-controlled county councils that seriously fear they will have to come up with council tax increases of below 10 per cent.
The Government seem genuinely perplexed that, despite their trumpeting of the above-inflation increase in grant that they have given every year, there have been even larger increases in council tax. Is that because councils have been inefficient or profligate? Not so, says the evidence. During the past four years, the majority of councils, of all political persuasions, have experienced great difficulty in maintaining a standstill on services, let alone funding real improvements to those services.
In the equivalent debate last year, complaints about the settlement came raining down from the Labour Benches on the then Minister. I do not see much difference in this evening's debate. The explanation for the large increases cannot lie with inflation, which has averaged about 2 per cent. over the relevant period. Nor do we believe that the overall total settlement figure is inadequate. At 7.4 per cent. it is, as the Minister said, well above inflation.
The answer to the conundrum lies in the double whammy imposed on local authorities by the Government and by the Minister's Department. On one hand, they have increased the regulations and burdens on councils, while on the other they have fiddled with the funding formula, put up taxes that directly affect local authorities' costs and altered the way that grant is distributed so that less money—not more—is going to front-line basic services.
Let us examine those extra costs and burdens, which have risen far faster than Government funding.
Mr. Clelland: I, too, take issue with the Minister on some of the points he made about the 7.3 per cent. average

359
increase, because local authorities such as Gateshead are receiving only 5 per cent. which will cause them difficulty. However, does the hon. Gentleman realise that during the first three years of the Labour Government the average increase in grant to Gateshead council was about 4.5 per cent? In the last three years of the Conservative Government, the increase was 0.7 per cent. In those circumstances, who does he recommend that the people of Gateshead vote for?
Mr. Moss: If the people of Gateshead are prepared to tolerate yearly council tax increases of three times the rate of inflation, I suggest that they may not be voting for the wrong party.
In relation to the extra costs and burdens, there is the real impact of the Government's stealth taxes. Advance corporation tax has increased the cost of providing pensions. The hidden iceberg of costs for local government pensions is estimated at £300 million each year.
Fuel tax rises have increased transport costs for councils, and the Government's insistence on bumping up landfill tax each year without a commensurate reduction in other taxes to compensate is causing councils a real problem. Local councils paid out £163 million in 1998–99, and by 2004 it is estimated that landfill tax will rise to £348 million a year.
Another obvious burden is that of best value. That has led to an excessively bureaucratic centralising regime and has proved itself not only incredibly complicated but—even worse—extremely expensive for councils to operate.
The Government would argue that they have recognised those increased costs, but the allocation of £40 million for central best value administration falls woefully short of the real costs to councils. The Local Government Association has complained that it costs an extra £175 million more than the allocated amount.
Criticism of best value does not come only from those on the Conservative Benches. In Wales, the National Assembly decided to abolish the regime. Labour Finance Minister, Edwina Hart, conceded that the system was "terribly bureaucratic". The Labour leader of the Welsh Local Government Association, Sir Harry Jones, stated that councils were spending more time on process than on actual service delivery.
The Government recognised that they have problems with best value. They could hardly have been unaware of the howls of protest coming from the councils, but their response—to hold a review—is pathetically inadequate. They should admit their error and scrap this absurd regime at the earliest opportunity. We would.
The list of new obligations does not end there. After the recent highly damaging floods, the costs to councils were not remotely covered by the emergency grants from the Government. Only this week, in the Civil Defence (Grant) Bill, the Government proposed restricting by 25 per cent. contingency and emergency planning expenditure in order to reduce their own liabilities. In the wake of 11 September, there are likely to be higher—not lower—costs for local government and the fire authorities.
360
On asylum funding, there is still a shortfall between the costs to councils and the Government's grant aid. Last year, the Association of London Government stated:
"Government grants made no provision for the education and social care costs of supporting asylum seekers in the year 2000–01. This is a problem because data lag means that authorities can wait up to two years before the asylum seeking child appears in the SSA formula for funding."
Additional costs are incurred when councils switch to the new cabinet system from the former committee system. For example, last year Cheshire county council said that the switch would cost it £660,000 a year.
Finally, on waste and recycling, we have the ridiculous situation whereby, from this January, fridges will be subject to the ozone depleting substances regulation, with very little extra grant being made available. The most ludicrous situation of all is that there is as yet no facility in this country that can do the necessary disposal. The Government must have known that that directive would be implemented this year. Why was there such woeful preparation and why is there such inadequate funding? The Government's offer of just £6 million is laughable. The LGA has estimated the total cost to local authorities to be some £60 million, so the legacy of the Government's mismanagement of the issue will be mountains of rusting fridges littering our landscape for years to come.
Perhaps the key area of budgetary pressure, for those councils tasked with the responsibility, is that of personal social services. There is real concern that the resources have not increased by any more than the forecast totals of 5.4 per cent. in the 2000 spending review.
Mr. Betts: The hon. Gentleman has just listed a catalogue of problems facing local government and the extra costs that he believes that local authorities have. Would he like to say by how much the grant to local authorities should be increased in excess of what the Government have recommended?
Mr. Moss: If the hon. Gentleman had been listening, he would have heard me say some moments ago that we have no argument with the total level of funding at a 7.4 per cent. increase, which is generous in relation to inflation. I am arguing that the Labour Government have burdened councils with all sorts of extra regulations and red tape and then not given them the money to deliver. That is the issue.
I return to the subject of personal social services. Why have the Government stayed with those outdated figures when all the evidence points to severe and increasing demand for children's services and care for the elderly? The Government know that local authorities are already spending more than £1 billion over the total SSA to try to meet those increasing demands. To ignore the facts, to ignore the crisis, is to condemn thousands of the most vulnerable people in our society to a life of misery.
"The present system is not working. Older people are suffering and will continue to suffer as a consequence. They deserve better."
Mr. Raynsford: The hon. Gentleman has just said, in response to an intervention by my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), that he has no quibble with the overall level of grant that we are proposing. How does he reconcile that with his latest comment—that he regards the social services grant increases as inadequate?
Mr. Moss: The Minister must be patient. I shall come to that later. There was last year, and has been promised

361
this year, £200 million from the health budget to help alleviate bed blocking. That is a source of money that a Conservative Government could certainly turn to, as the present Government have turned to it, so there is no magic in all that.
The words that I just used about social services were quoted from the report of an inquiry, chaired by the right hon. Member for Birmingham, Hodge Hill (Mr. Davis). He recently chaired an independent commission of inquiry into social services in Birmingham. The report also concludes that:
"Birmingham's problems are not unique. There is national underfunding of social services—especially the services for older people. However it is inescapable that it"—
the council—
"either finds the money or reduces the service it provides. Significant extra funding must be made available for Social Services as a whole … the identification of funding on a suitable scale is largely the responsibility of Central Government."
Mr. Chope: Does my hon. Friend agree that what matters is not just the overall level of funding for social services but the way in which it is distributed? Will he express some sympathy for the people of Dorset, where there are 88,000 citizens aged over 65 and the amount of funding for social services per person over 65 is £183 less than the national average? Does he agree that that is totally unacceptable?
Mr. Moss: I agree with my hon. Friend, who makes an important point.
The crisis in social services is of the Government's own making. Where is the sense in formulating ever more regulations for the nursing and residential home sector when private homes are closing down at a rate of knots? There are now some 47,000 fewer care beds than there were in 1997. That is a scandalous record, brought about by an incompetent Government. There appears to be little or no communication between the key Departments that have an input into this problem. At Prime Minister's questions, the PM himself seems totally oblivious to the time bomb that is ticking away under his nose.
Mr. Julian Brazier: My hon. Friend has just mentioned Prime Minister's questions and the Prime Minister's complacent answer when attention was drawn to the crisis in the East Kent hospitals at the moment. Those problems are heavily driven by the loss of more than a quarter of our nursing home beds over the past three years.
Mr. Moss: My hon. Friend makes my point for me.
Those, then, are the key cost pressures for local government. Now let us take a look at the funding pressures.
In 1998, the Labour Government altered the methodology by which the revenue support grant was to be distributed. Those changes are still in place. They perpetuate the initial inequalities and unfairness and they penalise the better-managed councils.
Over the lifetime of the last Parliament, the shire counties lost an estimated £700 million in grant funding, while London lost £450 million. We are not arguing that
362
the shire counties have not received any grant increases; rather, we are arguing that they would have received more grant if the funding formula had not been changed.
In the current settlement, the Government have also perpetuated the flawed funding system of floors and ceilings in their grant allocation. What is the point of having an elaborate system of SSAs, dependent on the collection and appraisal of huge quantities of data, if that exercise is subsequently ignored because the Government do not like the outcomes?
Mr. Raynsford: If I give the hon. Gentleman the figures of the cumulative increase in standard spending assessment for London, metropolitan areas and shire areas in the course of the lifetime of Labour Governments and compare it with the Conservative Government, he might find those figures instructive. Over the past four years, there have been year-on-year increases of 4.4 per cent. for London, 4.3 per cent. for metropolitan areas and 4.6 per cent. for shire areas. The respective figures during the Conservative Government's period of office from 1994–95 to 1997–98 were 0.6 per cent., 1.3 per cent. and 1.8 per cent. respectively. All categories—shire, metropolitan and London—have done very much better under the Labour Governments.
Mr. Moss rose—
Mr. Deputy Speaker (Sir Michael Lord): Order. There have been several long interventions in the debate. A number of hon. Members are very anxious to speak and unless interventions are briefer, or perhaps non-existent for a while, a lot of hon. Members will be very disappointed.
Mr. Moss: A wink is as good as a nod, Mr. Deputy Speaker.
Mr. Moss: I shall now return to the floors and ceilings issue. What could be more illogical or perverse than to have poor councils coughing up some of their grant to help even poorer councils? Only the present Government could come up with the philosophy of robbing Paul to pay Paul.
The unfairness of that redistribution is felt particularly by those councils in the south-east planning region that enjoy the area cost adjustment. Many of these have seen their grant reduced even though the SSA calculations were based on real need. If that is the Government's answer to the reform of the area cost adjustment, they should come clean and tell us. Reform, I would remind the House, was promised by the Prime Minister in Cambridge in the run-up to the 1997 general election. Five years later, we are still waiting—yet another example of a broken promise.
One of the most detrimental changes to local government that the Labour Government have made is that of the switch since 1997–98 from block grants to specific grants. As well as treating local councils as nothing more than mere agents of central Government, that practice actually takes money away from basic front-line services.

363
Non-police specific grants have increased from 4 per cent. in 1997–98 to over 14 per cent. in the current settlement. Not only are these specific grants unobtainable by certain councils but they frequently involve a complex bidding and allocation mechanism. That adds to the bureaucracy, and costs councils time and money.
The LGA is concerned about that increase in the proportion of resources devoted to ring-fenced funding, particularly for education and social services. Is not the planned increase in specific grants this year perverse in view of the Government's conclusion in their recent White Paper that the growth of ring fencing is "excessive" and that
"it threatens to erode local decision-making responsibility, limit authorities's ability to tackle environmental priorities and to increase council tax levels."
In education, for example, specific grants have increased so much in the current settlement—up from £2.6 billion to £3.7 million—that out of the 8.8 per cent. overall increase for education, only 5.7 per cent. has actually gone to the education SSA increase. Given the proposed increases in teachers' pay, there is precious little new money available in those figures for service improvements above inflation. The teachers' pay increase will cost local authorities a further £240 million above the 2.5 per cent. provision for pay increases in the 2000 spending review. Increases in superannuation contributions will cost an extra £140 million.
Finally on education, there is the fiddle of the funding transfer from post-16 education to the Learning and Skills Council. Many councils and the LGA believe that too much has been transferred out of the revenue support grant total because of an overestimate in the growth of sixth form numbers. The £16.8 million post-16 budget support grant does not compensate in full for that loss.
So what is the outcome of this misdirected and incompetent double whammy of extra burdens on the one hand and fiddled funding on the other? Every year, council tax has soared by three times the rate of inflation, despite the Prime Minister's promise before the 1997 election that he had no plans to increase tax at all. Over the past four years, council tax has risen by £212 on band D homes—equivalent to a 30.7 per cent. increase.
At least this year the Government have come clean and planned for that increase three times above the rate of inflation. In the small print of the November 2000 pre-Budget report, council tax receipts across Britain are budgeted to rise from £14.8 billion to £15.8 billion—a 6.7 per cent. increase. Of course, as we know, inflation is predicted at 2 per cent. in that report. Actual increases are likely to be higher in the shire counties, as I have already mentioned in referring to the letter from the secretary of the Labour group.
That hike in council tax—it is likely to break the £1,000 barrier significantly for band D homes for the first time—is one of Labour's more effective and less obvious stealth taxes, but it hits the most vulnerable in society disproportionately. In fact, it is a form of regressive taxation—something the Labour party in opposition said it would never countenance.
Let us consider pensioners. Between 1997 and 2001, a couple's basic state pension rose by £837. At the same time, band D council tax went up by £212. Therefore, 25 per cent. of the couple's pension increase was grabbed back in council tax, and the figure for single pensioners is 30 per cent.
364
Despite all those pressures, Conservative councils still have the lowest council taxes in the country. Currently, the average household pays about £88 a year more on a band D council tax bill in a Labour council and £63 more in a Liberal Democrat council, compared with Conservative-run councils. Labour and Liberal Democrat-controlled councils have the highest council taxes in England, and 13 of the councils with the 20 highest council taxes in England are Labour controlled—none is Conservative.
The message is clear to all those who have a vote in the forthcoming local elections: vote Conservative for the lowest council tax. People should not blame their local council for council tax increases at three times the rate of inflation—the blame lies with the Labour Government and this team of Ministers. The sad thing is that all that is avoidable. The problems are all of the Government's own making; they are caused by their spin philosophy, which promises all and delivers nothing; their craving for central control; their fiddling of the funding formula; their switch to specific grants that they can control; their imposition of additional burdens, costs and red tape; and their total failure to address the inherent and severe problems in social services.
Mr. Deputy Speaker (Sir Alan Haselhurst): I remind hon. Members that the 12-minute limit on Back-Bench speeches starts now.
8.4 pm
Mr. Jim Marshall: Thank you, Mr. Deputy Speaker. I am aware of the 12-minute limit; it is one of the reasons why, although I am sorely tempted to debate with the hon. Member for North-East Cambridgeshire (Mr. Moss), I shall refrain from doing so, except to express agreement with a specific part of his speech, but not the arguments that surround it. The hon. Gentleman mentioned the problem of social services, and as the Minister recognises, there is a real problem with them not only in delivery, but in financing them locally. Although the Government are aware of that problem, I am sure that they realise that a solution must be found before the implementation of the next financial settlement in 2003. Unless that problem is addressed seriously, it will not only persist at its present level, but escalate.
I wish to make a parochial speech on the problems that are specific to Leicester, as well as to one or two other local authorities in England. Before I do so, I congratulate the Government—a rare phenomenon for me—on the real-terms increase in this year's local government financial settlement, in which real-terms expenditure is increased by 7.5 per cent. and the SSA by 5.5 per cent. Last year's increase, coupled with this year's increase, represents a real advance in local government resources.
I also welcome the Minister's comments on the floors and ceilings scheme. I do not know what outsiders makes of that phrase, but I presume that at least hon. Members know what it means. The scheme will ensure that no authority with educational services will receive less than a 4 per cent. increase in Government grant compared with 2001–02. Again, I welcome that on the national level, but the Minister will be aware that, on these occasions, hon. Members always have local bleats, and I now wish to turn them.
Although the grant increase nationally is very good, it will not prevent local authorities from continuing to face difficulties. The Minister will know, even though he is

365
looking at his notes, that the increase in SSA that Leicester has received is lower again than the national average. I know the reason for that, as well as the Minister does. There is a falling population, which therefore gives us a smaller proportion of the national pot, but we do not necessarily accept the reasoning behind that argument. As the Minister will also know, even though a population may be falling, it does not remove the difficulties. In some cases, the difficulties can be enhanced by the problems arising from a falling population. I hope that that point will be addressed in the overall review of the formula for 2003–04.
Brian White: I totally agree with my hon. Friend about falling populations, but does he accept that equal problems need to be addressed in constituencies, such as mine, that have a rapidly rising population?
Mr. Marshall: It was implicit in what I said that I recognise that there are problems on both sides. I am concerned that the way that the formula works at the moment seems to neglect the problems arising from falling populations, while recognising the problems of increasing populations. Clearly, both types of local authority have problems, but they are necessarily different kinds of problem. I hope that both will be recognised in the new formula that will come into force in 2003–04.
However, the Minister will be aware that Leicester city council has approached the Department for Transport, Local Government and the Regions about the specific problems that have faced Leicester in the past 18 months, which will continue into 2002–03. We will require additional funding to finance the burden faced by Leicester's education and social services departments in dealing with a large influx of European Union nationals who came from the Netherlands but who were originally of Somali origin.
As I believe my right hon. Friend the Minister is aware, in 2001 approximately 300 to 400 Dutch Somali families moved to Leicester from the Netherlands. I emphasise that they came as EU nationals and not as asylum seekers, but Leicester is inevitably incurring significant additional expenditure to support those families. The social services department must provide the money to cover their daily living costs until those European citizens acquire habitual residence in the United Kingdom. Other support services also have to be provided. The social services department estimates that an additional £300,000 is required to finance those services in this financial year and that a further £400,000 will be required in the next financial year.
As my right hon. Friend will also recognise, the impact on the educational service is even more acute. Some 900 Dutch Somali children of school age have arrived in Leicester over the past 18 months, with 488 of them—54 per cent. of the total—arriving since September 2001. These arrivals have resulted in an increased requirement in the budgets delegated to schools. On average, the sums are £1,400 per primary pupil and £1,900 per secondary pupil but, in most cases, there has been no matching increase in the standard spending assessment.
Other educational costs, such as the need to provide additional language support and additional support for admission procedures, will also have to be incurred. It is
366
estimated that the education department in Leicester will need to spend more than £500,000, rising to more than £2 million next year, to support those children.
However, as the hon. Member for North-East Cambridgeshire pointed out in relation to asylum seekers, the SSA calculation does not recognise most of these pupils for financial assistance. That is because the calculation for primary pupils is based on their number at the beginning of the previous year's spring term while that for secondary pupils is based on the number the previous September. Therefore, all the new primary pupils who have arrived since January 2001 and all the secondary pupils who have arrived since September 2001 have not been included in the SSA calculations.
I hope that, even at this late stage, my right hon. Friend will recognise the problem and that he will be prepared to make a financial adjustment. I realise that it is too late to change the formula and too late to include those children officially in this year's settlement, but I hope that he and the Government will consider the problem, perhaps with a view to providing the type of specific grant that is available to local authorities that are faced with a sudden increase in the number of Army personnel with children in their area. Additional finance can be found in such cases.
Leicester has an enviable reputation as a multicultural city. I should hate to see the difficulties that I have described made any worse because of a lack of financial resources. On behalf of my hon. Friend the Member for Leicester, East (Mr. Vaz) and the Secretary of State for Trade and Industry, my right hon. Friend the Member for Leicester, West (Ms Hewitt), and myself, I urge the Government to consider the problem seriously and to come up with a solution that will provide further financial assistance to the city council in Leicester.
8.14 pm
Mr. Adrian Sanders: Given the interest that there was in the earlier debate on police grants and given the number of Members present for this debate, I wonder why we discuss both issues on the same day. More time was made available for the police debate than for the local government debate even though local government is responsible for a wide range of services. Perhaps the Minister and the usual channels might like to consider that point.
"The central message from today's debate is that, in the coming year, council tax payers will end up paying more and getting less. As happened last year, there may be a few parts of the country where the council tax does not rise or where services to local people are not reduced, but in most places the council tax will go up and services will come down; local people will have to pay more, and will get less."—[Official Report, 31 January 1996; Vol. 270. c. 1028.]
Those are not my words or those of anyone on the Opposition Benches, but those of the right hon. Member for Holborn and St. Pancras (Mr. Dobson) in the debate on the final local government settlement of the previous Conservative Government.
A year later the right hon. Gentleman said:
"The local authority associations and individual local authorities accept that, while the Government are in power, all that they can expect is fine tuning of the system. The more I look at the system, the more I believe that it needs to be changed root and branch because it is a racket."

367
It is a racket, and the racket is the standard spending assessment that we have had to live with since 1990–01 when it was introduced He also said:
"The undertaking that I give is that we shall have a fair system of allocation. The present one is manifestly not fair."—[Official Report, 3 February 1997; Vol. 289, c. 694–95.]
We are still stuck with that present, manifestly unfair racket of a system.
The authorities that have been most disadvantaged by that system suffer from it year on year. Although this year's increase is, indeed, the highest increase that we have ever seen in local government, it does not make up for those lost years for those disadvantaged authorities. When the Minister comes to the Dispatch Box to say, "It is a 7.4 per cent. increase. We do not expect any unreasonable council tax rises," that is only half the truth. Not every authority receives 7.4 per cent. Some authorities receive much more; others receive much less. Even if those that receive much less get more than the inflation rate that the Minister mentioned, it is the retail price inflation rate. It is not the pay inflation rate or the inflation rate that local authorities have to deal with in their real world.
There are some good things in the proposals. I have mentioned the size of the settlement—that is good. Although the Minister did not mention it in his speech, the fact that the council tax benefit subsidy is to be abolished is another good thing.
However, there are some very bad things in the proposals and among them are the constant top slicing and the fact that councils are made to bid for funds. In 1997–98, 4 per cent. of funds were in that category, but the figure is nearly 15 per cent. today. It is a terribly wasteful system for councils, particularly those that go through the effort of applying for funds and do not succeed. It wastes officers' time and council tax payers' money.
The overall increase is not distributed across the board to all local authorities. The main losers from that are county and unitary social service providers. They are hit in two ways. The first is because the formula does not recognise the amount of need that there is in such areas. A number of sources say that local needs are not met by the formula. The second is because the funds are not fairly distributed. Two sectors of social services—children's social services and elderly care—face real problems. Our hospitals are filling up with people who need social services care, not hospital treatment. That fact must be tackled and, although extra money has been made available to help the social services that are under pressure, it is peanuts compared with the scale of the problem facing hospitals and social services departments in many parts of the country.
Mr. John Hayes: Untypically for a member of his party, the hon. Gentleman is making a persuasive argument. However, will he also point out that the local authorities that suffer from the problems that he has described are also often burdened with additional regulations and certainly with additional demands and statutory requirements? On top of the problems that he has described with the formula funding, that creates real tensions for personal social
368
services throughout the country, which, he may be interested to know, were £50 million worse off in the first year of this Government.
Mr. Sanders: That is a helpful, and untypically friendly, contribution from a Conservative Member, and I thank the hon. Gentleman for it. I was going to mention regulation.
The numbers and costs involved in children's social services in particular are beyond local authority control. The Government have to accept that. If a social worker says that a child has to go into care, that cannot be covered by a target. In smaller authorities, especially some of the small unitary authorities, it takes only a handful, or even less, of children going into full-time residential care for them to have a massive social services underspend. Something needs to be done to address that problem within smaller authorities.
Correspondence between south-west social services local authorities and the Government has highlighted many of the problems that authorities face, in particular the huge discrepancy between children's SSA and actual spend; the emerging and rapidly increasing disparity between SSA and spend on younger adults, especially those with learning disabilities; the cross-funding of those essential services by holding down spending on older people's services, with consequent destabilisation of the residential and nursing care markets; and the inevitable negative consequences on health care strategies to provide more care within the community. My constituency has a well above average proportion of residential care homes, so I am well aware of their problems. They are closing almost by the week because the fees do not enable them to carry on trading.
Those problems have been pointed out by the corporate director of social services for Somerset, writing on behalf of another 14 social services authorities, including Torbay and Bath and North-East Somerset, which is represented by my hon. Friend the Member for Bath (Mr. Foster). The corporate director goes on to say:
"These are national trends. This demonstrates clearly that there is a chronic funding problem."
Hon. Members have reflected that chronic funding problem, but it will get worse. There is a demographic time bomb because older people are living longer. The Government might say that the answer is to cull old people, but I do not think that they would—no party could come to power on that basis. The problem is, however, that they have to do something about the problem. We welcome the fact that older people are living longer, but we have to recognise that that takes more money from the public purse.
Mr. Burstow: My hon. Friend makes an important point about the dilemma that local authorities face when it comes to funding services for older people. Does he find it alarming that councils, because of their financial difficulties, face the prospect of having to allow someone in a care home to die before they can fund a new place?
Mr. Sanders: That is a tragedy and all too common. Indeed, it has even cropped up in my area.
In addition to the demographic time bomb, there is a pensions time bomb. Local authority pensions, like hon. Members' pensions, are an end-of-life deal in which

369
people receive a proportion of final salary. That has been underfunded over the years by central Government. They have not recognised the additional costs that have to be met for pensions, which come out of local authority budgets.
The Government impose costs themselves. Best value has been mentioned. The inspection regulation regime is necessary to provide a common standard of service, but if a council is not recompensed for the full costs of implementing that administrative system, the money has to come out of cuts or from increases in council tax. Again, that is where the settlement does not meet actual need.
There is also the whole agenda of corporate government to consider. This year's increased settlement will be swallowed up chasing the extra costs that Government impose. It does nothing to help a council that is disadvantaged by the grant formula to catch up. Funding gaps will have to be filled by increased council tax, cuts in services, asset sales, privatisation, stock transfers, increased charges or borrowing. Councils can use a raft of measures, but most of them are negative. They are not wanted and should be unnecessary.
Most councils will increase their charges—my hon. Friend the Member for Bath has studied those at some length—way above the rate of inflation. They will bear no relationship to the retail prices index. Council tax is part of the problem, together with the formula. It hits the poorest hardest, in particular people on fixed low incomes, who tend to pensioners. Let us change the formula and have one that is based on local needs. Let us scrap the council tax altogether and have a taxation system that is based on the ability to pay—a local income tax.
The Minister is on record as saying that he wants to improve service delivery, and service delivery is the key. The settlement leaves a gaping hole in some local authority budgets. There are spending shortfalls almost across the board. We have highlighted social services, but no doubt it would be as easy to talk about the gross underfunding of transport and highways. The Minister tells local government to stand and deliver while he robs the highways budget. The Secretary of State has admitted that the funding formula is unfair. The Labour party promised five years ago that the problem would be fixed. Sadly, we are still waiting for treatment.
I conclude with a final quote from the right hon. Member for Holborn and St. Pancras. He said:
"The incoming Labour Government will be based on the supposition that democracy depends on the people who take the decisions carrying the can and the people who carry the can taking the decisions. So we shall be honest in our relations with local councils and we shall take responsibility for our share of those decisions. We shall not roam around the country blaming local councillors for decisions that we have taken in the House of Commons."—[Official Report, 3 February 1997; Vol. 289, c. 701.]
It would be nice if the Minister endorsed those comments. My question for him is the question that every council tax payer will ask: who is to blame for council tax rises and the cuts to services—Government or local councils?
8.28 pm
Mr. Chris Mole: I am pleased to have the opportunity to speak in the debate. I am not a great lover of tradition, which perhaps makes me ill equipped for
370
service in the House, but I suppose that that makes me ready to join the ranks of the modernisers. I gather that the tradition for maiden speeches is to mention in equal parts the subject at hand, the constituency and my predecessor. Fortuitously for me, there are threads that link all of those.
This is the gateway to the only speech in one's parliamentary career in which hon. Members do not seek to make interventions. I am not afraid to take advantage of that tradition. I speak in this debate on the local government finance report as the leader, until recently, of one of two local authorities serving the needs of Ipswich; my predecessor, the late Jamie Cann was the leader of the other before he came to the House. Ipswich has a tradition of being well served by its local authorities; Ipswich borough council has won multiple charter marks and this year Suffolk county council was acknowledged by the Local Government Chronicle as council of the year.
People in my constituency recognise the contribution that their councils make to their quality of life, economic development and as community leaders. Jamie Cann, as leader of Ipswich borough council, made such a contribution throughout the 1980s. At his memorial service, the people of Ipswich feted him as a man of the people, a plain speaker and a hard-working constituency MP, and for his many achievements as leader of the council. Despite the growing restraints on council spending. Jamie found the means to develop leisure facilities for hard-working families and began much of the regeneration that has made our town a more thriving and attractive place; he still found time to save the Regent theatre and the Ipswich Witches speedway club. He will be sadly missed.
The first Labour MP for Ipswich, R. F. Jackson, was also the first Labour councillor and council leader in our town; I was the first Labour councillor to lead our county council. I am sure that R. F. Jackson would have appreciated the way in which Jamie's efforts added to the development of Ipswich, and would understand that councils must have resources to make partnerships work and deliver progress.
Perusing the maiden speeches of my predecessors, I could not detect any agreement on whether the Danes or Vikings first saw the benefit of Ipswich as a natural haven. Recent archaeology has shown that the Stoke Bridge area was an early settlement of the Angles; some local historians therefore see Gippeswic as the birthplace of modern English. It is certain, however, that following the granting of a royal charter by King John more than 800 years ago, the town developed strongly around its port. Such was the commercial prominence of the town that Edward III and the Black Prince gathered 500 ships off Ipswich. I wonder what they would make of the more than 500 boats that bob in Ipswich wet dock, another product of regeneration, with a new marina, new housing and new businesses, and more than £20 million of investment from sources as diverse as Associated British Ports and the East of England development agency's single regeneration budget.
Ipswich has moved on. My predecessors spoke of manufacturing, which is now much reduced, but the arrival of BT, my own former employer in the late 1960s and early 1970s at what is now Adastral park, has had a lasting effect on the town, which has become a primary location for the development of knowledge-based e-business. A manifestation of the growth of that sector is

371
the IP-City partnership, which is successfully developing one node of the Ipswich to Cambridge hi-tech corridor. That partnership, along with the Suffolk development agency, in which local councils are major players, is driving the regional economy toward the future. If I can be permitted one glance over my shoulder, it would be to recognise that that sector needs the development of skills that would be better provided if we had a university in the town. Indeed, Members can see in the House of Commons Library a depiction of Cardinal Wolsey on his way to Westminster; he was the last civic leader to try to develop higher education facilities in Ipswich. Unfortunately, the only remaining manifestation is Wolsey's gate, which is largely held up by three reinforced steel joists.
Ipswich is blessed with local councils and councillors who are committed to their role as community leaders and to working in partnership with the private sector and other public agencies to help the town develop in a sustainable way and with due regard for the environment and social inclusion. However, I should like Ministers to note that in promoting partnership working all partners must be able to bring something to the table. Councils such as Ipswich borough and Suffolk county, which are not high spenders, want to provide community leadership in partnership, but they must be able to negotiate with resources to make those partnerships work; that is not getting significantly easier for them.
I welcome the local government finance report as something of a curate's egg. The settlement again allows for a real-terms increase in Government support; as someone who put council budgets together between 1993 and 1997, I can assure the House that it is a welcome turnaround from those dark days. We need to be realistic about the implications for council tax; all parties in the Local Government Association accept that more local spending needs to be financed locally, which has led to significant increases in council taxation over the past ten years. Not to accept that reality would be to prevent our councils from tackling challenges such as the placement of difficult young children—much of the problem stems from the Children Act 1989, which was passed under the previous Government—and the community care of the elderly, which has only recently attracted specific, but as yet not continuing or recurring, Government support.
I welcome unreservedly the increase in education standard spending, as Government estimates finally catch up with the level of spending that Suffolk county council has been making for many years. Our schools welcome the certainty that has kept them part of the LEA family—an LEA that was recently assessed by Ofsted as one of the top six in the country.
That leaves me only to introduce the fourth element of an Ipswich Member's maiden speech, for Hansard shows that it is traditional to congratulate Ipswich Town football club on its recent success. I hope that the club is in the middle of another one—at 8 o'clock, I understand, the score was one-nil. I have no difficulty in congratulating the club, which has played large in my life recently. It played Milan away on the evening of my selection as a candidate, and at home on the night of the by-election, in what turned out to be a notable double victory.
I look forward to future debate in the Chamber. In the present debate, I encourage my hon. Friends to support the Government.
8.35pm
Mr. David Curry: It is a pleasure to follow the maiden speech of the hon. Member for Ipswich (Mr. Mole). He said that he was not a great fan of tradition. A few moments later, I noticed that the Labour Deputy Chief Whip arrived in the Chamber, so clearly the hon. Gentleman has already made his mark in that regard. We should not worry—he will become a fan of tradition after he has been here for a little while. After all, his affection for Ipswich Town football club denotes a gentleman with considerable faith.
We all subscribe to the hon. Gentleman's gracious remarks about his predecessor, whom we shall miss, as the people of Ipswich already miss him, but they will soon learn that their new Member of Parliament has brought to this place a great deal of experience of local affairs. He spoke of their history with affection, a little teasing and a great deal of understanding. I am sure that he will soon feel at home with us, and we will feel at home with him.
When I was a Minister, with responsibility for local government, the hon. Gentleman came to see me, I suspect, to ask for more money, but there again, almost everybody did. The only point that I make about Ipswich is that in the return match against Dynamo Kiev, the club lost handsomely. I would not wish to draw any analogies about the next election result on that basis. Being a supporter of Bolton Wanderers for reasons that are too complex to explain, I have some doubts about wishing to see Ipswich rise above the bottom three in the table, because I know which team would replace it.
I hope that I am not regarded as eccentric for wanting to make a speech, rather than an intervention, in the debate. I note that total standard spending for local government is about £60 billion in England. That is a quarter of all public expenditure. I cannot help but note that when the Chancellor delivers a Budget, we spend five days debating it, and when we are speaking about the distribution of 25 per cent. of total public expenditure, we spend three hours debating it. Perhaps we should reflect on that allocation of time.
I accept that the settlement is relatively generous. I am grateful for the abolition of the council tax benefits subsidy limitation scheme—a wonderful mouthful. I served on the Committee that passed the relevant order, and I said at the time what a silly idea it was. It was a means of making the almost-poor subsidise the poor. I am glad that the Government have at last come round to my way of thinking and got rid of the wretched thing, which only pushed up council taxes at the expense of those least able to pay, in those local authorities with the largest number of houses in the lower bands, multiplying the effect of hitting the people whom, in theory, the Government were trying to help.
As the hon. Member for Torbay (Mr. Sanders) said, the increases in RSG and SSA necessarily have implications for the level of council tax. In a sense, they pull the council tax up with them. If a council raises a third of its money locally, if the Government say that spending should rise by, say, 7 per cent. and insist on the passporting of all the SSA through to the services, and if the Government further provide only two thirds of that increase, it follows as night follows day that the other third must come from the council tax in roughly the same sort of volume as the increases that the Government have

373
made. In North Yorkshire, that pull-through effect automatically means that a council tax increase of some 4.5 per cent. is necessary to make the settlement whole.
Although the settlement may be relatively generous, serious problems exist. Like other hon. Members, I shall talk about social services. Three years ago in North Yorkshire, we "lost" £3 million because of a change in the method of calculating the formula. Social services are historically underfunded; they do not have the same lobby as education. All head teachers suddenly became wonderfully acquainted with the area cost adjustment, even those who taught in schools that were nearer the Scottish border than the south-east region.
Social services funding is fragmented by its nature. The people whom it helps are not perhaps the most eloquent in arguing their case. Social services are therefore the Cinderella of local government. In North Yorkshire, we have had to overspend more than £3 million to keep social services afloat. That has almost exhausted the reserves. We must now rebuild the budget, stabilise it and reconstitute the reserves.
The reserves are used to deal with not only the demand on social services but natural disasters such as foot and mouth disease. The Selby rail crash happened in my constituency, and the coroner's costs fell on the local authority. Flooding also occurred there. Reconstituting the social services budget and covering the emergency costs are worth another 4.5 per cent. or more.
A curious quirk of the Bellwin formula, which I am sure that the Minister recognises, means that the amount of money that the Government allocate to alleviate emergencies depends on the number of teachers that the local authority employs and their grades. It kicks in after 0.2 per cent. of the budget, which is largely determined by the teachers' pay bill. [Interruption.] I await the Minister's wonderful new scheme. I remember his predecessors' words about finding a way through the area cost adjustment. They knew that the north-west passage was somewhere in the ice floes. Boat after boat got stuck in the ice because the north-west passage did not exist. The Minister will find it difficult to negotiate his way when the wonderful sons or daughters of SSA come into existence.
Mr. Andrew Stunell: Will the right hon. Gentleman give way?
Mr. Curry: I am afraid not because I am time limited.
The build-up of pressure on social services is remorseless, and demography partly accounts for that. However, the increase in demand is most acute in children's services; it is not surprising that local authorities decide to play it safe after so many high profile cases of social services failures. The implications are enormous. The Government know that the funding is inadequate, that the inadequacy will continue and that that invites a crisis.
We all know that local authorities currently spend £1 billion above their SSA on social services. The Minister is an intelligent man; he knows that that constitutes a crisis. I am sure that he would have loved to use some of the Department's transport underspending for social services, but the Treasury would not allow him to make the transfer, and he simply got stuffed.
374
Our case in North Yorkshire is eloquent. We can foresee the pressures. Elderly people whose care was previously funded directly by the Department of Social Security, now the Department for Work and Pensions, under the so-called preserved rights will be funded by the local authority. There are approximately 1,000 cases in North Yorkshire. Let us consider the fees. The weekly fee for ordinary residential care is £229 under preserved rights, but North Yorkshire pays £275; the fee for highly dependent people is £265 under preserved rights, but North Yorkshire pays £300; the nursing fee is £342 under preserved rights but £390 for North Yorkshire.
It is inevitable that care home owners will ask for the equalisation of those fees. North Yorkshire has not paid that money without heavy negotiations with the care homes. In my constituency, care homes gave notice to the local authority to terminate contracts for people, including those in their 90s, who had been in homes for years because the owners believed that they could not make a living, the local authority could not pay more and the victims tended to be the least able to understand the problem or to defend themselves. Those scattered incidents will become more common unless we consider the structure of the services.
The county has received short-term funding through the building capacity and partnership scheme, for which we are grateful. But the Minister talked about the need for certainty. He said that that was why he was reforming his system. Well, we are all sitting here agog, waiting for the next phase of the spending review before we know whether that funding will continue in the third year, so there is no continuity there.
The Government have also issued guidelines on charging. North Yorkshire's local authority has had an extensive range of charging, but some of that will have to be discontinued, as its estimated cost is more than £500,000 over six months. That is just for social services departments. In addition, the rules have changed on the educational standards fund, so that the Government's participation goes down.
Then we have the wonderful, complicated business of the transfer of funding from the local education authorities to the learning and skills councils, which makes the Schleswig-Holstein question look elementary. That has been done in a way that has left a number of local authorities, including Durham and North Yorkshire, having to subsidise education below the levels of their sixth forms because of the way the money has been passed back, after having been taken from the local authority. This means that the counties are going to have to subsidise education in that way.
In general, I welcome the settlement. I look forward—as one who has been there and got the tee-shirt—with eager anticipation to what comes after it. I exhort the Minister to take seriously his own promises about ending the ring fencing. and to urge his Secretary of State to take seriously what he said in Harrogate, which was that he was going to dismantle some of the apparatus—the great gendarmerie—that is supervising best value. That great inspectorate has taken over most of the democratic and accountable functions in large parts of our public services. I look forward to what is to come. As the clown said to Cleopatra:
"I wish you joy of the worm."
8.46 pm
Mr. David Kidney: Having listened to my hon. Friend the new Member for Ipswich (Mr. Mole), I am convinced that he is going to be a formidable debater in our proceedings. I was pleased to hear his praise for his predecessor, a fine man who is sadly missed in this place. I encourage my hon. Friend to retain his zest for modernisation, speaking as a member of the Modernisation Committee with a full agenda for modernisation in this Parliament.
Local government is big business. In this financial year, councils in England are spending more than £61 billion on delivering daily the broad range of services with which we are so familiar. The Government send those councils three quarters of that spending power: half in the form of revenue support grant and a quarter in non-domestic rates. So only a quarter of the spending by English councils comes from the councils' own resources—council tax, fees and charges.
Last December's White Paper says that this imbalance of income is less important to address than what the White Paper calls an imbalance of control. Most directly, this phrase refers to local education authorities passing Government grant through to individual schools. My view is that both are vitally important and that it is time to look at more radical ways of giving councils more control over their income. This is a complex issue, but I would like to see the time come when councils collect a range of taxes that are payable locally and spent locally.
How the Government share out their revenue support grant is of intense interest to all hon. Members and their constituents. The present formula, dating back to 1991, is widely discredited. It comprises an obscure set of values grafted on to outdated standard spending assessments, and causes great disparities in funding between councils. These are disparities that this Labour Government say that they cannot justify.
The case for reform of the system was definitively set out in the Government's Green Paper on local government finance, published in September 2000. In general, the Government hold out the prospect of a fairer system with simplified formulas, floors and ceilings, safety valves and a limit on the use by Departments of ring-fenced grant.
For education in particular, the White Paper published in December promises us a standard pupil entitlement that can be tracked through the system from the Government settlement to the individual school budget. The only enhancements to Government grant for education would be for deprivation and for high costs of recruitment and retention. I would strongly welcome a system such as that for distributing Government grant to councils. It is my profound regret that we do not have such a system yet.
Mr. Mark Todd: Does my hon. Friend share my impatience with the slow progress of change? Many of us who represent constituencies that have been adversely affected by the current system have lobbied assiduously for change for the past four or five years. Does my hon. Friend agree that the outcome of the current review is so impatiently awaited that it could be described as a "last chance saloon"?
Mr. Kidney: We have been waiting a long time for change. I am probably more forgiving of the Government's conduct than some hon. Members, because
376
I have followed the subject closely and I know the huge scale of the challenge and the sincere commitment of the Government. My right hon. Friend the Minister has been pressed hard tonight to confirm that the new system will begin from next year's local government settlement, and he has said that it will. May I say to my right hon. Friend that, in working out the details of the new system, I hope that the Government will be open with us. Hon. Members have a keen interest in what has been developed, and rightly so.
It would not be correct to say that the Government made no changes to the present system after the 1997 election. In a written answer to me in 2000, the then Under-Secretary of State at the Department of the Environment, Transport and the Regions, my hon. Friend the Member for Stretford and Urmston (Beverley Hughes), informed me that there were 15 changes in the method of determining SSAs for the 1998–99 local government settlement and 20 changes for the 1999–2000 settlement. One of those changes, in respect of children's services within social services, has benefited Staffordshire county council by about £1 million a year.
However, it is in education funding that the greatest dissatisfaction is expressed. That is because of the vastness of the disparities of funding and the importance of the service. Year after year in the 1990s, in the league table of education funding for shire counties, Staffordshire was stuck in last-but-one position. Parents, school governors and teachers would compare our lowly position with the high position every year of Hertfordshire, and would ask why their children's education was worth less than that of children in Hertfordshire.
Many changes have been made since 1997. The Labour Government have increased overall spending on education. The rising tide of funding for capital as well as revenue spending has benefited Staffordshire. For example, in 1997–98 Staffordshire's education SSA was £279.1 million; by 2000–01 it was £336.4 million. In 1997–98, Government grants were £12.9 million; by 2000–01 they were £21.5 million. In 1997–98, capital spending was £7.4 million; by 2000–01,it £34.2 million.
Frustratingly, the disparity with our friends in Hertfordshire has not closed; it has not even stayed the same, but has continued to grow.
Mr. Mark Prisk: As a Member representing a Hertfordshire constituency, may I ask the hon. Gentleman to recognise the simple fact that because of higher housing and salary costs, Hertfordshire's local education authority has higher costs?
Hon. Members: Rubbish.
Mr. Kidney: As the hon. Gentleman will have gathered from many sedentary comments, there is not much sympathy for that argument. If the new system is developed according to the Government's intentions, it will include a factor for recruitment and retention costs, which are higher in some parts of the country than in others.
David Taylor: My hon. Friend rightly referred to Staffordshire's ever present bottom-but-one place in the league table for primary and secondary school SSA. I regret to say that Leicestershire

377
has had an ever present place in the bottom slot. Does he acknowledge that the problems that he described in Staffordshire are even worse in Leicestershire?
Mr. Kidney: There is some variation each year, although Staffordshire and Leicestershire are among those counties that often appear at the bottom of the pile, as my hon. Friend says.
Two years ago, the 40 worst-funded local authorities decided to band together to draw attention to the injustice of the disparities and to the discontentment across the country, and to campaign for a fairer settlement. Whether metropolitan or shire, unitary or non-unitary, and whatever their shade of political control, the authorities formed a fair funding forum. They called themselves F40 for short.
Inside Parliament, I have been willing to make contact with hon. Members from both sides of the House who have constituencies within the boundaries of F40 authorities. Together, those hon. Members and authorities have mobilised a strong force for change. That was vividly shown by the 14,402 representations that the Government received from F40 campaigners in support of the case for change set out in the local government finance Green Paper.
I believe that the F40 campaign has been the stimulus for changes that have already taken place. There has been the Green Paper proposal for a new pupil entitlement, the introduction of floors and ceilings into last year's and now this year's settlement, and the introduction of flat rate payments to all schools.
I pay tribute to all those who have helped to organise the F40 campaign, and to those who have supported it. I also pay tribute to Ministers who have given us a fair hearing, and have acted when convinced of the justice of our cause. Things are changing. I described Staffordshire's perennial position next to bottom of the funding league table for shire counties. I see from a written answer on 15 January that we are now seventh from the bottom.
Tomorrow I face an audience of 400 angry parents, governors and teachers in Stafford. They will tell me that all this is too little, too late. When I say to them that a fair, fully funded new system will be in place for next year's local government settlement, I sincerely hope that the Government do not subsequently let me down. More importantly, I hope that they do not let down those parents, governors and teachers who have waited so long.
8.56 pm
Sir Paul Beresford: The previous two speeches—my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) is about to skip out as fast as he can—brought back memories. My right hon. Friend and I looked after local government under the last Conservative Government, although that way of putting it is debatable. I can remember much the same complaints and points being made then by different Members representing different parts of the country. I look forward to this breath of fresh air: this new idea that is brightly being proposed. However, if the formula has any indicators or recognition of need—I certainly hope it does—we will have exactly
378
the same thing all over again. I suspect that the sign of the albatross may be appropriate given some of the Minister's comments. I must say that they caused a smile.
My right hon. Friend the Member for Skipton and Ripon has stolen some of my thunder, especially on social services. In Surrey, social services are at crisis point, particularly the care of the elderly. Reference was made to the value of property in the south-east. Many of the elderly in Surrey are looked after in large, old, high-value homes. They require changes to be made to comply with new regulations, so many of them have closed. It is of more value to the owners to sell them and to use the profit to move to a better life, perhaps in another country with more sunshine—that was said with a touch of bias on my part—than to pay for the necessary changes.
I was intrigued by the fact that the Minister went on at some length about the size of the announced increase. At 7.5 per cent., it is a considerable increase, but that does not necessarily mean that all is simple and clear. Underneath the Minister's smile and spin presentation are some nasties. The obvious one is the specific grants, which have increased annually and been top-sliced. Funds are specifically designated to selected local authorities, apparently at ministerial whim. The volume of specific grant allocation has tripled since 1997, and the Government have voiced woolly aspirations to reverse the trend.
We should reflect on the fact that this year there has been a 40 per cent. increase in educational specific grants, and a 100 per cent. increase in Department of Health specific grants. All those are tied closely to defined expenditure in uniquely prescribed modes, with all the accompanying bureaucracy and expense of guidance, conditions, reports and audit.
The grants are designed in such a way as to knock flat the Government's claim of increased stability and predictability in local Government finance. Local authorities are being forced to rely increasingly on major specific grants that can be withdrawn at any time. Major grants are now to be attached to local public service agreements. Most major authorities are negotiating on those grants now. They will be heavily dependent on fairly unpredictable factors such as road accidents, graffiti and, perhaps, the examination results of small groups of pupils. I suspect that that could present the Minister with another albatross.
The Minister has said quite frequently, as did his predecessor, that freezing the SSA methodology brought stability. That has been questioned by Members on both side of the House today. Many of us think that the Government have refused to consider any desirable changes suggested by local authorities and introduced their own changes, necessitated by their own policies, while pretending that they are data changes rather than methodology changes. As we are well aware, authorities are now faced with the complete unpredictability produced by the new grant formula.
There is no doubt that the Government's paranoid obsession with central control has landed local authorities throughout the country with enormous volumes of regulations and requirements. Along with my right hon. Friend the Member for Skipton and Ripon, I served on a Committee that warned the Government about the so-called best value regime. We told them that the costs would be astronomic, and would not be justified by the results. That warning has been proved correct.

379
I believe that last year the cost of installing the best value system, with its myriad officials, meetings, consultations, audits and auditors' reports, swallowed many authorities' grant increases. The size of the Audit Commission has more than doubled, the extra being funded by local government. As I said yesterday, I understand that the internal costs of the monitoring of councils by the Department's officials has risen to £600 million, charged to the taxpayer. Local authorities' extra costs have been increased by the replacement of the traditional clear, open committee system with a choice of systems. The Minister said yesterday that there was a choice, but no one wanted it. It was a choice between three bad options, the fourth having been withdrawn. While adding dramatically to authorities' costs, that has led to a diminution in the transparency of decisions and a general reduction in council tax payers' interest in the activities of their local councils.
This extraordinarily centralistic Labour Government purport to be a friend of local government, but clearly are not. I have no doubt that if the trend continues, next year's local government finance report will make sad reading.
Underlying the setting of council tax is the way in which local authorities use the position in relation to the services they provide. They have opportunities to make distinctive economic changes, which the hon. Member for Torbay (Mr. Sanders)—who is not here now—failed to recognise. I do not think he has heard of the word "efficiencies". I am sure that, on average, Conservative councils will end up charging council tax payers less, but I am also sure that the Minister will ignore that and turn to the percentage argument.
Year by year, Labour Ministers choose to ignore the fact that a small increase in a small council tax may be large in percentage terms and, conversely, a large increase in a huge tax may be small in percentage terms. The percentage argument does not work; what counts in the end is the quality of service received by the public, and the size of the bill that arrives through their doors.
A very simple example has come up. In times gone by, the media regularly took part in the sport of comparing Wandsworth with Lambeth. Interestingly, that comparison is still valid. The cost of a quality household waste collection in Wandsworth is approximately £24 per household. There is a poorer contrast next door because the cost in Lambeth is approximately twice as much per household.
I am not alone in making that comparison. This afternoon I was handed a copy of a cutting from the South London Press. It details a visit from the hon. Member for Vauxhall (Kate Hoey) to the south London Patmore estate. That estate is split by a boundary line. Part of it is under Labour-controlled Lambeth and part of it is under Tory-controlled Wandsworth. She explained to the South London Press:
"There is a huge difference in the level of service provided between the two boroughs.
The Patmore co-operative is fantastic but they are being let down by the local authority"—
Labour Lambeth.
We must remember that the public, the council tax payer, the firms that pay business rates, are footing the bill. There is not enough recognition by the Government of the need to take the load off local government and to give democratically elected members the opportunity to
380
produce quality services without myriad auditors and other people peering over their shoulders at their every move.
9.6 pm
Mr. Clive Betts: The report essentially does two things. First, it sets out the overall amount of grant that central Government will give to local authorities. There have been expressions of support, certainly from Labour Members, for what the Government have done. The settlement is reasonably generous; the increase is well above the level of inflation. Secondly, it distributes the money among the individual local authorities.
As a Sheffield Member, I can accept the Government's position this year. They have gone for stability in the light of the fact that, next year, fundamental changes, for which we are all waiting, will be made, but from Sheffield's perspective today's settlement is another in a long line of unacceptable and unfair grant distributions, although it is considerably less unacceptable and unfair than the grant distributions before 1997. The Government have brought some improvements to Sheffield's position since that time.
At least we can celebrate the fact this is the last time that we will have to discuss this form of settlement—the standard standing assessment—in the Chamber. We have been promised that next year we will not simply get a settlement derived from tinkering with the formulae but one based on a completely new system. My right hon. Friend the Minister has said that that system must be transparent. It is important not simply that the anoraks can explain it to us as politicians, but that we as politicians can explain it to our constituents. That needs to be a fundamental part of any new system.
We should not be surprised that the present system, with all its regressions and proxies, is not transparent—it was not designed to be. Hon. Members talk about this Government's control freakery. Where were they in the 1990s when that system was invented and developed? It was not transparent because it was meant to hide the fundamental attack by the Conservative Government on local government spending. It was meant to hide the sleights of hand to pass money to councils such as Westminster and Wandsworth. Fundamentally, it was part of the Tory Government's command and control policy towards Labour local authorities.
On one side of the coin, we had the standard spending assessment, which is about not just grant distribution, but controlling spending levels; on the other, we had the arbitrary system of council tax capping. The two went hand in hand. They were a system of control over local authorities. That is why there is no transparency; the system was not just about grant distribution but control. The changes that the Government have introduced are welcome.
Just to show that the current system is nonsense, one of its peculiarities affects Sheffield. The chief executive has written to me about it. I have been critical of the approach of the Liberal Democrat council in Sheffield to housing benefits over the past two years, which has caused chaos and confusion among my constituents. At least the council has got on quickly with introducing the benefits verification framework, and has sought to bear down on benefit fraud. That has led to a reduction in

381
benefit claimants, because the people who should not have been claiming benefits in the first place have been taken out. As the council accepts, the direct cost of that process has been borne by central Government, but there is a twist in the tale. Among the myriad formulae and proxies that constitute the SSA, one proxy for poverty and deprivation is housing benefit case loads. Under this wonderful system, if a council bears down on fraud by reducing the number of fraudulent claimants, its area is deemed to be less poor and less deprived, so it gets less grant. That is just one nonsense in the system, but it has cost Sheffield £1.2 million this year. Such stupidities cannot be explained to the public, there is no rationale or reason for them and they must be fundamentally reformed when we get the changes that we are promised.
The new system will doubtless be complicated as well, and my right hon. Friend is right to say that it cannot increase everyone's grant. However, on looking at the totality of the current system, one can instinctively tell that things are wrong with it. I can see no reason why Sheffield and similar authorities receive less grant per head. People can show me the formula and the calculations, but they cannot convince me that the system is right, and I cannot convince my constituents. Given that Sheffield's neighbouring authority, Barnsley, is bouncing along the bottom of the grant table, and given Barnsley's needs compared with authorities that get far more grant per head, the system is clearly unfair and unreasonable and needs to be changed. It is against such benchmarks that we will judge the new system.
One particular and peculiar problem of the current system deprives my local authority of resources. Because of the formula's averaging process, if an authority has areas of poverty and real deprivation, and some of great affluence—Sheffield has such areas—it will probably lose out on grant altogether and get nothing even for the very poor areas. I know that my right hon. Friend is aware of the problem, and I hope that it will be addressed through future arrangements.
On occasions such as this, many hon. Members usually berate the area cost adjustment. I suspect that that has not happened today because this is the last of such arrangements. However, we have not forgotten it and we are still unhappy about it, and we are looking for change. Everyone accepts that the cost of employing staff is higher in some parts of the country—particularly in central London—than in others, but the ACA does not work fairly across the country. We accept that the settlement constitutes a minimal change, but the ACA needs to be reconsidered in future.
Hon. Members have commented on social services, and I intervened on my right hon. Friend the Minister to point out that there were choices for local authorities. In Sheffield, higher priority could be given to important social services spending, rather than to matters such as corporate publicity and the salaries of senior officers. I accept, however, that there are real pressures on the budgets of social services, which may not have always managed their resources well in the past. We have rightly focused attention on large increases for education and on encouraging local authorities to spend that money accordingly; nevertheless, social services have been left
382
behind. I am pleased to hear my right hon. Friend say that the Government are aware of that issue, and I hope that they will develop some real proposals.
There is one final matter that I hope the Government will consider. As I have said, the settlement is generous overall, but generosity can be a two-edged sword. Central Government give local authorities a big share—about 80 per cent.—of local authority budgets, and they control such expenditure to a degree by determining how much a local authority will be allowed to spend. That causes enormous gearing problems. If a local authority decides to increase its budget and therefore to increase council tax, and if council tax constitutes only 20 per cent. of its spending, the 4:1 gearing ratio proves a real disincentive to responding to the wishes of the local electorate by spending extra money to improve local services.
Ring fencing has been raised by other hon. Members. I believe that there will be a problem in the long term arising from the fact that central Government control 80 per cent. of local authority grant, compared with the 20 per cent. that comes from council tax. Moreover, central Government increasingly seek to determine how the grant that they give to local authorities is spent.
Those two factors are fundamental and crucial. They go to the heart of local democracy and the freedoms of local authorities. They are also central to efforts to get people re-engaged with local politics. I know that my right hon. Friend the Minister will not be able to deal tonight with the problems that remain, but I hope that the Government will address them in the future. I look forward to Ministers returning to the House on a future occasion with proposals to tackle the problems that I have described.
Mr. Deputy Speaker: Order. If all hon. Members who wish to speak in the debate can confine their remarks to about seven minutes, they will be successful. If they cannot, they will not be able to speak in the debate.
9.15 pm
Mr. Mark Prisk: I am grateful to you, Mr. Deputy Speaker, and I shall take note of your request.
I shall begin by welcoming the headline increase of 7.9 per cent that has been proposed for Hertfordshire county council. That reflects the record increase in the county's school population, the growing elderly population, and the higher costs that the county faces. I am sure that the last factor is something that the hon. Member for Stafford (Mr. Kidney) and I could discuss at greater length, given the opportunity.
It is good that the Department has listened to the representations from me and other hon. Members with constituencies in Hertfordshire, and from county council officers. It has recognised our needs and the pressures that we face, but I hope that the Minister will understand why I was somewhat disappointed by the subsequent imposition of the floors and ceilings cap. That has meant that Hertfordshire will get £2.6 million less than it sought.
Given that the Department listened to representations, discussed people's needs and looked at the pressures involved, I fail to understand why it then imposed a simple, crude cap in a rather arbitrary way. I do not think that that has helped the process, as I hope that the Minister will understand.

383
The result is simple Hertfordshire county council's budget has been reduced by £2.6 million. That includes a reduction of £1.6 million in the schools budget, which could not have come at a worse time. Hertfordshire has one of the fastest-growing school populations of any county in the country, and that puts considerable pressure on school places.
Every week, I receive letters from distraught parents who are trying to get their youngsters places in nursery, primary or secondary schools. The rising school population and the funding that is about to be made available mean that there will be more letters and more disappointed parents and pupils.
The problem is compounded by the teacher shortages that we suffer. Those shortages are evident at primary level, and secondary school head teachers in my area tell me that the problem is also being felt at secondary level, especially in Hertford. That reflects one of the elements that the Department originally recognised—the fact that, in Hertfordshire and the other home counties, it is extremely difficult to retain senior staff.
The third reason why the budget cut has come at an especially bad time for our schools is that the pupil-teacher ratio in Hertfordshire is bad and getting worse. My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) has rightly and recently made it clear that pupil-teacher ratios in Hertfordshire, unlike other parts of the country, have worsened over the past five years. Indeed, they have worsened every year since this Government came to power. I say that with considerable regret, which I hope that the Minister will understand.
The settlement involves a cut of £1.6 million in the schools budget. Contrary to the Government's promise in 1997, if the budget cut is implemented things are only going to get worse in Hertfordshire schools.
Two other uncertainties remain, and I would welcome any response from the Minister with regard to them. The first is related to previously housed asylum seekers, an issue that was raised before. I know that ceilings have been imposed on the costs involved, as other hon. Members have mentioned. The difficulty in Hertfordshire is that there is a £1 million gap between the cost to the county and the money that is forthcoming from the Government. The ceiling has been relaxed in Oxfordshire and for London authorities, and I should welcome any indication from the Minister of a similar flexibility for Hertfordshire.
My right hon. Friend the Member for Skipton and Ripon (Mr. Curry) referred to preserved rights. I do not claim to be expert in the finer details of local government finance, but I understand that this relates to elderly people who were in residential homes before 1993. The county council is quite prepared to accept responsibility for these people, and has done so, but on the basis that the Government are willing to provide the funds. At this point, the funds from the Government are £2.2 million short. I know that the county is making representations to the Minister, and I ask him to bear those in mind.
The cost of running services in Hertfordshire and other home counties is high and is rising faster than in other parts of the country. The pressures are great, particularly with regard to our school population. I was pleased that the Government listened to our representations about the SSA, but deeply disappointed that they were ignored,
384
given the arbitrary nature of the floors and ceilings mechanism. The mechanism is crude; it contradicts the aim of matching spending to need. In Hertfordshire, it will betray every child in our schools.
9.21 pm
Mr. Kevan Jones: Like my hon. Friend the Member for Leicester, South (Mr. Marshall), who is no longer in his seat, I intend to be parochial and raise the dire situation faced by Durham county council this year.
The Minister has referred to an average settlement of more than 7 per cent. Durham's allocation is just over 5 per cent., one of the lowest settlements of any county council in the country. Durham county council has always been moderate and responsible. Even during the 1980s, a time of lunacy in some London boroughs, Durham was a responsible council that worked within its means. It went through some tough times, with the closures of the steelworks at Consett and the Durham coalfield, but it came through and worked in partnership with local business and local people. This year, however, it finds itself in a depressing situation.
Social services and education have been mentioned tonight. Durham, like many other county councils, is facing pressures due to the growing numbers of elderly people in the community. That is exacerbated in County Durham. Its long industrial past has meant a legacy of industrial-related diseases to elderly people, and they need intensive care from social services.
The other pressure is children's services, which was mentioned by the hon. Member for Torbay (Mr. Sanders). He is right to say that those services are expensive and there is no control over them. Durham's intake this year is up by about 30 per cent., and the council cannot budget for that. A colleague of mine on Newcastle city council, Colin Gray, the chair of finance, used to say that it would be cheaper to send someone to Eton or Harrow than it would be to have them looked after by the local authority. Education services are very expensive and councils such as Durham have very little control over the number of children in their care.
It has been announced that Durham will receive an additional £1.8 million mainly to deal with bed blocking, which has been a problem for Durham and most other councils this winter. That compares with last year's figure of £1.6 million, which does not bring a great deal of joy to the county council. It has been estimated that to deal with its social services problem, the council needs about £10 million. That raises a bigger problem, faced by many councils, of how to make the connection between councils, social services departments and the health service, because £10 million is a drop in the ocean to the health service but not to a council such as County Durham.
The council is making some difficult decisions this year about the closure of homes. It is undertaking rationalisation that the present leadership realises is long overdue. The council is also making a capital investment of £10 million in new provision. That capital receipt came from the council's share in the sale of Newcastle airport. The council is facing up to its social services problems and tackling them.
In Durham, education offers a good example of non-joined-up government. Last year, the county council received £2.76 million in education budget support grant.

385
That was withdrawn this year so it will be difficult for the council to meet the standard funds for investment in schools. That is sad. In my constituency and throughout Durham, since Labour came to power in 1997 there has been some good capital investment. For example, almost £3 million has been spent on Pelton Roseberry school and we can see the difference that has made. However, Durham will have to find that funding this year.
Furthermore, money has been taken from council budgets for the learning and skills councils, as has been mentioned; £850,000 has been taken from Durham county council's budget that was not spent on sixth form provision. The result is that primary and secondary schools will suffer because that money was arbitrarily taken from the budget. When I made representations to the Minister about that, he said that it was a matter for the Department for Education and Skills. However, I plead with the Government to use joined-up thinking on such decisions.
Durham is not an irresponsible council. It has had to take many difficult decisions during the past few years but we shall face a record rise in council tax this year, whether we like it or not. According to my estimate, after today's announcement, grants of about £300,000 will be allocated to Durham county council. That is a drop in the ocean when education has lost £2.76 million alone, apart from the pressures on social services.
I plead with the Minister to consider Durham's case. The problems will not go away and the council will find it difficult not to impose council tax rises of 10 per cent. or more. Several hon. Members have referred to the new system that will apply next year. I accept that, but I agree—with some trepidation—with the right hon. Member for Skipton and Ripon (Mr. Curry) who pointed out that we are trying to find a system that will please everybody, but clearly we cannot do so.
Durham faces a tough year and local politicians will have to take some hard decisions. I plead with Ministers to reconsider Durham's case. We will not be able to avoid a council tax rise of at least 10 per cent.
9.28 pm
Mrs. Annette L. Brooke: There are parts of four councils in my constituency: two district councils, one unitary council and the county council. In our local newspaper, all the predictions are that although council tax may rise by less than 10 per cent. in one or two places, the rise for the councils in my constituency and for neighbouring authorities will be much more than 10 per cent.
The Minister might have given me good news for the district councils although I am not sure. If the news is not as good as I thought, I shall write him another letter.
I shall concentrate on the county council and the unitary authority and, yes, I shall speak about social services again. I make no apology for being repetitive because they are so important. Last year, throughout the south-west region, 13 of the 15 authorities spent 72 per cent. above the SSA for children's services, so we cannot point the finger at individual authorities.
I am a member of Poole unitary council. I promise that I will not go through the budget line by line—I shall choose a few examples. Poole is a small authority and, as
386
several hon. Members have pointed out, that makes things doubly hard just one change has a big impact. Spending on children's services is an enormous 70 per cent. above SSA. In the social services budget for 2001–02, with an SSA of about £23 million, Poole unitary authority is heading for a £2 million overspend. That might not sound a huge sum, but it certainly is in relation to the budget. That obviously signals tremendous problems for next year.
Many hon. Members have mentioned the problems in social services. We cannot take risks with our precious young people. We must respond to real-life problems. I cannot believe that the Minister is actually asking us to look for cuts in the social services budget when it is so tight.
On Friday I had a meeting, along with other MPs, with Poole unitary authority. I asked why, when most authorities were reporting an overspend on social services, Poole's overspend was so large proportionately. The answer was that there were special factors, such as an inability to find enough foster parents and a consequent need to buy in extra help, and the fact that some children needed very expensive education.
Poole, as an authority, has a low council tax. It is in the lowest quartile for the country. It is one of the lowest spending authorities throughout the south-west—it has been in Liberal Democrat control for the past 10 years. One cannot really accuse Poole authority of being an irresponsible high spender, but what is it to do unless there is some response to all the cries, from throughout the country, about the particularly severe situation regarding social services?
I beg the Minister to listen tonight. We hope for better with the new formula, but the crisis is with us now. We cannot afford to wait another year before that may be addressed. I put that plea for all the councils with the same problem, because it is so serious and the individual cases are harrowing. I shall be in a position to vote, and I certainly cannot vote for any shortages on the social services budget.
We are short of time so I shall change topic rather abruptly and move on to fridges for a while, to illustrate my point. I repeat that Poole is a small unitary authority. I thought that there was a mistake in an e-mail that I received tonight, but I can now see that the figures do add up. Poole has been allocated £17,000 to store all the surplus fridges, and officers from Poole unitary authority have told me that that amount is about £180,000 short. That is a very big sum for a small unitary authority.
I thought that that figure was wrong, but the Local Government Association predicts that storage of surplus fridges will cost between £60 and £65 million—10 times the £6 million that has been allocated. Whereas I responded in a similar way to the Minister when I read that e-mail, thinking that it was wrong, I now, having heard the LGA figures, think that it is right.
The question for my council and many other councils is whether they should budget for costs of £180,000 or whatever and build that figure into the council tax because they have to find that money, or hope that the Minister will monitor the costs closely and address the matter if the costs exceed £17,000, or whatever amount each authority has been allocated.
Our biggest concern must be the fact that there will be high percentage increases in council tax. It was refreshing when the hon. Member for North-East Cambridgeshire

387
(Mr. Moss) said that the high percentage increases in council tax would be down to the Government. In my area, we usually find that if it is a Liberal Democrat-controlled council, various leaflets say that it is the Liberal Democrats' fault. If it is a Conservative-controlled council, those same leaflets say that it is the Government's fault. It is bad that we have a blame culture.
The only point that I want to raise on reform of the area cost adjustment is that it must be clear, open and transparent so that local councillors are genuinely accountable to their electorate, which they are not at the moment. At the moment it is a case of who tells the best story and how many times. We have some amazing graphs that go off the pages referring to council tax increases in Liberal Democrat councils, but at the end of the day my authority and Dorset county council have relatively low council taxes, so that is not the issue.
However, a large percentage increase is an issue for many elderly people and others on fixed incomes. It is not easy to say that the problem is that we have not spent enough over the years on our services and that we have got to up the money to cover the social services this year. That really hurts those at the other end of the range—the elderly and the vulnerable. We need much more help than is offered in the local government financial settlement for 2002–03, and I urge the Minister to consider funding for children's social services in particular.
9.35 pm
Mr. Andrew Lansley: I am grateful to the House for the opportunity to contribute to this debate. There is a certain symmetry in being the back marker in this debate because Cambridgeshire has the dubious distinction of receiving the lowest SSA per head of any shire county.
I welcome the maiden speech of the hon. Member for Ipswich (Mr. Mole). We at the other the other end of the A14, as part of the Cambridge to Ipswich corridor, would probably be happy to trade a bit of Cambridge's knowledge, industry and expertise if Cambridge United received a bit of footballing expertise in return. He mentioned higher education expertise, and I recognise that that matters. Given that he thought Cardinal Wolsey was the last person to promote such expertise, perhaps he should have a word with the Lord Chancellor, who seems to see himself in like guise.
I want gently to chide the hon. Member for North Durham (Mr. Jones) and, to be evenhanded, my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) on their contributions to the debate. It is very interesting to consider the respective SSA per head of shire counties. Hertfordshire, at £774 per head, and Durham, at £771 per head, contrast dramatically with Cambridgeshire at £647 per head for 2002–03. If my hon. Friend reads the report of my little contribution, he will find that one of the pressures on school places in Hertfordshire is that there are those in my constituency, just over the border from Hertfordshire, who are trying to place their children in schools in Hertfordshire, rather than in Cambridgeshire. They do so because Hertfordshire has £270 per pupil more to spend on schools than we do in Cambridgeshire.
Although my hon. Friend may claim a fast-rising population and high relative costs, the population of South Cambridgeshire is among the fastest growing anywhere in the country. The cost of employment, housing and living
388
in Cambridgeshire are at least as high as in many parts of Bedfordshire, Essex and, indeed, Hertfordshire, including Hertford and Stortford, yet those counties receive the area cost adjustment, whereas Cambridgeshire does not.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) remarked on the lack of comment on the area cost adjustment in the debate. He wondered why that was—if for no other reason, it was because I had not spoken at that time. The Minister will recall that the first debate on the Adjournment that I was able to obtain in the House took place in July 1997 and was on the area cost adjustment. One of the more recent—not the most recent—debates on the area cost adjustment took place in January 2001. In response to the debate in July 1997, the Minister said:
"I assure him"—
he was referring to me—
"that we shall study the further surveys carefully and discuss them, as a matter of urgency, with the local government associations. We shall not be precluded from taking decisions at the earliest opportunity about possible adjustments that might be appropriate."—[Official Report, 18 July 1997; Vol. 298, c. 670.]
In January 2001, three and a half years later, the then Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Stretford and Urmston (Beverley Hughes), changed the Government's position. She said:
"We are not rushing to make hasty solutions".—[Official Report, Westminster Hall, 30 January 2001; Vol. 362, c. 14WH.]
All that was in pursuance of the commitment made by the then Leader of the Opposition—now the Prime Minister—on 30 April 1997, days before the general election. He said:
"We will review the area cost adjustment in time for the next financial year".
I am afraid that the Minister must understand why my hon. Friend the Member for Maidenhead (Mrs. May), the shadow Secretary of State, has pressed that matter a little. We have found in the past that, when we have been told that something will be reviewed in time for the next financial year, four years have gone by and nothing has been done. Something must be done about the area cost adjustment. It must reflect costs accurately across the country. The kind of cliff-edge effects that currently occur are unsustainable. Respective costs across the country must be acknowledged.
I shall not continue to describe how that change should take place. However, I shall say two things. First, the grants must be disaggregated to district council level—with respect to my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), there are big differences between his constituency and mine in Cambridgeshire. It is deeply unsatisfactory that a fast-growing district council, such as South Cambridgeshire district council which is in an area of national importance in terms of development and infrastructure, should have a 2.3 per cent. increase in grant. Not only the county council but the district council—which has such a large planning function—have been woefully under-provided with grant by the Government given the councils' responsibilities.
Methodology may not have changed, but the data have. It is unsatisfactory, from our point of view in Cambridgeshire, that we have seen another increase in area cost adjustment factors, which had the net effect of

389
taking £300,000 out of Cambridgeshire's relative allocation compared with what would have been allocated in 2000–01 when the previous factors applied.
The Minister referred to the importance of using the latest data. Data from 16 October 2001 was used for the council tax. Therefore, when the local authority's resources were assessed for the purposes of grant, up-to-date data were being used. However, when population was assessed, estimates for 30 June 2000 were used. For somewhere such as South Cambridgeshire, the difference between the estimate of a 1.3 per cent. increase in population per annum and the actual increase in population of more than 1.5 per cent. meant that that increase was not reflected in the allocation of grant.
Many hon. Members have spoken about the implications for council tax. I agree with what was said about the stress being put on local authorities as council tax reflects an increasing proportion of the cost of providing services. The same is true in relation to the national non-domestic rate, because of a 9.8 per cent. increase this year. The product of that rate is a further burden on businesses.
Cambridgeshire county council is currently consulting on the basis of a 9.8 per cent. council tax increase, and the district council is considering anything up to a 40 per cent. increase—from £50 to £70. We discussed the police, who are considering an increase of 20 or 30 per cent. to sustain their position. The net result could be an overall increase of £95 in band D council tax this year, which is the equivalent of nearly £2 per week.
As my hon. Friend the Member for North-East Cambridgeshire rightly said in his opening speech, a very high proportion of the additional money being provided to those on fixed incomes—through the basic state pension, for example—could be taken up next year by the increases in council tax, much of which is a product of distortions in the Government grant distribution system.
9.44 pm
Mr. Moss: With the leave of the House, Mr. Speaker, I begin by complimenting the hon. Member for Ipswich (Mr. Mole) on his maiden speech. He spoke authoritatively on local government finance and shared his experience and expertise of local government with us. He was gracious and generous in his comments about his predecessor who was an assiduous Member of the House and achieved much for his constituency. The hon. Gentleman showed that he is a worthy successor.
The debate has been useful. I agree with my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that, given the enormity of the money involved as a proportion of total Government spending, it is ridiculous that we have only three hours to debate local government finance when we spend almost a week on the Budget.
Many hon. Members took the Minister up on his promises, especially to review the SSA and, by implication, the area cost adjustment. I intended to mention my experience of the area cost adjustment in Cambridge, but my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) took care of that authoritatively. It makes no sense to have the cliff-edge syndrome, as he described it, in which one side of the
390
county boundary receives substantially more money per pupil than the other. That needs to be addressed. The hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Stafford (Mr. Kidney) also mentioned that.
The Minister said that the SSA is unfortunately so complicated that only boffins in anoraks can understand it and, by implication, that he, perhaps, did not. [Interruption.] If any hon. Member can tell me that they understand the formula in the report, I shall willingly take my cheque book out. It is extremely complicated and we wish the Minister good speed in coming up with something that is agreeable to all. I suspect, however, that he is setting himself an impossible task and that those who have suffered low SSAs will be disappointed when the fruits of the reorganisation do not materialise as they expect.
There were recurrent themes on both sides of the Chamber. The crisis in social services was emphasised in particular. We all know that that is a problem not just for local government funding and local government, but for government as a whole. We would be more than happy to co-operate with the Government to consider that in a broader perspective so that social services are given the right funding without necessarily making councils rob Peter to pay Paul.
My hon. Friend the Member for Mole Valley (Sir P. Beresford) and the hon. Member for Torbay (Mr. Sanders) mentioned best value. My hon. Friend also raised problems of ring-fenced funding, as did the hon. Member for Sheffield, Attercliffe. The important point was made that if 80 per cent. of local government money is funded by the Government and 15 per cent. of that goes to specific grants, that reduces significantly the flexibility of every council to pursue its responsibility to ensure that it has a balanced approach to the provision of services across the board.
My right hon. Friend the Member for Skipton and Ripon also mentioned the transfer of funding for post-16 education. That has not been calculated correctly. I know that the Government have made some adjustments from the initial announcements made late last year, but some councils still believe that they have been penalised because of the inadequate compensation. The floors and ceilings mechanism was not universally welcomed by hon. Members on both sides of the House. It is possible that the Government are devising a crude way to even out differences, especially in relation to the area cost adjustment.
We will not seek to divide the House on the report. We want money to go to local councils as soon as possible and cannot understand why the Liberal Democrats want to vote against the Government. Perhaps the Government should sit on their hands. Liberal Democrats might then have the difficulty of explaining to their local councils why there is no money in the budgets next week.
9.49 pm
Mr. Raynsford: With the leave of the House, Mr. Speaker, I should like to reply. We have had a good, thorough and extensive debate, which has covered a wide range of issues. I shall try to do justice in the short time available to the many speeches that we have heard.
The hon. Member for North-East Cambridgeshire (Mr. Moss), speaking for the official Opposition, deftly tried to damn me either way by picking up my remark

391
about the complexity of the system and the fact that it was probably only intelligible to anoraks; he then suggested that probably even I did not understand it. If I agree, I condemn myself for not understanding the system; if I do not, I condemn myself as an anorak. Either way, I cannot get out of that. [Interruption.] I ask Members to wait until the end of the speech before judging.
My hon. Friend the Member for Leicester, South (Mr. Marshall), who opened the debate from the Back Benches, welcomed the real-terms increase in grant and highlighted some specific questions from Leicester, particularly the addition of 488 pupils to the school register since the annual census, largely as a result of the influx of Somalis from Holland. That unique and special problem will be considered by the education funding strategy group. However, we cannot make an immediate change to a formula which has been generally agreed and will not be changed in the course of this year. We understand the problem and shall obviously look at it.
The hon. Member for Torbay (Mr. Sanders), speaking for the Liberal Democrats, acknowledged that the grant increase was generous overall, but expressed concern, as many Members did, about particular difficulties in relation to social services. I acknowledged that issue in my opening remarks. The hon. Gentleman highlighted failings in the grant distribution formula which, as he knows, we have pledged to replace. My hon. Friend the Member for Ipswich (Mr. Mole), in an impressive maiden speech, paid tribute to his predecessor, Jamie Cann, whom we all miss; he was an assiduous Member of Parliament, as well as an assiduous and dedicated leader of Ipswich borough council before coming here. We all miss him. My hon. Friend highlighted the importance of community leadership and spoke with knowledge and authority about the financial pressures on local authorities; I am sure that he will contribute authoritatively to many future debates on the subject in the House.
The right hon. Member for Skipton and Ripon (Mr. Curry), in a characteristically thoughtful speech, remembered his own days in the post that I currently occupy. I have been thinking about him; when I went to meet the LGA after the publication of the provisional settlement, it began by reminding me of its meeting with the right hon. Gentleman six years ago, which he opened with the words, "We've all been stuffed by the Treasury." I am pleased that that was not the experience this year.
Mr. Curry: I am delighted to have afforded much innocent pleasure over many years to many people in local government, who no doubt have a great nostalgia for the Minister who was honest. The right hon. Gentleman and I have shared the occasional glass of something and the occasional meal. Now and again, we have mused about the behaviour of the Treasury; in those conversations, I have not noticed a sharp difference in view between us.
Mr. Raynsford: I look forward to continuing this conversation with the right hon. Gentleman, perhaps over another glass of wine one evening.
My hon. Friend the Member for Stafford (Mr. Kidney) made a powerful case for the reform of the standard spending assessment to end the disparity in the treatment of different counties, particularly his own. That is a
392
complex issue, which I shall pick up when I deal with the contributions of other hon. Members. The hon. Member for Mole Valley (Sir P. Beresford) criticised the best value regime, which is not surprising, given that he was very much committed to the discredited compulsory competitive tendering regime, which it replaced. There is no appetite in local government for returning to CCT. We shall continue to refine and improve the best value regime; as it beds in, and as we cut out unnecessary complexity which, I accept, has been present in the early stages, there will be genuine benefits in driving up services.
My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) made a passionate case for the reform of the SSA system, which has particularly disadvantaged areas of great need in south Yorkshire and neighbouring areas. He mentioned a perverse incentive in the current housing benefit arrangements, and said that reduction in fraud could reduce local authorities' grant entitlement. We accept that that is a fair point and we will examine it in the formula review.
My hon. Friend the Member for North Durham (Mr. Jones) highlighted the difficulties facing his county. There is no question but that there is real pressure there in relation to social services, which I have acknowledged in discussion with him. The grant increase for County Durham is 5.6 per cent. It is a little lower than the shire county average of 6.1 per cent., but it is a good increase, well above inflation, and compares with 3.2 per cent. last year. It involves an additional £15.8 million for County Durham.
The hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) drew attention to social services pressures in her area and also to the matter of refrigerators. The £6 million Government grant is designed to cover the cost of storage of fridges up until March this year—only in the period from January to March—and should not be confused with an annual figure. We will consider the position urgently and determine what further action is required beyond March to help deal with the issue. I hope that that reassures the hon. Lady.
The hon. Member for South Cambridgeshire (Mr. Lansley) also presented the problems facing county councils and in doing so highlighted the dilemma. Whatever changes we make to the formula, there will inevitably be some authorities that receive less than others, either per capita or in an overall figure. That is the nature of a formula system for distribution of grant.
I hope that the hon. Gentleman will acknowledge that a formula system is better than an arbitrary system of allocation by ministerial fiat. He has drawn attention to the problem that arises when a formula is used. I do not underestimate the difficulties of trying to create a fairer and better system in the future than the one that we have at present, but I believe that we can make progress in simplifying the system, making it slightly less opaque than it is, and addressing some of the genuine unfairnesses that are inherent in the current arrangement.
The report that we have debated this evening confirms a generous settlement which gives an average increase of 7.5 per cent. in funding for local authorities in England. Some speakers criticised aspects of the settlement or expressed concerns about the current position in their constituency, but almost all acknowledged that this year's settlement is generous. It is not a panacea for all local

393
authority problems. We recognise the very real pressures that local authorities face, not least in respect of social services, but it is a settlement that gives real-term increases in grant to the vast majority of authorities and a guaranteed increase of at least inflation for every authority in England.
How very different was the experience that local government had under the previous Government. The average grant increase in the last five years of the Tory Government was just 2 per cent. per annum—just 2 per cent. per annum over that five-year period. Since 1997, we have seen an average of 6 per cent. per annum, and this year the increase is 7.5 per cent.
This is a good settlement from a Government who are committed to local government and to forging a new relationship with local government. We recognise the hugely important contribution that local government makes to meeting local needs and delivering services to people in its area. We are determined to work in partnership with local government and to help local authorities meet their responsibilities and deliver to their residents the high quality services that their residents expect and need.
We are making real progress in establishing a far better and more positive relationship with local government—a relationship based on trust, the removal of unnecessary red tape and bureaucracy, giving greater freedoms to local authorities, and putting that in the context of a performance management system that will drive up standards. The ultimate aim is to deliver high quality services to people in need. All of us, whether from the local government or central Government perspective, want high quality services to be delivered to the people whom we represent. This is a good settlement, which I commend to the House.
Question put:—
The House divided: Ayes 286, Noes 40.

Division No.149]

[9.59 pm

AYES

Adams, Mrs Irene (Paisley N)

Brown, Rt Hon Nicholas

Ainger, Nick

(Newcastle E & Wallsend)

Ainsworth, Bob (Cov'try NE)

Bryant, Chris

Allen, Graham

Burden, Richard

Anderson, Rt Hon Donald

Burnham, Andy

(Swansea E)

Cairns, David

Atkins, Charlotte

Campbell, Alan (Tynemouth)

Austin, John

Campbell, Mrs Anne (C'bridge)

Bailey, Adrian

Campbell, Ronnie (Blyth V)

Baird, Vera

Caplin, Ivor

Barnes, Harry

Caton, Martin

Barron, Kevin

Cawsey, Ian

Battle, John

Challen, Colin

Bayley, Hugh

Chapman, Ben (Wirral S)

Beckett, Rt Hon Margaret

Clark, Mrs Helen (Peterborough)

Benn, Hilary

Clark, Dr Lynda

Bennett, Andrew

(Edinburgh Pentlands)

Berry, Roger

Clark, Paul (Gillingham)

Best, Harold

Clarke, Rt Hon Charles

Betts, Clive

(Norwich S)

Blears, Ms Hazel

Clarke, Rt Hon Tom (Coatbridge)

Blizzard, Bob

Clarke, Tony (Northampton S)

Boateng, Rt Hon Paul

Clelland, David

Bradley, Rt Hon Keith (Withington)

Clwyd, Ann

Bradley, Peter (The Wrekin)

Coaker, Vernon

Brennan, Kevin

Coffey, Ms Ann

394

Cohen, Harry

Iddon, Dr Brian

Connarty, Michael

Illsley, Eric

Corston, Jean

Jackson, Helen (Hillsborough)

Cranston, Ross

Jamieson, David

Crausby, David

Jenkins, Brian

Cryer, Mrs Ann (Keighley)

Johnson, Alan (Hull W & Hessle)

Cryer, John (Hornchurch)

Jones, Helen (Warrington N)

Cunningham, Jim (Cov'try S)

Jones, Jon Owen (Cardiff C)

Cunningham, Tony (Workington)

Jones, Kevan (N Durham)

Curtis-Thomas, Mrs Claire

Jones, Lynne (Selly Oak)

Darling, Rt Hon Alistair

Jones, Martyn (Clwyd S)

Davey, Valerie (Bristol W)

Joyce, Eric

David, Wayne

Kaufman, Rt Hon Gerald

Davidson, Ian

Keen, Alan (Feltham & Heston)

Davies, Geraint (Croydon C)

Keen, Ann (Brentford & Isleworth)

Davis, Rt Hon Terry

Kidney, David

(B'ham Hodge H)

Kilfoyle, Peter

Dawson, Hilton

King, Andy (Rugby & Kenilworth)

Dean, Mrs Janet

Kumar, Dr Ashok

Denham, Rt Hon John

Ladyman, Dr Stephen

Dobbin, Jim

Laxton, Bob

Dobson, Rt Hon Frank

Lazarowicz, Mark

Donohoe, Brian H

Lepper, David

Doran, Frank

Leslie, Christopher

Dowd, Jim

Levitt, Tom

Drew, David

Lewis, Terry (Worsley)

Eagle, Angela (Wallasey)

Liddell, Rt Hon Mrs Helen

Eagle, Maria (L'pool Garston)

Linton, Martin

Ellman, Mrs Louise

Lloyd, Tony

Ennis, Jeff

Lucas, Ian

Etherington, Bill

Luke, Iain

Fitzpatrick, Jim

Lyons, John

Fitzsimons, Mrs Lorna

McAvoy, Thomas

Flint, Caroline

McCabe, Stephen

Flynn, Paul

McCafferty, Chris

Follett, Barbara

McCartney, Rt Hon Ian

Foster, Rt Hon Derek

McDonagh, Siobhain

Foster, Michael (Worcester)

McDonnell, John

Foster, Michael Jabez (Hastings)

MacDougall, John

Foulkes, George

McGuire, Mrs Anne

Galloway, George

McIsaac, Shona

Gapes, Mike

McKechin, Ann

George, Rt Hon Bruce (Walsall S)

McKenna, Rosemary

Gerrard, Neil

McNamara, Kevin

Gibson, Dr Ian

McNulty, Tony

Gilroy, Linda

MacShane, Denis

Godsiff, Roger

Mactaggart, Fiona

Griffiths, Jane (Reading E)

McWalter, Tony

Griffiths, Nigel (Edinburgh S)

McWilliam, John

Grogan, John

Mahmood, Khalid

Hall, Mike (Weaver Vale)

Mahon, Mrs Alice

Hall, Patrick (Bedford)

Mallaber, Judy

Hamilton, David (Midlothian)

Marsden, Gordon (Blackpool S)

Hamilton, Fabian (Leeds NE)

Marshall, David (Shettleston)

Hanson, David

Marshall, Jim (Leicester S)

Harris, Tom (Glasgow Cathcart)

Marshall-Andrews, Robert

Havard, Dai

Martlew, Eric

Henderson, Doug (Newcastle N)

Meacher, Rt Hon Michael

Henderson, Ivan (Harwich)

Michael, Rt Hon Alun

Hendrick, Mark

Milburn, Rt Hon Alan

Hepburn, Stephen

Miliband, David

Heppell, John

Miller, Andrew

Hesford, Stephen

Mitchell, Austin (Gt Grimsby)

Heyes, David

Moffatt, Laura

Hill, Keith

Mole, Chris

Hinchliffe, David

Moonie, Dr Lewis

Hoey, Kate

Moran, Margaret

Hoon, Rt Hon Geoffrey

Morley, Elliot

Hope, Phil

Morris, Rt Hon Estelle

Hopkins, Kelvin

Mudie, George

Howarth, Rt Hon Alan (Newport E)

Mullin, Chris

Howarth, George (Knowsley N)

Munn, Ms Meg

Howells, Dr Kim

Murphy, Denis (Wansbeck)

Hoyle, Lindsay

Murphy, Jim (Eastwood)

Hughes, Kevin (Doncaster N)

Murphy, Rt Hon Paul (Torfaen)

Hutton, Rt Hon John

Naysmith, Dr Doug

395

O'Brien, Bill (Normanton)

Southworth, Helen

O'Hara, Edward

Spellar, Rt Hon John

Olner, Bill

Squire, Rachel

Organ, Diana

Starkey, Dr Phyllis

Osborne, Sandra (Ayr)

Stewart, Ian (Eccles)

Owen, Albert

Stinchcombe, Paul

Pearson, Ian

Stoate, Dr Howard

Picking, Anne

Stringer, Graham

Pickthall, Colin

Stuart, Ms Gisela

Pike, Peter

Tami, Mark

Pollard, Kerry

Taylor, Rt Hon Ann (Dewsbury)

Pond, Chris

Taylor, David (NW Leics)

Pope, Greg

Thomas, Gareth (Clwyd W)

Prentice, Ms Bridget (Lewisham E)

Thomas, Gareth R (Harrow W)

Prentice, Gordon (Pendle)

Timms, Stephen

Prescott, Rt Hon John

Tipping, Paddy

Primarolo, Dawn

Todd, Mark

Prosser, Gwyn

Touhig, Don

Quin, Rt Hon Joyce

Truswell, Paul

Rapson, Syd

Turner, Dennis (Wolverh'ton SE)

Raynsford, Rt Hon Nick

Turner, Neil (Wigan)

Reed, Andy (Loughborough)

Twigg, Stephen (Enfield)

Reid, Rt Hon Dr John (Hamilton N)

Tynan, Bill

Robertson, John

Vis, Dr Rudi

(Glasgow Anniesland)

Ward, Ms Claire

Roche, Mrs Barbara

Wareing, Robert N

Rooney, Terry

Watson, Tom

Ross, Ernie

Watts, David

Roy, Frank

White, Brian

Ruane, Chris

Whitehead, Dr Alan

Ruddock, Joan

Wicks, Malcolm

Russell, Ms Christine (Chester)

Williams, Mrs Betty (Conwy)

Sarwar, Mohammad

Winnick, David

Savidge, Malcolm

Winterton, Ms Rosie (Doncaster C)

Sawford, Phil

Woodward, Shaun

Sedgemore, Brian

Woolas, Phil

Shaw, Jonathan

Worthington, Tony

Sheerman, Barry

Wray, James

Short, Rt Hon Clare

Wright, Anthony D (Gt Yarmouth)

Simpson, Alan (Nottingham S)

Wright, David (Telford)

Skinner, Dennis

Wright, Tony (Cannock)

Smith, Rt Hon Chris (Islington S)

Wyatt, Derek

Smith, Geraldine (Morecambe)

Smith, Jacqui (Redditch)

Tellers for the Ayes

Smith, Llew (Blaenau Gwent)

Angela Smith and Dan Norris.

Soley, Clive

NOES

Allan, Richard

Hancock, Mike

Barrett, John

Harris, Dr Evan (Oxford W)

Beggs, Roy

Heath, David

Breed, Colin

Hermon, Lady

Burnett, John

Holmes, Paul

Burstow, Paul

Hughes, Simon (Southwark N)

Calton, Mrs Patsy

Keetch, Paul

Carmichael, Alistair

Lamb, Norman

Cotter, Brian

Laws, David

Davey, Edward (Kingston)

Moore, Michael

Doughty, Sue

Pugh, Dr John

Foster, Don (Bath)

Reid, Alan (Argyll & Bute)

George, Andrew (St Ives)

Robinson, Mrs Iris (Strangford)

Gidley, Sandra

Robinson, Peter (Belfast E)

Green, Matthew (Ludlow)

Russell, Bob (Colchester)

396

Sanders, Adrian

Webb, Steve

Shepherd, Richard

Williams, Roger (Brecon)

Stunell, Andrew

Younger-Ross, Richard

Taylor, Dr Richard (Wyre F)

Taylor, Sir Teddy

Tellers for the Noes:

Thurso, John

Mr. A. J. Beith and Mrs. Annette L. Brooke.

Tonge, Dr Jenny

Question accordingly agreed to
Resolved,
That the Local Government Finance Report (England) 2002–03 (HC 545), which was laid before this House on 28th January, be approved.

PETITIONS

  Eye Clinics
  10.12 pm
  Miss Julie Kirkbride: I am particularly grateful for the opportunity to present this petition tonight on behalf of the people of Bromsgrove and Redditch. They are concerned about the prospective loss of their eye clinics, especially given that they raised some £70,000 to pay for eye treatment to be delivered locally. The petition of the people of Bromsgrove and Redditch declares:
  Worcestershire Acute Hospitals NHS Trust proposes to transfer the eye clinics at the Alexandra Hospital, Redditch and the Princess of Wales Community Hospital, Bromsgrove to Kidderminster and Worcester; that the eye scanners used in both clinics were bought by funds raised through a public appeal to the residents of Bromsgrove and Redditch, organised by the Bromsgrove Advertiser/Messenger and Redditch Advertiser; and they object to the loss of this valuable service.
  The petitioners therefore request that the House of Commons urges the Secretary of State for Health to review the proposals and ensure that the eye clinics remain in the communities they were established to serve.
  And the petitioners remain, etc.
  To lie upon the Table.

  Crown Post Office
  10.13 pm
  Geraint Davies: This petition is presented by the residents of Croydon and others, supported by more than 4,000 people. It declares that the petitioners object to the Post Office's proposal to close east Croydon's Crown post office and states:
  The Petitioners therefore request that the House of Commons urge the Secretary of State for Trade and Industry to take appropriate action to ensure East Croydon Crown Post Office remains open.
  And the Petitioners remain, etc.
  To lie upon the Table.

  Inner Cities
  Motion made, and Question proposed, That this House do now adjourn.—[Dan Norris.]
  10.14 pm
  John Robertson: It gives me great pleasure to have secured this debate, and I want to focus on how we should strive to break the cycle of poverty in our inner cities. Poverty manifests itself in a number of ways: lack of access to good-quality housing, poor health, high levels of unemployment, low rates of pay, high crime rates, and poor educational performance. Unlike the Tories, the Labour party believes that poverty breeds further poverty, that unemployment can lead to crime, and that living in poor, overcrowded housing can result in poor health and have a detrimental effect on a child's education. Each aspect of poverty is linked, and we cannot effectively tackle one aspect without tackling all of them.
  I want to use the debate to focus on the effects of unemployment on our inner cities, and to consider how poverty affects pensioners, who have passed employment age, and children, who have yet to reach it. I shall focus on my constituency, but I shall also use our experiences in Glasgow to examine the position more broadly in Scotland and in the United Kingdom as a whole. Above all, I want to use this opportunity to pose questions and to offer solutions.
  Our children are our future, so tackling childhood poverty is crucial, not least because our children need and deserve to grow up in a secure and protective environment, and because childhood experience lays the foundations for later life. Children's experiences and their outcomes in later life are fundamentally influenced by their family circumstances. Children growing up in low-income households are more likely to have poor health, do badly at school, get involved in crime and later in life become unemployed and earn lower wages. That is why I welcome the pre-Budget report "Tackling child poverty".
  I welcome the excellent start that the Government have made. Families with children in the poorest fifth of the population are now on average £1,700 a year better off. There have been increases in child benefit, and the introduction of the children's tax credit has been announced. There are now 1.2 million fewer children in poverty as a result of the measures that we have introduced since 1997. If we are to reach our target of halving child poverty by 2010, we must ensure that this programme continues, that progress is regularly monitored, and that the initiatives are implemented as a result of changing circumstances.
  I should now like to consider how poverty affects our pensioners. My constituency has one of the highest concentrations of people aged over 60, not only in the UK but in Europe. Almost a third of the electorate are over the age of 60. I wholeheartedly welcome initiatives such as the minimum income guarantee and the pensioner credit, which have taken some of our poorest pensioners out of poverty.
  Although I realise that the introduction of the stakeholder pension will ensure that future pensioners have an income that will protect them, a great many elderly people in Glasgow, Anniesland do not have any pension other than the state pension. The Government
  398
  must ensure not only that we protect future pensioners, but that the needs of today's pensioners are recognised and addressed.
  Approaches are being taken to ensure that successful regeneration is shared by our citizens and, in particular, helps unemployed people get back into work. My hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) has an Adjournment debate on Friday, and she will draw attention to the problem of unemployment in Glasgow. I shall focus on a few key areas.
  I have had a long-standing interest in schemes designed to reduce unemployment, particularly the intermediate labour market and transitional employment initiatives. The Wise group pioneered the ILM approach in Glasgow some 18 years ago, and local authority housing was insulated and improved at the same time. From 1996 to 2001, ILM projects in Glasgow ensured that some 7,500 long-term unemployed people found jobs.
  Glasgow's economy has been doing rather well in recent years. The number of jobs in the city rose by 8 per cent. between 1996 and 2001—from 346,000 to 375,000, which is an increase of 29,000 jobs. Over the same period, the number of jobs in Scotland as a whole grew by only 0.2 per cent. Registered unemployment in Glasgow has fallen from 32,000 in 1996 to the current figure of 18,000, which is a fall of 44 per cent. compared with 34 per cent. for Scotland as a whole.
  Despite that initially positive picture, it must be remembered that the starting point is poor. The unemployment rate in Anniesland is 6.9 per cent., more than double the national average, and some areas in Glasgow still have some of the worst unemployment levels in the United Kingdom. Despite a recent upturn in its economic performance, parts of Glasgow are missing out. In its deprived areas there are social inclusion partnerships, known as SIPs, where additional help is given. There are two SIP areas in Anniesland, but that is not enough.
  In some parts of Glasgow the average employment rate is only 33 per cent., compared with a Scottish average of 78 per cent. The employment rate in Glasgow as a whole is only 58 per cent. Why are parts of the city not benefiting from the recent economic upturn? One reason is that about half the jobs belong to commuters, who work in Glasgow but do not live there. The other main reason, on which I shall focus, relates to the large number of people receiving some form of income support.
  In 1999, 19,000 people were officially registered unemployed but more than double that number—39,000—were claiming incapacity benefit. A further 19,000 were receiving lone parent premium, and 42,000 were receiving other benefits. That amounts to a grand total of 119,000. The officially defined unemployed form only 16 per cent. of the total number of unemployed people in the city.
  That is partly due to the last Government's manipulation of the unemployment figures. They deliberately moved people out of those figures, and into the benefit figures. Those unregistered unemployed people would be better described as the hidden unemployed. Incapacity benefit claimants, in particular, significantly outnumber the officially registered unemployed in Glasgow. Even if we accept that many of the hidden unemployed could work given suitable support and opportunities and that real medical, physical or social

  399
  reasons prevent many others from entering the labour market, that still leaves a large number who are unemployed and capable of work, but not included in the official unemployment figures.
  Some may ask whether this really matters. I happen to think that it does. If Glasgow's employment rate is to get anywhere near the Scottish average, we must find ways of helping the hidden unemployed to get into work. Glasgow needs more of its people to be actively engaged in the labour market.
  Mr. Ian Davidson: Is not one of the barriers the high rent and council tax in Glasgow? The loss of rebates is a serious disincentive to becoming employed. Glasgow city council has come up with a useful proposal that would allow them to be continued for those who stay in work, but a council tax cut is also needed. Glasgow needs a fair share of the money that is available.
  John Robertson: That is an excellent point. It is part of the reason why people get into such a state with the benefits system. My hon. Friend has obviously read part of my speech, although I did not let him see it in advance.
  At present most schemes designed to help unemployed people are restricted to the officially registered unemployed, but in Glasgow, as I have said, there are far more unregistered unemployed residents. Many more unemployed people, both registered and unregistered, need to work in the city to get near the Scottish average employment rate. Does it make sense for so many Government and European schemes to be artificially restricted to helping jobseekers alone?
  There are some signs that things are changing—for example, the new deal for the disabled with its emphasis on incapacity benefit claimants, and the action teams for jobs with their remit to assist the workless. But given the nature of unemployment in Glasgow and the number of unregistered unemployed people, we need more flexibility to use existing systems or new programmes to help that large group.
  In the 1990s, the economic development agenda in Glasgow tended to focus on measures designed to reduce the official unemployment rate. That agenda needs 21st century ideas to concentrate on a more subtle strategy designed to increase the city's employment rate. Glasgow's economic potential cannot be effectively maximised until we get significantly more of our residents into work. Getting on one's bike to look for work is not the answer for those people. The last Conservative Government caused the problem and the Labour Government need to solve it. ILMs and transitional employment initiatives have a key role in implementing that agenda by focusing on those furthest removed from the labour market—what some call the hard-core, long-term unemployed.
  Some pioneering developments involving ILMs are being developed by Glasgow city council in partnership with other local agencies. A proposal called the Glasgow full employment initiative is being developed, which aims to create full employment in specified deprived parts of the city. Each scheme would cover 400 to 500 households.
  Within full employment areas, there would be a commitment that individuals or indeed whole households would be offered a regular job with continued after-care
  400
  support, or a subsidised job with a full wage through an ILM scheme. They would be offered quality support and advice to overcome barriers to employment and full access to and integrated support from all existing employment services already available in the area.
  If people later lost their job, the FEA would start them straight away in other alternative employment, which may be on an ILM scheme. The aim is that people will never again have to go on the dole. In effect, the FEAs would be offering a job guarantee. I would be interested to know whether the Minister can find ways to support that initiative.
  The work of the FEAs will also involve proposals to the Scottish Executive and the UK Government for a pilot actively to use unemployment benefit and/or income support in a benefits transfer package. Technically, the legislation already exists to do that. At present, that is only available to registered unemployed working links clients. Permission will be sought for a benefits transfer pilot to be available to all the unemployed people with the FEA—registered and non-registered unemployed.
  Glasgow's unemployment problems cannot be easily solved without changes at a national level in terms of the welfare structure and the avoidance of benefit traps. However, that does not mean that nothing should be tried locally to achieve full employment in deprived areas.
  I think the Minister will agree that we need more flexible and innovative local labour market measures. We need fewer one-size-fits-all, top-down imposed approaches and we need to break down the artificial barriers that mean that help is available only to the registered unemployed and not to the non-registered unemployed. We need more freedom to explore the active use of unemployment and income support payments to meet individual employment and training needs.
  There is no quick fix or magic cure as regards the best way to relieve poverty for the young, the old or, for that matter, the long-term, hard-core unemployed. For those furthest removed from the labour market, we will continue to need an array of different approaches and measures. However, I am sure that within the economic development toolkit there will always be a place for ILM or transitional employment type measures. The Minister will, I hope, be interested in what I have said about Glasgow's latest efforts in that regard.
  The old adages, "No experience, no work" and "You need a job to get a job" still hold true for many people in Glasgow and other UK cities, particularly those furthest removed from the labour market. Because ILMs tackle that issue head on and provide unemployed people with much needed work experience, they must continue to be a major plank in economic development policies for cities. ILMs are not competing with the work first approaches of the employment zones or action teams for jobs. Instead they should be seen as complementary. Indeed, why not refer all those people who are failing to get jobs through the employment zones, action teams for jobs or the new deal to an ILM straight away?
  I have raised important questions and, I hope, some solutions. They are a blueprint not just for Glasgow; I believe they could be developed in any of our inner cities. To use that much used saying, much has been done but there is much to do. I want to see this Government do it.
  10.30 pm
  The Minister for Pensions(Mr. Ian McCartney): Good evening, Mr. Speaker. I congratulate my hon. Friend the Member for Glasgow, Anniesland (John Robertson) on securing a debate on inner-city poverty. I am also grateful for his kind comments on the Government's initiatives to tackle child and pensioner poverty, and the general poverty of those of working age. This debate is a unique experience, because I see in their places my hon. Friends the Members for Stirling (Mrs. McGuire), for Strathkelvin and Bearsden (Mr. Lyons), for Hamilton, South (Mr. Tynan), for Eastwood (Mr. Murphy), for Glasgow, Maryhill (Ann McKechin), for Glasgow, Pollok (Mr. Davidson) and your good self, Mr. Speaker, representing your beloved Springburn. My accent tends to give away my previous incarnation and even my hon. Friend the Member for Wigan (Mr. Turner) can claim that his mother was born in Cathcart. He just failed to get across the border and was born in Carlisle. My only question is where is the Scottish National party? We are debating strategies to end poverty in Scotland and the SNP is not even here.
  We are absolutely committed to eradicating child poverty by 2020. Our strategy is outlined in "Opportunity for all", the annual report that sets out our progress. Significant progress has been made, but as my hon. Friend the Member for Glasgow. Anniesland made clear, much more remains to be done. There is a clear political commitment to tackling the problems of poverty and social exclusion. Poverty and social exclusion are complex, multidimensional issues and are not just about low income. My hon. Friend highlighted that point eloquently in his contribution this evening.
  We are determined to ensure that there is opportunity for all, not just the privileged few. Tackling poverty is not just a social objective or a moral issue. It is also an economic necessity, because we all pay the price of poverty. Research shows that work is the best route out of poverty. Our strategy is to provide work for those who can and security for those who cannot. We are making real progress. I listened carefully to my hon. Friend's speech and to the intervention by my hon. Friend the Member for Glasgow, Pollok and I am very interested in the initiatives they described. I give my hon. Friend the Member for Glasgow, Anniesland a commitment that I will arrange for officials from Glasgow city council and from the Scottish Executive to meet officials from my Department to explore these proposals further. I will write to him when I have made those arrangements, which I hope to do shortly so that we can take forward the ideas that he set out tonight.
  It is clear that the measures that we have already introduced are having positive effects on people's lives. We will continue to work to improve the opportunities available to all people looking for work. Today, as a result of a stable economy and measures to help people into jobs, some 300,000 fewer children live in a household where no one works. We are introducing new tax credits to tackle poverty and make work pay.
  There are more than 1.2 million more people in work now than in 1997. We have increased the household incomes of 2 million of the poorest pensioners by at least £15 a week since 1997. We are tackling the legacy of
  402
  poverty and social exclusion that we inherited. We are making progress, but, as my hon. Friend said, it has been slow and painstakingly difficult in some areas.
  Mr. John Lyons (Strathkelvin and Bearsden): Will my right hon. Friend accept that the national minimum wage, presently £4.10, has played a constructive part not only in bringing people from unemployment to work, but in giving them some security when they take up work? We should try to uprate it regularly because that would make it more attractive for people to take up work.
  Mr. McCartney: As the Minister who introduced the national minimum wage, I am more than happy to endorse my hon. Friend's observation that, together with the working families tax credit and the changes in child benefit, the national minimum wage has made a significant difference. Women in my constituency were earning £1.20 an hour; after the introduction of the minimum wage and the WFTC they now have incomes of £11 an hour and four weeks' paid holiday. The minimum wage has risen consistently since its introduction, following the recommendations from the Low Pay Commission. We have also given the lie to the Tory claim that its introduction would cost a million jobs. Since its introduction, we have created more than a million jobs.
  I thank my hon. Friend for his kind remarks and I will tell my father tonight that his Member of Parliament is doing a damn good job for him—although at 82 I am not sure that he wants to go out and earn the national minimum wage.
  Colleagues, we have set clear objectives that require long-term commitment to year-on-year investment. They need more than just a short-term investment. For people of working age, we are rebuilding the welfare state around work, for both individuals and families. As I said earlier, paid work is the best form of welfare. It is the most secure means of averting poverty and dependence.
  Mr. Bill Tynan: Does my right hon. Friend agree that the drug culture in many Scottish communities is also one of the aspects of poverty that has to be addressed?
  Mr. McCartney: My hon. Friend is right. From bitter personal experience, I know that the drug culture in Scotland damages communities and families, and that it tragically destroys many young people's lives. Across Britain, 3,000 young people a year die from drug abuse. To destroy that culture, there must be action in the community against the criminal. That action must involve young people and investment in treatment and rehabilitation. Part of the rehabilitation culture must be the introduction of young people to education, training and employment opportunities.
  The drugs problem is prevalent in the east end of Glasgow, where initiatives have been set up similar to those in other parts of Glasgow described by hon. Friend the Member for Glasgow, Anniesland. I welcome the comments of my hon. Friend the Member for Hamilton, South in that regard.
  We are also changing the culture of the benefits system. We are moving away from a strategy based on the question "What money can we pay you?", to one based

  403
  on the questions "How can we help you become more independent? How can we help families to help themselves? How can we help communities to rebuild and regenerate themselves, and to develop a self-confidence and a feeling of self-worth and commitment?"
  Our approach works on two fronts—making it easier to move into work, and ensuring that work pays. One of the problems facing people moving into work is the gap between their final benefit payment and their first pay cheque. That is why we have introduced initiatives to ease this transition. Examples of that are the simplification of the housing and council tax benefit of the mortgage interest run-on, the lone parent's benefit run-on and the job grant.
  We have introduced a number of measures to ensure that when people take up work, that work pays. Mention has been made of the working families tax credit and the national minimum wage. The House may want to know that, since the working families tax credit was introduced by my right hon. Friend the Chancellor, 120,000 families in Scotland have benefited. Moreover, 110,000 families in Scotland are benefiting from the national minimum wage. The combination of both those innovations means that no family with one person working full-time earns less than about £11,000 a year. That is a major step forward.
  As my hon. Friend the Member for Glasgow, Anniesland pointed out, the Government have had great success with reducing unemployment. Since 1997, we have reduced long-term unemployment by more than 50 per cent. in Glasgow in general, and in the Anniesland constituency in particular.
  Nearly 6,500 young people have found work in Glasgow through the new deal. Another 1,000 long-term unemployed have moved into work through the new deal 25 plus scheme.
  We are constantly improving these new deals to help clients to match their current skills to vacancies in the labour market. New deals also help clients to gain new skills through education and training to meet the needs of local employers.
  As we announced in November, we will soon be launching our pilots for our new StepUp programmes. In April, a pilot will start in east Ayrshire and another pilot will begin later in Edinburgh. These pilots will test out the provision of transitional jobs to act as a stepping stone for long-term unemployed people moving from benefits into work. In his speech, my hon. Friend the Member for Glasgow, Anniesland asked the Government to consider that matter specifically.
  We have also introduced employment zones to help long-term unemployed people in some of the most deprived areas. Employment zones are looking at innovative ways to find local solutions to local problems. The employment zone in Glasgow works with local organisations such as the Wise group, and has already helped nearly 2,000 people find work.
  I also agree with my hon. Friend that our focus needs to be wider than just those traditionally classed as unemployed. We must look to help more jobless people who would like to move into the labour market. We have launched 56 pathfinder offices for our new service, Jobcentre Plus, and their locations include Aberdeen, Livingston, Greenock and Port Glasgow. The offices will be rolled out over the next few years across the whole of Scotland.
  404
  This new service will give all benefit claimants the opportunity to find out about the help and support available to them if they move into work through work-focused interviews. Lone parents whose youngest child is of school age already benefit from having a work-focused interview at the start of their claim for income support. From April, these interviews will be extended to lone parents whose youngest child is three years old or older.
  All lone parents who are out of work can benefit from our new deal for lone parents. This offers specialist help and advice to enable them to take up work. By the end of October, we had already helped more than 2,200 lone parents in Glasgow, and in Anniesland nearly 300 lone parents have been assisted in taking up employment.
  Specialist help is also available for people on incapacity benefit through our new deal for disabled people. During the pilot phase, more than 8,200 people have been helped into work. In the summer, we launched a national network of job brokers who work with people on incapacity benefit to help them access the labour market.
  These national programmes are complemented by our action teams for jobs. The teams work with local organisations to find innovative solutions to problems faced by people from disadvantaged groups such as those with disabilities, lone parents, homeless people and people with drug or alcohol problems. The action team in Glasgow was so successful at the start of this year that the team has been split into four and their collective budget has been increased by more than 700 per cent. to one in excess of £3.5 million.
  That demonstrates our clear and specific strategy on employment. It works alongside initiatives taken by Glasgow and the communities there to develop self-help and a co-ordinated approach between central Government, local government and the community to the regeneration and refurbishment of communities for individual families and the community as a whole.
  In his opening remarks, my hon. Friend alluded to the need for the Government to end pensioner poverty and design new systems to end it. He is absolutely right. Our pension strategy is simple: we want to ensure that all pensioners have a decent income in retirement. That is why it was important to introduce the minimum income guarantee, rough and ready as it was. We have been the first Government for two generations to take a positive decision to target elderly people who were being left out of the basic pension system and, as a consequence, were living in poverty. From a standing start, almost 2 million elderly people now receive on average between £15 and £20 a week that would never have been available to them had we not taken action. However, that was a short-term action; to deal with poverty now, we must modernise a pensions system to prevent future pensioners from falling into poverty.
  In their Lordships' House is the State Pension Credit Bill which will soon come before this House. The Bill is about modernising the whole basis and concept of the pensions system, so that it will ensure a minimum guaranteed income for all pensioners, irrespective of how they access the pensions system, as well as for millions of hard-working pensioners who, under the current system

  405
  and particularly under the Tories, were trapped at 100 per cent. for having small savings and small second pensions. The modernised state system will not only pay their basic minimum guarantee but will pay them extra for having small savings. They will benefit from having small savings or a small second pension.
  In addition, we will take steps to assist people who work for employers have no form of pension savings. From a standing start, in the first seven months 80 per cent. of employers required to register for stakeholder pensions have registered. The big task is to turn those registrations into pension entitlements for many people who last year, before stakeholder pensions, had no pension opportunity. This year they have a pension opportunity.
  406
  The Government's step-by-step approach is working, but we cannot beat poverty in a few years. We certainly cannot beat poverty—
  The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at sixteen minutes to Eleven o'clock.

  CORRECTION
  Official Report, 28 January 2004: In col. 125 after "Clause read a Second" delete, "added to the Bill"