§ Motion made, and Question proposed, That this House do now adjourn.—[Joan Ryan.]
10.30 pm§ Mr. David Amess (Southend, West)The financial settlement for Southend borough council for the year 2004–05 is nothing short of a scandal. In fact, I would go further and say that the Government have behaved vindictively towards the council. I hope to charm the Minister into reflecting on what I have to say and into revising the figures.
When the Chancellor of the Exchequer trumpeted another £340 million for council tax payers, our borough treasurer worked out that Southend borough council's share would be £4,000. I am sure that the Minister will understand how badly that went down with residents in Southend. I hope that the Minister will reflect on the three letters exchanged between the leader of the council and the Minister for Local Government, Regional Governance and Fire, and that he will reconsider that right hon. Gentleman's refusal to meet a delegation from the council. If the Government felt that they had treated Southend borough council fairly, I should have thought that they would be prepared to meet a delegation. Up until now, I am told, they have refused to do so.
I also hope that the Minister will reflect on the census figures, which are inaccurate as far as Southend borough council is concerned. I hope that he will reflect on how the money has to go into education, which means that terrible cuts are having to be considered in social services and highways. I hope that he will reflect on the difficulties that the council must face on issues surrounding asylum seekers. Finally, I hope that he will consider the lousy deal that we have been given by the Government for looking after our young people.
There is currently great concern about the level of council tax. Some of my colleagues might groan at what I am about to say, but I am proud to tell the House that I made my maiden speech on the Bill that introduced the community charge. I still believe that if the community charge had been introduced with many exemptions and at a reasonable level, it would have proved much fairer than the council tax has. Every year Labour claims that its funding settlements are generous, but every year council tax across England soars. Every year Labour breaks its promises. Most recently, the Labour promise, made by the Minister for Local Government, Regional Governance and Fire was that
there is no reason why councils cannot continue to improve services while sticking to reasonable council tax increases."—[Official Report, 5 December 2002; Vol. 395, c. 1068.]In reality, the average council tax bill rose by 12.9 per cent., with band D bills passing the £1,000 mark for the first time. Council tax on band D homes has increased by 60 per cent., or £413, since Labour came to power. During the years of the Conservative Administration, on average, taking all factors into account and after inflation, council tax bills rose by 2.1 per cent. in real terms. Under Labour, council tax has risen by more than double that figure, averaging 5.2 per cent. a year in real terms. I ask the Minister to reflect on the fact that Southend borough's council tax is the seventh lowest in 644 the country. We are very proud of that. The average council tax for a band D property in Southend is £851, compared with a national average of £1,102.
I am grateful to Councillor Sir Sandy Bruce-Lockhart, who is the leader of Kent county council—Essex Members have many friends across the water in Kent—who advised me that the proportion of the council budget funded by Government grant in the south-east for 2003–04 was 64.5 per cent., whereas in the north-east it was 75.5 per cent. That is some 10 per cent. more, which is grossly unfair. Some 35.5 per cent. of the council budget was funded by the taxpayer in the southeast, but only 24.5 per cent. of the council budget was funded by the taxpayer in the north-east.
Southend band D properties paid £854 for council services for the year 2003–04, which is a 15.7 per cent. increase. However, in Gateshead, a band D property paid £1,115, a 9.8 per cent increase. Gateshead council receives £261 more per household than Southend borough council. However, the real unfairness is that Gateshead council, which raises more money from the council tax, is rewarded by being given 10 per cent. extra grant by the Government. Total public spending per head of the population in 2002 for the south-east was £4,444, compared with £5,793 for the north-east. Why is that disparity so great? I would like the Minister to address that question.
Southend borough council's treasurer, Mr. Andrews, has advised me that if the council is to spend to the formula spending share, it will have to increase the council tax. The leader of the council, Howard Briggs, stated in a letter to the Minister for Local Government, Regional Governance and Fire that for services to remain at their present standard the council needed to increase council tax by
well over 20 per cent … which is unacceptable.The borough treasurer has said that even with an increase in council tax, savings of £7 million would be needed. Like Kent county council, Southend borough council sees job cuts as the way forward, but that cannot be what this Labour Government want. The council intends to make savings by freezing recruitment and only advertising job vacancies internally. Job cuts will be made through natural wastage and all efforts will be made to ensure that there are no compulsory redundancies.
I know that the Minister has copies of all the correspondence between the council leader and his colleague, but I draw his attention especially to the letter of 3 December. The council leader states:
Ever since Southend-on-Sea became a successful Unitary Authority we have managed our finances carefully and indeed"—as I have already said—Southend is one of the lowest Council Tax authorities in the country. We have always spent at Government recommended levels".That is where the real unfairness in the system lies—in social services.My constituency is No. 1 in the country in terms of the number of residents aged between 100 and 110. That says it all. People in Southend, and especially in Southend, West, are living longer, and that ageing 645 population requires tremendous extra expenses for social security support. In England as a whole, there has been a 4.9 per cent. increase in funding for social services for children, but in Southend the figure is 2.4 per cent. The increase for social services for older people in England as a whole is 8.7 per cent., but it is only 8.2 per cent. in Southend; the increase for younger adults—those aged between 19 and 64—in England is 4.1 per cent., but in Southend it is 1.4 per cent. The situation is the same for other services; for example, the amount for highways in England is 2.8 per cent. but 1.2 per cent. in Southend.
The leader of the council warned the Minister for Local Government, Regional Governance and Fire that the council tax increase would be 20 per cent., which is obviously wholly unacceptable. I have read the Minister's letter carefully, but neither the leader of the council nor I agree with any part of it. The letter was very, very disappointing.
I am sure that the Under-Secretary will refer to education funding. However, Mrs. Sally Carr, the chairman of Southend education committee, has advised me that Southend's entire budget settlement was not sufficient even to cover the increased amount to be passported for education—hence, extra money was given. The amount left for the rest of the council's services once the funding for schools is taken out will not even cover the rate of inflation, so services will be cut, charges will be increased and a high rate of council tax will be needed just for the council to stand still.
Southend was the highest delegating authority in the country, so it will have to continue to passport the same amount even though it is not directly funded. Last year, Southend took £700,000 from the LEA block grant to make up the difference for school funding and it will have to do exactly the same this year to maintain the amount that the Government say must be passported.
Southend cannot continue to sustain such amounts. We spend less per pupil at LEA level, because of all the extra work that the authority has to do with no extra funding; for example, by the end of 2004, it must be the clearing house for all secondary admissions, which is putting a real strain on central resources. Schools have received the required amount—less the £700,000 that we have to make up–but the rest of the local authority has received nothing, and social services especially will suffer.
I have said that settlements for children and older people are disappointing compared with those for the rest of the country. The social services department will receive an average increase of 4.6 per cent., compared with an increase of 6.3 per cent. for England as a whole. Southend's director of social care, John Nawrockyi, has advised me that up to 60 jobs will have to be cut due to the financial settlement, although he hopes that the cuts will be spread evenly across the department.
The council understands that the Government will penalise local authorities if they are found guilty of what is described as "bed blocking". If social services cannot move elderly people out of Southend hospital, they will be penalised with fines of £100 per person. In an article in the excellent Leigh Times, the leader of the local authority stated that those provisions would
destroy the co-operation that has been built between the Council's Social Services and the Hospital, which has seen the number of cases of delayed discharge dramatically reduced in the past 12 months.646 The £100 penalty will be yet another blow.I say again to the Minister that the local authority corresponded with the Office for National Statistics and the census figures showed that the number of vacant houses did not tally with the council's council tax returns. The figure for vacant houses was not accurate in respect of, for example, the Palace hotel, which looks after many homeless people and asylum seekers.
The Government have been very unfair to Southend borough council, which has done a splendid job in looking after local residents. It has coped with the increasing demands made on it, but it is faced with a crisis, whereby it will have to introduce a high council tax, cut services and staff and increase charges for off-street parking and crematorium and cemetery fees. This financial settlement will not only produce a huge council tax, but have a detrimental effect on Southend residents' quality of life. It is a very raw deal, and at the very least I ask the Minister to have a conversation with his right hon. Friend the Minister for Local Government, Regional Governance and Fire, so that he reconsiders refusing on three occasions to meet a delegation from Southend borough council.
§ The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope)I congratulate the hon. Member for Southend, West (Mr. Amess) on securing a debate on the provisional local government settlement for Southend in the coming financial year. The overall settlement is, of course, an issue of great interest to local authorities at the moment. We are considering the comments received during consultation on the proposals, which my right hon. Friend the Minister for Local Government, Regional Governance and Fire announced on 19 November, augmented for some authorities in the pre-Budget report by my right hon. Friend the Chancellor of the Exchequer. Consultation closed last Friday, and we expect to announce the final allocations around the end of the month.
On the point about meetings, the hon. Gentleman will know that we are in the second year of a three-year settlement, and Ministers do not meet individual local authorities during the second year and this part of the consultation period. However, we are meeting representatives of bodies such as the Local Government Association that are putting the kind of points to us that he is making this evening.
I am still very confused, however, about the tenor of the hon. Gentleman's contribution. It is one example—we have many of them—where Conservative Members call for increased spending on state services. The hon. Gentleman does not want to increase the council tax, so he must want central Government taxation to increase to pay for that. I find that confusing because the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) recently published his series of "I believe" statements. They have been criticised as meaningless platitudes because they contain no policy detail, but we know what at least one of them might mean in practice. Of course, I am referring to his belief that people should be big and that the state should be small. We know what that means in practice: under the last four years of the previous Conservative Administration, there was a 7 per 647 cent. real-terms cut in support for local councils, such as Southend. If the Conservatives were ever to regain office, it is their stated aim to cut public spending by £80 billion. Local government would clearly be one of the biggest losers in that financial cull.
If belief in a small state—local or national—translated into practice involves a cut in local government funding, I should have thought that the hon. Gentleman would come here tonight to plead for less money for his council, not more, to be entirely consistent with Conservative philosophy. However, given that that is not the case, let me move on to the points that he is making. He made a very angry point at the start about the unfairness of the situation, so I want to spend a little time describing the settlement overall and how we have reached this position.
The main element of support to local government—revenue support grant and redistributed business rates—is set to rise by £2.4 billion or 5.5 per cent. next year, which is more than double the present rate of inflation. Special grants distributed outside the main finance system will rise by a further £1.3 billion or 11.7 per cent. That gives a total increase in grant to local authorities next year of some 7.1 per cent. By any standard, that is a massive increase in investment. It brings the total increase in support to local authorities since Labour took office to 30 per cent. in real terms. This is the clearest possible demonstration of our commitment to local government and the importance that we attach to the services that local government provides to local communities.
For individual local authorities, this year's settlement is largely shaped by the review of formulae that we conducted before the 2003–04 settlement. One of the key outcomes of the review—I stress this point to the hon. Gentleman and to the council whose case he is making—was a change in the way that the top-up for higher staffing costs operates. In the old system, the area cost adjustment was set for crude concentric circles around London, but he and I know that wage and recruitment costs vary much more widely than that. Wages in west London are much higher than the rest of outer London. The M4 corridor in Berkshire, Wiltshire and Avon previously received no top-up, nor did areas outside the south-east such as Cheshire and the old West Midlands county, although all have significantly higher costs than average.
The new area cost adjustment addresses these anomalies by considering wage levels for each county separately. In taking account of higher costs more accurately, some areas inevitably lost out in relative terms. Wage levels to the east of London are noticeably lower than neighbouring areas and, consequently, the authorities concerned receive smaller top-ups than previously.
To turn specifically to the settlement for Southend, the Government recognise, of course, that any move from the old unfair system to the new fairer formula will require a period of transition. In recognition of this, Southend, like some other authorities, directly benefits significantly from our floors and ceilings system, which gives a minimum increase in grant to each authority. The floor for all authorities was set above inflation for the first time last year, 2003–04, and, with the additional 648 £340 million announced in the pre-Budget report, we have been able to repeat this level of protection for 2004–05. The updated provisional settlement gives Southend a like-for-like increase in formula grant of 4.4 per cent.—a real-terms increase of almost 2 per cent. This follows increases in the seven years of this Government, ranging from 3.9 per cent. to, in one year, a 7.5 per cent. increase in grant to Southend borough council. These figures mean that Southend has received a real-terms increase every single year. That is in marked contrast to the decisions of the previous Administration who, we know, produced year after year of cuts for local authorities amounting to an actual cut of 7 per cent. in the last four years of the Conservative Government.
In addition to the 4.4 per cent. like-for-like grant increase, Southend has also benefited from the range of additional special grants that we are providing to local authorities, including up to £1.4 million of extra help for schools and more than £600,000 of the new money that we announced for social services specifically to deal with services for children.
The hon. Gentleman also referred to passporting to schools. Local government services are part funded by central Government and part funded through council tax. Schools are no exception. Although we have expressed the new guarantee for schools funding arithmetically in terms of the passporting target, it is misleading to suggest that increases for schools are fully funded while other services see no increase. In fact, Southend, like other councils, has other sources of income that can be spent on its services. They include the reasonable low single-figures increase in council tax that we expect, other special grants—I have mentioned some already; others are to be announced—efficiency savings through things such as better procurement and new powers in the Local Government Act 2003 to borrow and to levy charges and fees. So it should not be implied from this that, in the passporting of funds to schools, Southend has been discriminated against in some way.
Last year, 12 authorities were asked to increase spending on their schools by more than their increase in formula grant. This year, with even more importance attached to full passporting to schools, the Government decided that it would not be reasonable to ask authorities to do this. When we announced the consultation in November, 13 authorities, including Southend, received additional grant to ensure that they received at least as large an increase in formula grant as their target for passporting to schools. Southend is in this position because we have provided a high floor for the schools formula spending share of 5 per cent. per pupil. Combined with an increase in pupil numbers, the authority is being asked to increase its schools budget by more than 6 per cent.
The extra money from the pre-Budget report that the hon. Gentleman mentioned increased the raw grant entitlement of all 150 upper-tier authorities, but we had to make a choice on the floors and ceilings to determine how much they should actually receive. We concluded that it would be appropriate to increase the floor to 4 per cent. and the ceiling to 7.5 per cent. His authority received extra money in November and, in the pre-Budget report, we made a change and more money went in, which was reflected in the ceilings and floors. However, we kept the guarantee—[Interruption.]The 649 hon. Gentleman does not understand that because of the formula grant, we are ensuring that the money can be passported.
We are keeping the guarantee that every authority should have a grant increase that is sufficient to meet its passporting target. Even when we recalculated the settlement with the extra £340 million, Southend and five other authorities required extra top-up to enable passporting. That amount was relatively small in some authorities and relatively large in others. Southend is still receiving more funding in cash terms than the formulae say that it should.
There are arguments that Southend and other authorities should receive more money than the minimum necessary to passport to schools—I am apparently hearing that from the hon. Gentleman. However, there are even stronger arguments that the extra money that we have provided through the new guarantee is fair. Indeed, we have received representations from several authorities saying that the level of protection that we have provided is far too generous—other hon. Members have made that point fiercely.
With that in mind, I turn to the council tax and the possibility of capping. I must say that I was completely surprised to hear that the hon. Gentleman is still in favour of the poll tax, or the community charge. There cannot be too many of his like left on the Opposition Benches. I think that that was probably the single reason why the then Prime Minister Margaret Thatcher lost her job, and it is interesting that the current Leader of the Opposition was the Minister responsible for putting the poll tax legislation through Parliament—I do not suppose that he likes to be reminded of that too often. Still, I have no doubt that he is grateful for his supporters such as the hon. Gentleman reminding the House of that track record.
Let us consider the council tax and the possibility of capping. Last year, Southend borough council made the choice to increase its budget by 7 per cent., which was much more than double the rate of inflation. [Interruption.] As a consequence, its council tax increased by 15.7 per cent., which was substantially above the average and no less than six times the rate of inflation. I must say to the hon. Gentleman that we made it quite clear that such an increase was completely unacceptable. Hon. Members should be in no doubt 650 that we want to see percentage increases restrained to low single figures next year, and we are prepared to use our capping powers—[Interruption.]
§ Mr. Deputy Speaker (Sir Alan Haselhurst)Order. I should not have to intervene in an Adjournment debate, but there has been far too much sedentary comment on both sides of the House. The Minister should be heard.
§ Phil HopeThank you, Mr. Deputy Speaker.
We are prepared to use our capping powers on any authority, including police and fire authorities, if that proves necessary. We will decide on the criteria in the light of authorities' budget decisions.
I share the hon. Gentleman's worries about unreasonably high council tax increases, so we are taking steps to help individual council tax payers directly. Unfortunately, not all those who are entitled to help with their council tax bills are claiming that benefit. Local authorities have a statutory duty to promote the take-up of council tax benefit, and we are actively pursuing new ways of supporting them.
The Department for Work and Pensions is planning to launch a campaign to raise awareness of council tax benefit and encourage take-up by potential beneficiaries. We especially want to ensure that the 1.9 million pensioners who will gain more council tax benefit on the introduction of pension credit will get the extra help to which they are entitled. Furthermore, the DWP is revising and streamlining the process for claiming housing and council tax benefit and pension credit. We have also removed the restriction on people living in houses with high council tax bands from claiming council tax benefit at the full rate.
The hon. Gentleman made a point about the census. We have announced that we will do an amending report for 2003–04. We are allowed to make only one amending report for the financial year, which will take place within the statutory time scale allowed. That means that it must take place before the end of the 2004–05 financial year because we have only one chance—
§ The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at one minute to Eleven o'clock.