Westminster Hall Sitting of 3 April 2001

Preamble
[MRS. SYLVIA HEAL in the Chair]

Local Government Finance
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Touhig.]
9.30 am
Mr. Keith Darvill: It is a privilege to open this important debate on modernising local government finance and on the Green Paper on the subject that was published on 19 September. The Green Paper sought views on the Government's aims and proposals for modernising local government finance and invited responses by 8 December. More than 16,000 responses were received, which must be a record—I myself responded in detail. I look forward to seeing the White Paper later this year. While hon. Members had that opportunity to respond to the Green Paper, it is also useful for Green and White Papers to be debated in the House whenever possible. It is by such listening and debate that hon. Members can formulate ideas and opinions. Perhaps naively, one is also ever hopeful of persuading Ministers that general and specific proposals have merit and will be adopted as policy.
In addition to the broad point of principle about the opportunity to debate important issues such as this one, I was struck by the number of hon. Members who wanted to participate in the revenue support grant debates earlier this year but were unable to do so. It was disappointing that the Opposition insisted on separate debates for the special grant report and the rate support grant, leaving limited time to explore individual constituency grievances. Despite considerable latitude by the Deputy Speaker, the House had inadequate opportunity to debate this year's revenue support grant.
That small but important issue is relevant to this morning's debate. Hon. Members believe that the existing system is defective and will no doubt use this and other forums for debate to argue for changes based on experiences from their own local authority and perhaps their own experiences of local government. I hope that they will not only dwell on the defects but comment on the alternatives, particularly those set out in the Green Paper.
In his foreword to the Green Paper, my right hon. Friend the Deputy Prime Minister said:
"Our local government finance system is complex. Few people make the effort to understand it. Fewer still succeed."
I am not an expert on that system and, indeed, have not fully understood it, but I am one of those few people who have made an effort to do so. I am convinced of the need for reform. Change should not be delayed beyond the timetable required to consult, decide and legislate because there is an overriding feeling that the existing system is unfair, has created many anomalies and is in need of urgent reform.
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Unison, the union to which 1.3 million public service workers—including 850,000 in local government—belong, sent me a copy of its response to the Green Paper. That response, with which I very much agree, stated:
"We believe that the system of local government finance is long overdue for reform. We welcome the general approach which the Government has adopted in relation to the issue. For too long local government has suffered from the effects of cuts in funding coupled with restraints on freedom of action. The effects of persistent neglect can be seen in declining local services and underinvestment in staffing and infrastructure. Tackling these problems will require imagination and initiative together with the resources to really make a difference."
Local authorities play different roles and provide a diverse range of public services. A substantial proportion of local authority activity effectively involves the delivery of Government-determined services, on which there is little variation between each local authority. As the Green Paper states, local government implements key national policies at local level. I expect that few right hon. and hon. Members disagree with the aims of reform: to fund all authorities adequately; to promote continuous improvement; to provide a reasonable degree of predictability and stability; to provide balanced funding for local government's delivery of national priorities and targets, with real financial freedom and responsibility; to be fair; to clarify accountability for financial decisions because, if council tax increases are excessive or services are underfunded, people should know whom to hold to account; to be intelligible and transparent; to make partnership working easier; and to encourage consultation, particularly with local taxpayers.
Some progress has been made on a number of fronts. I welcome the increased level of funding; the inbuilding of certainty with three-year spending rounds; the moratorium on changes to the grant-distribution formulae; the replacement of compulsory competitive tendering with best value and of crude and universal capping with new reserve powers; and pilot schemes for local public service agreements.
Despite those improvements, there is still much to do. As the Green Paper admits, the grant system and capital finance systems are especially complex and opaque. As I have said, the case for reform is overwhelming. Despite what the Green Paper says, the current system, which has been in place for the past decade or so, does not fulfil its single, explicit objective: to ensure that council tax bills for properties in the same council tax band are the same everywhere in England. They could be if every authority budgeted to spend in line with its standard spending assessment. Nor do I agree with the general assertion that the system has been able to cope with substantial change in the structures and responsibilities of local authorities. Paragraph 3.2 of the Green Paper sets out four weaknesses that have become apparent.
Mr. Nigel Waterson: Before the hon. Gentleman moves on to the next passage of his speech, to which I am listening intently, and while he is talking about comparisons between council tax rates in different authorities, does he accept the proposition that the proper comparison is between band D levels?
Mr. Darvill: I would not say that that is the proper comparison, but it is certainly one that is widely used.

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First, the current system has lacked certainty. Only since the 1998 comprehensive spending review has that problem been addressed. In the past, there was uncertainty from year to year about the level of grant to expect, which hindered planning and modernisation of services. Stability and predictability are important changes for the better. Secondly, the current system gives authorities the same amount of grant regardless of what they are doing to modernise services. Thirdly, the grant system has relied too much on the mechanical use of the statistical analysis of spending. Fourthly, it does not apply any fine tuning to take account of circumstances in individual authorities. I would add a fifth weakness to those set out in the Green Paper: no account seems to be taken of the adverse historical circumstances that applied in some local authorities when the new system was introduced.
My complaints about and criticisms of the existing system are based firmly on my experience of finances in the London borough of Havering, not only in the past four years, but since the reforms were introduced by the previous Administration after the disastrous poll tax debacle more than 10 years ago. I speak from personal experience, not only as a politician, but as a governor for two local schools, an activist in the communities association in my local area, the backroom boy in the Labour party during those years and chair of the infamous local government committee in Havering.
How does the present system impact on boroughs such as Havering? First, the level of Government grant that Havering receives is one of the lowest in London. When compared with those of its neighbouring boroughs, the level of grant per head of population is significantly lower. That may sound like special pleading, which I accept to a certain extent in being an advocate for my local area. More importantly for this debate, that illustrates some of the weaknesses in the system.
For 2000–01, Havering received £578 grant per head of population, whereas Redbridge, its neighbour, received £741 grant per head—20 per cent. more. Barking and Dagenham, another neighbouring borough, received £896 per head—55 per cent. more—and Newham received £1,237, which was 114 per cent. more. I will continue to refer to those boroughs. Although deprivation levels are rightly taken into account, the structure of the standard spending assessment calculation does not reflect the pockets of deprivation in boroughs such as Havering, nor does it reflect the actual cost in, for example, the unit cost per pupil in the education SSA.
The basic structure of the SSA calculations is the number of clients multiplied by unit costs multiplied by area cost adjustment. The unit cost includes a national standard amount and a supplementary amount to reflect the assumed effects of deprivation, and sparsity or density, and the area cost adjustment reflects the higher cost of employing people and property in the area. The indicators in the formula determine the supplementary amounts that are detrimental to Havering. Although some data used in the education, social services and environmental, protective and cultural services—EPCS—service blocks are updated annually, such as the number of income support
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claimants, other data are based on the previous census, which was conducted 10 years ago, and have become considerably out of date.
To illustrate the detrimental effects of the formula, I refer to Havering's SSA for secondary education. The flat-rate unit is £2,306 for each pupil. The supplementary amount for deprivation is £309 for Havering, £448 for Redbridge, £549 for Barking and Dagenham, and £842 for Newham. The area cost adjustment is £283 for Havering, £298 for Redbridge, £309 for Barking and Dagenham, and £341 for Newham. The unit cost per pupil in Havering is £2,898. It is £3,052 in Redbridge, £3,164 in Barking and Dagenham, and £3,489 in Newham. The total secondary schools SSA is based on the number of pupils in the borough, which is 14,649.
I am sorry to repeat the statistics, but they illustrate an important point. If the SSA were based on the Barking and Dagenham unit cost, the total amount received from the Government would be £46.3 million. It would be £51.1 million for Newham, and £44.7 million for Redbridge. Havering receives only £42.4 million, which is £3.8 million below the Barking and Dagenham figure, £8.6 million less than Newham, and £2.2 million less than Redbridge. I appreciate that there are higher levels of deprivation in those areas, but the gap is too wide.
One can argue that it costs the same to educate a secondary school pupil in Havering as it does in neighbouring boroughs, in terms of the cost of teaching staff, staff-to-pupil ratios and school running costs. With those figures, Havering could attract £8.7 million extra in Government support on that part of the SSA alone. That is only one aspect of the formula. I could go on, because similar effects are illustrated by the EPCS service block and concessionary fares system.
The SSA formula has not reflected Havering's need to spend on local services, especially social services. Compared with outer-London boroughs in general, Havering continues to have one of the lowest SSAs per head of the population. Compared with its neighbours, the disparity is marked; Havering's SSA per head of population is on average 23 per cent. less. Although the borough recognises that the percentage increases in SSA for 2001–02 are good—double the rate of inflation—they will be applied against a low base and do not reflect true spending needs. In that respect, it is not as good a settlement as it looks.
Since 1995–96, Havering's budget requirements have consistently exceeded the SSA, even after accounting for drawing down from reserves—in 2000–01, spending was 4.5 per cent. above SSA. That inequity must be resolved. The continued underfunding has had a detrimental effect on the council's infrastructure. A prime example is highways maintenance spending. About 58 per cent. of the borough's street lighting columns are more than 15 years old, and in excess of 2,500 have significant deterioration. Spending on highways maintenance averaged 17 per cent. below the SSA in recent years. I was interested to look at the performance indicators. Whereas in the past, Havering's maintenance of street lights was average, it has now declined, which reflects the lack of investment in that important area.
The imposition of the ceiling for data changes appears to be unfair to councils like Havering. It already provides services for pupils in schools, for the elderly

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and other services for the general population and it pays higher input costs to employ skilled staff as reflected in the new earnings survey. Further more, as in other London boroughs there are recruitment and retention problems in key local government professions. The effect of the ceiling should be taken into account within the council tax benefit subsidy limitation scheme. It should also be taken into account in the passporting rules for the education standard spending assessment. Passporting the SSA increase in full will increase the loss to the council through the council tax benefit subsidy limitation scheme, yet Havering has the highest level of delegation in the country. Nearly 90 per cent. of devolved funding goes to local schools.
External support for Havering is one of the lowest in the outer London boroughs. In the past five years, it has averaged 71 per cent. while the outer-London average is 75 per cent. The gap is widening from 3 per cent. in 1996–97 to 4 per cent. in this year's provisional settlement. That means that in addition to having one of the lowest SSAs in London, which restricts the council's spending, Havering residents are expected to pay a higher proportion of costs towards local services. Currently, the council tax is well above average at £959 this year.
The borough loses out in other areas. Havering pays its levy to the East London Waste Authority based on band D equivalence. Funding through the SSA formula is based on population and deprivation indicators. The basis of the costs to the constituent boroughs is not represented in the SSA formula. If the levy were based on tonnage of waste generated, it would more closely reflect the funding stream and would save Havering nearly £875,000 per year. Another example is the mismatch between the funding and costs to the council in concessionary fares. The SSA formula, which distributes grants to fund that service, takes into account the way those services are paid for, but as the SSA formula includes deprivation indicators, our neighbouring authorities receive significantly more Government support to fund those services.
Havering also loses out in the London borough grants scheme. The total cost is allocated on a population basis, but grants made by the units to voluntary organisations whose work includes Havering represent approximately 10 per cent. of the amount that the council contributes. That is partly due to the fact that any grants allocated by the unit require match funding. The council has no scope to match-fund to attract those resources to improve services in the borough. I have gone though the difficulties that a borough like Havering has in some detail, but other boroughs throughout the country have similar problems. They have led to significant increases in the council tax. There was a 43 per cent. increase in council taxes from 1996 to 2001 There is a 12.4 per cent. increase for 2001–02. Increases above the national average are likely for the remainder of the comprehensive spending review period.
What does the future hold? The Green Paper sets out a number of ways of trying to achieve a better regime. A number of them require careful analysis. I am in favour of the safety valve suggestion. The Government recognise that any formula-based system is bound to have limitations and that those limitations could be resolved by allowing authorities to apply for further funding via a safety valve mechanism. That would allow
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the Government, presumably as a top-up to the revenue support grant, to pay additional non-ring-fenced grants to councils that appear to be underfunded.
I agree with that approach, subject to there being clear criteria that local councils can understand when applying for the funding. Comparisons of external support to the class of authority are a good starting point. The criteria should be consistent, holistic and not open to different interpretations. For example, unit costs can vary simply by the allocation, while best value performance indicators need to be applied consistently across authorities and years. The system should be neither administratively cumbersome nor costly. The Government should consider using other sources of information, such as inspection results.
Mr. David Kidney: My hon. Friend has shown a wonderful grasp of the details of Havering. He mentioned other sources of data. Is he aware of what the Office for National Statistics is doing? The decennial census is about to begin, the average earnings index is changing, and there is a new project to capture ward-based statistics. Does my hon. Friend agree that such new data might be helpful?
Mr. Darvill: I thank my hon. Friend for that intervention. The problems that can result from using old data are one of my main themes today. The current system perpetuates existing problems but, as my hon. Friend suggests, current technology could help to ensure that grants take account of updated information.
The use of ministerial discretion in safety valves could give rise to concern unless the discretion is tied into a clear, published and transparent framework. In other words, the safety valve system could work quickly, but the framework must be open to avoid difficulties with the allocation of grants at central level.
The Government have changed their emphasis recently on public service agreements. I look forward to hearing the Minister comment on the setting up of pilots, and clarify the criteria for public service agreements. The Green Paper also touches on the business rate, which the Government are considering. In principle, the more the business rate can be defined and made accountable to the local area, the more effective it will be.
I apologise for concentrating on my local authority's position, but I wanted to highlight the severe difficulties that have resulted from the existing system. The borough has never been a profligate or high-spending council. It has made strenuous efforts to modernise and embrace change, yet finds itself in a difficult position. It has suffered from a lack of investment in the past, almost entirely due to previous Conservative Administrations. I am sorry to make a party-political point, but it is relevant to explaining the historical position.
In the lead-up to the 1990s, the borough was a low-spending, low-investment authority. Following subsequent changes in the 90s, several services—particularly children's and other social services—needed improvement. Improvements often resulted from inspections, but funding adjustments were not made following the implementation of recommendations, resulting in spending above the standard spending assessment.

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The previous Conservative Government, with their disastrous poll tax fiasco and creation of the present system, exacerbated the problem. Low settlement figures in the few years before 1997 were another factor. From a low base, the borough has never been able to recover and has sometimes had to reduce its reserves. That effectively lowers income because, as reserves reduce, so does the interest from investments. Despite higher investment by the present Government, the borough remains in a difficult position.
As a result of its continuing problems, the borough has made its own representations. With all-party support in the borough, a campaign for "Justice for Havering" has been established. We must halt the decline before the position worsens. It has been calculated that there have been cuts of approximately £19 million in the past 10 years. Admittedly, some of them were the result of planned spending expansions, but in many ways such expansions were justified investment in several essential services.
The financial system impedes the planning and modernisation of services. It hinders delivery of the Government's programme, creates low morale among staff and council members and leads to public incredulity because council taxes are high when public services have been cut. Local government finance needs urgent review—that will be complex—and I am aware that the Government are starting to give the matter priority, which I appreciate. If the planned reforms take longer than expected, the Government should introduce the safety-valve concept as an interim measure. That would be a possibility for boroughs such as Havering, which has specific difficulties.
It is important that our public services are maintained. Delivery is important not only for the local authority's services, but for initiatives in which local authorities have an important role, such as reducing crime and increasing educational standards. With that, I conclude my remarks and look forward to the Minister's reply.
9.56 am
Mr. David Kidney: I congratulate my hon. Friend the Member for Upminster (Mr. Darvill) on securing this important debate and on his thoroughly reasonable and constructive presentation. Yes, he made special pleas for the London borough of Havering; however, his grasp of the underlying circumstances in that borough shows that he has made a genuine effort to understand the complexities of local government finance.
I begin my discussion of some of the criticisms of the present system and why reform is necessary by referring to my hon. Friend's fifth criticism about the formula for funding local government from Government funds. That regressive formula goes back to a period in 1990 and seals in the pattern of spending that was then current. It means that the whole system is trapped in a time warp and that local authorities can do nothing to change their situations.
My special pleading is for the local authority of Staffordshire. In the league table of funding for shire counties, Staffordshire is always at No. 34 of 35. Unlike
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those in a football league table, the authority cannot raise its position by improving its performance. That is absolutely contrary to my idea of a modern system of local government finance.
Another criticism of the present system is the introduction into the formula of factors that are not objectively justified. The most obvious one is the area cost adjustment, which my hon. Friend mentioned. A couple of years ago, I asked the House of Commons Library for some details on how Staffordshire has been affected by not being eligible for the area cost adjustment, which is drawn in a ring around south-east England. I was given an indication of how Staffordshire has suffered. In 1999–2000, the standard spending assessment for Staffordshire county council would have been about £28.6 million—or 5.4 per cent.—higher, if area cost adjustment figures equal to the arithmetic mean for those counties with an area cost adjustment factor of more than one had been applied. Staffordshire was £28.6 million gorse off in that one year alone, simply because of exclusion from a formula for dishing out money. Staffordshire was denied that considerable chunk of spending.
Additional educational need is another element in Staffordshire—that need is thought to lack credibility. Parents of schoolchildren in Staffordshire often make comparisons with other parts of the country—not so much the London boroughs to which my hon. Friend referred, such as Hackney or Havering, but Hertfordshire in south-east England, which many people would say is similar to Staffordshire. Funding in Hertfordshire is between £200 and £300 higher per pupil than in Staffordshire, although the education service is the same.
Mr. Darvill: Does my hon. Friend agree that although those comparisons appear to be reasonable, they tend to undermine the system of local government finance in the eyes of the electorate?
Mr. Kidney: The Green Paper discusses the ability of politicians to explain and justify a system, which many people find incomprehensible, to the public. It is difficult to justify the formula because of its regressive nature.
I should also mention the plight of social services in Staffordshire. As the standard spending assessment is so low, support from central Government is also low. This year, the director of social services reckons that he is £17 million light on the funds that he needs to provide the same level of service as the rest of the country. From a politician's point of view, an excellent indication of that shortfall is that county council elections are due in Staffordshire on 7 June this year, but local politicians have decided to increase spending by 5 per cent. That is almost entirely because of the pressures on the social services budget, especially from older residents who want more support in their homes or to go into residential homes.
That spending increase is a measure of the desperation. Even in an election year, there is no question of not introducing an increase, although it will be unpopular with residents. As the 5 per cent. increase in spending outstrips central Government support by a considerable amount, the excess is loaded on the quarter of the council's income that comes from council tax,

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which converts to an 8.9 per cent increase in council tax bills, which has made residents angry. It is difficult to explain to them why the local authority bears such a disproportionate amount of that cost.
The Green Paper was welcomed in Staffordshire because it rejected a continuation of the status quo. In that regard, the Government have taken an important stride forward compared with previous Governments. My hon. Friend did not touch this matter, so I ought to make it clear that the Green Paper offered two different ways forward. On the one hand, it suggested a simplification of the existing formula for distributing central Government grants. On the other, it offered a system whereby local authorities would submit their plans for future spending and central Government would decide how to allocate funding in accordance with the quality of those plans.
Most responses that the Government have received do not favour the plan-based system because of the uncertainty at the bidding stage and concern about the additional bureaucracy caused by administering the plans. There is a further worry that that system would centralise control in the hands of the Government of the day, which would not allow local authority independence. Most people support a simplification of the formula. On 5 March, the Government published a summary of the responses received to the Green Paper, and if one reads through them it easy to see that a majority of respondents felt that a simplified formula was fairer, easier to explain and easier to understand.
I welcome the suggestion on education in the Green Paper, which proposes a simplified formula with a minimum per pupil entitlement throughout the country. The parents, teachers, school governors and politicians of Staffordshire would be delighted to see that in place. Of course, there are reasons why some parts of the country need more money—for example, inner-London boroughs. The Green Paper therefore discusses additional payments for objectively ascertainable levels of deprivation and the costs of recruitment and retention. I have already mentioned the role that the Office for National Statistics could play in providing ward-based data that would justify those objective decisions.
I welcome the discussion in the Green Paper of funding floors and ceilings to limit the gains and losses of the winners and losers and to improve stability from one year to the next. On balance, I would probably support safety valves, as did my hon. Friend, but I am worried about discretion for the Government of the day. I support the response that one local authority made to the Green Paper that any funding for safety valves should be additional funding from central Government and not achieved by top-slicing other authorities' funding.
My final and probably most important comment on the Green Paper concerns the anticipated levelling up of funding rather than taking money from existing winners and redistributing it to losers. That is important to ensure that the future settlement is acceptable throughout the country.
I have read the responses to the Green Paper, which include support for a simplified formula. That support is not unanimous and some authorities oppose it, but it is fair to surmise that opposition comes from those who
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are gaining from the present unfair formula and do not want to risk losing their gains. There is strong support for a system of funding floors. Of the 229 local authorities and other organisations that responded, 89 per cent. favoured a funding floor, 9 per cent. were neutral and only 2 per cent. opposed a funding floor. That response was different from the response to a system of funding ceilings—my hon. Friend was nervous bout that—which was supported by 56 per cent. of those who responded, with 26 per cent. being neutral and 19 per cent. opposed. Again, those who opposed it were those who feared that they would lose out.
My knowledge of funding campaigns goes back to the 1990s, when the seven worst funded shire counties formed themselves into a group. It called itself the E7 group and when another authority later joined, it became the E8 group. However, it had little clout or influence because it was a small group of losers and no one took any notice of it. If it threatened an authority that was a winner, it received no support, which was understandable. The group made a strategic decision during the present Parliament and disbanded. It obtained wider support from local government associations and formed a group of the 40 worst funded authorities in the country. It included all sorts of authorities—unitaries, metropolitans and so on. I was flattered that it chose the university of Staffordshire in Stafford in my constituency for its inaugural meeting in recognition of what I had said and done in Parliament.
I attended the inaugural meeting, at which it was agreed to set up a fair funding campaign group, called F40 for convenience and brevity. I said that I would write to Members of Parliament with constituencies covering those 40 authorities to ask if they were interested in supporting the group in the House. Approximately 200 Members of Parliament from all parties replied saying that they would support the campaign. We then held several meetings, which were very well attended bearing in mind our numerous commitments elsewhere, and were able to send out a firm and consistent message, especially to the Department of the Environment, Transport and the Regions.
I like to think that the message that we delivered so clearly and consistently influenced the rationale of the Green Paper. We were pleased with its contents and I am proud that 14,402 supporters of the F40 campaign wrote individual letters in response to the Green Paper. They came from parents, teachers and schools as far afield as Cambridgeshire, Cheshire, Cumbria, Derbyshire, Devon, Dorset, Gloucestershire, Leicestershire, North Yorkshire, Northumberland, Nottinghamshire, Shropshire, Somerset, Staffordshire, Suffolk, Warwickshire, Wiltshire, Worcestershire, Bury, Dudley, North Tyneside, Solihull, Stockport, Trafford, Tameside, Wakefield, Wigan, Bath and north-east Somerset, East Riding of Yorkshire, north Somerset, Poole, Rutland, Swindon, Warrington, west Berkshire, Wokingham and York. That is a pretty impressive spread. A total of 14,402 people wrote in support of a resolution, which, with your leave, Mr. Amess, I should like to read into the record of our deliberations, because the respondents deserve that recognition. It says:

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"The f40 Group welcomes Government recognition of the need to remove unjustifiable inequalities in the system for funding education. The next three months give an opportunity for authorities, governors, teachers and parents to influence future plans.
The Group is now keen to work with DfEE and DETR in the positive spirit of levelling up the worst funded areas. However, we are greatly concerned that the Government appears to contemplate that the existing injustices will be continued for another three years.
We strongly urge the Government to act now to provide additional funding for levelling up from April 2001. This will provide a temporary solution under the existing discredited system while the new long-term proposals are being developed.
The f40 Group is of the opinion that the proposed three year freeze to the SSA formula is unacceptable."
That is a positive and powerful message to the Government. The April 2001 financial settlement, which is now up and running, does not include extra money specifically for areas such as Staffordshire. However—it is fair to give the Government these limited accolades—the local government formula for 2001–02 included funding floors and ceilings as an experiment. The Government were partly driven to do that by data changes in the average earnings index, which would have been embarrassing for them. Nevertheless, the fact that, even in advance of the White Paper and new legislation, they are operating floors and ceilings demonstrates a welcome commitment on their part to the matters discussed in the Green Paper.
In the Budget, the Chancellor of the Exchequer announced even greater flat-rate payments to every school in the country—up to £63,000 to a large primary school and £115,000 to a large secondary school. It is welcome, on the basis that equality is equity, that every school in the country receives the same sum of money regardless of its location.
Like my hon. Friend the Member for Upminster, I urge that the White Paper should not long be delayed and that legislation to make the necessary changes in accordance with it should be a priority for the next Parliament. We do not want new groupings of winners and losers fighting each other across party political boundaries about cash. To prevent that, it is important for the Government to stand by their commitment to level up funding to those authorities that are at present the losers.
I look forward to listening to other hon. Members' contributions to the debate.
10.13 am
Mr. David Drew: I add my congratulations to my hon. Friend the Member for Upminster (Mr. Darvill) on his lucid explanation of the subject and pay tribute to my hon. Friend the Member for Stafford (Mr. Kidney), who has led the F40 group magnificently both in this place and outside. We have made our point and eagerly await the Government's response.
There is always a temptation to think that anyone who takes an interest in local government finance is mad, bad or merely sad. However, its importance cannot be underestimated, given the impact that it has on our lives as Members of Parliament through the various ways in which our local councils operate. I shall
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lay my cards on the table from the outset. I come not to praise the current system, but to bury it. It is unfair, opaque, and fails in its key task of providing the right level of services in the appropriate way. Radical reform is necessary, and I welcome the Government's Green Paper. Like my hon. Friend the Member for Stafford, I look forward to a White Paper soon after the election to ensure that we drive the change through and achieve radical reform.
We can dissect the problems of local government finance in many ways, but I will concentrate on three areas that clearly demonstrate where it has gone wrong. First, my hon. Friend the Member for Stafford mentioned cost adjustment, which is the Tories' payola and nothing less titan a way of bribing certain local authorities to continue with what has happened in the past. If one wants to annoy any head teacher or councillor in an area that is tangential to an area in which cost adjustment applies, or in one of the metropolitan boroughs, one must only mention cost adjustment and a blue touch paper is lit; the issue causes incredible anger and dispute and something must be done about it.
Secondly, for all the complications and differences in local government finance, the same services are effectively being provided nationwide. There may be some cost differences across the country, but they are often exaggerated. If we are providing common services, they should be funded in common ways. A need for commonality of funding exists and we should either be levelling up to a mean, or jointly accepting that a common system can be achieved, barring the exceptions that I shall mention.
The third area may have been brought to Ministers' attention by the sheer idiocy of what is happening. Like my hon. Friends, I shall use the experiences of my local authority to highlight the anomalies in the system. Our fire and rescue service in Gloucestershire has done what it should have done —reduced the number of emergency calls by checking calls and ensuring that people are not abusing the emergency services, as well as the number of retirements—so it has achieved a wonderful 1.4 per cent. increase in our standard spending assessment. After some nifty lobbying on my part, I managed to reduce that to a 1.3 per cent. increase. Ministers were apoplectic when they were asked why that had happened. That anomaly, and other anomalies that every hon. Member can think of, bring home the reason why we must change the system.
Why have we failed to change the system in the past? We all agree on the need for reform, but not necessarily on a mutual goal. There has been conflict between the metropolitan boroughs and counties, among the various layers of local government and between those in an area of cost adjustment that have something to defend and those outside the area who are trying to get in, or who are saying that the system is unfair and should be changed. We sometimes underestimate the impact of the different layers of local government. It pleased me that the Green Paper mentioned parish and town councils. As a town councillor, I was happy to see that the first level of government—which should not be regarded as the lowest level—was mentioned because it has a role to play in reforming the system.

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However, what brings home the need to engineer that reform is the state of the major services—education and social services. My hon. Friend the Member for Stafford mentioned that the Chancellor had channelled funding into schools in a different way, and we have certainly seen the advantages of having a common system. However, many problems exist in the social services of most authorities and they are related to funding and unfairness in the system, which we must do something about. To a certain extent, those problems could be dealt with outside the area of funding and its need to be linked with health, housing and other issues. However, that strategy will not be sufficient on its own and we must see what the funding arrangements are to ensure that services are receiving funding, particularly those for older people and children. One anomaly in the system that needs to be addressed is the radically different way in which children's services are funded in different parts of the country.
I shall deal with a few other matters in passing. The formula is far too complicated and as a result no one understands the nuances of the resulting change. Importantly, that situation militates against local initiatives and improvements. I have confidence in local government, albeit in perhaps a different form. Those of us with three-tier authorities are desperate to move to a two-tier system that bolsters town and parish councils and recognises that unitary authorities can deliver services with clarity. However, that is an argument for another day. It is galling to discover that the funding arrangements do not take account of particular problems. In the past six months, my county has been hit by two crises: flooding, which caused enormous problems, and foot and mouth disease. There must be a degree of finesse, in that funding must form part of the way in which we deal with those problems. Unfortunately, there is no way to do that at the moment.
What can we do? The Government must face up to the need for radical reform. My hon. Friend the Member for Stafford referred to the F40 group. Its highly creditable campaign, which the Government have regarded positively, has introduced many ideas, but we must push the rationale for reform. That is only one service and we must remember that we are reforming across the board, but its arguments for raising lower-funded authorities to an arithmetic mean and establishing common, service-based funding deserve close attention. Such initiatives could be linked to changes in the council tax regime. Re-banding, for example, should play a part in the changes in local government finance that we are discussing. We need to lower the banding for some residents in band A. Those of us who campaigned for fairness for dwellers in park homes will regard that as an important issue. Moreover, we should ensure greater fairness as regards those in band H—I am not having a go at them as individuals—who are not paying the proper amount towards local government funding.
Establishing floors and ceilings is a move in the right direction. I am confident that the Government now know how to do so, but they must grasp the nettle of reform and ensure that the various services are able to continue by providing appropriate funding.
Another reason why reform has failed is the London effect. Given that the constituency of my hon. Friend the Member for Upminster, who secured this Adjournment debate, is in the London borough of Havering, he is
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doubtless able to argue far more fiercely than I could for the need to recognise London's impact. I accept entirely that London is a special case, although we may not choose to describe it as such. We must recognise that the poorer London boroughs must not be disadvantaged by the new system. Indeed, if there is to be proper reform, some dampening might be necessary for a time to ensure that certain authorities are not unduly hammered. Some parts of the country will doubtless express a degree of schadenfreude, saying that it is about time that the south-east got its come-uppance. However, we should not argue that case too fiercely, because that is not the way to achieve an acceptable level of reform. We must recognise that there will be cost implications in the interim, until we move to a funding system that is fairer and more transparent.
We recognise that the task will not be easy and that many other elements in the Green Paper are also worthy of note. It is a strength of the document that it is thin: it is straightforward and not over-complicated. Pages 12 and 13 set out the SSA system clearly and comprehensively and have enabled me to come nearer to understanding it than ever before. I wish that the hideously complicated system were that simple in reality.
We must also examine such topics as the fairer use of capital investment and links to business rate changes. I would like the funding stream to be localised so that businesses can put money directly into their local communities. Such a link between a business and the local community is a symbolic, but important, gesture.
I hope that the Government recognise the need for urgent reform, and will get on and make the progress that some of us wanted earlier. The case is now proven, and all that remains is delivery.
10.26 am
Mr. Tom Brake: I congratulate the hon. Member for Upminster (Mr. Darvill) on securing the debate. "Justice for Sutton" has a nice ring, and something might be germinating there. We had the first phase of the "Justice for Sutton" campaign when I took an all-party group of local councillors to see the relevant Minister to express concern that, on the present grant, the London borough of Sutton cannot deliver the education or community services that residents want.
I welcome the opportunity to debate local government finance. Perhaps it is not the most media-grabbing issue, but it is of great concern to local residents, whom it seriously affects. As the hon. Member for Upminster pointed out, one could make this a much more controversial debate about public-private partnership for London Underground. The appropriate Minister is here, and such partnership is a means of funding local government services. Does the Minister advise local authorities to pursue public-private partnership arrangements for the long-term financing of council services?
We could make the debate different again by extracting the "local" and the "finance" to end up with "Modernising government". Today's debate could have touched briefly on the need for a fixed term for a Parliament. We must discuss that in this Chamber at some point.

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The Liberal Democrats broadly support the aims of the reforms in the Green Paper, "Modernising Local Government Finance". Local authorities need a strong democratic mandate from voters and the support and involvement of a wide range of local stakeholders, as well as clear, forward vision and firm leadership. We agree with the hon. Members who have said that local authorities can achieve nothing without money. We must get financing right and fund all local authorities adequately.
Local authorities should have a greater say in what constitutes adequate funding. The standard spending assessment is unloved and based on projections that are up to 10 years old. If local authorities had a greater involvement in the funding process, some of the authorities in the south-east to which hon. Members have referred could have the necessary resources to tackle their serious problems, such as attracting teachers and social workers.
We support the continuous improvement in service quality. We support predictability and stability. Local authorities cannot plan ahead with confidence if they are subject to large or unexpected variations in grant, or take on additional responsibilities, perhaps at short notice, without the adequate level of funding required to deliver them. We support the need for local authorities to have real financial freedom and responsibility, but do the Government?
The Government's Green Paper states that local authorities need clear forward vision and firm leadership, but when local authorities provide firm leadership, they are slapped down by central Government. I shall cite my borough as an example, for which, like other hon. Members, I apologise—it is the borough that I know best. The London borough of Sutton carried out a consultation a few years ago asking local people what local government structure they wanted. My authority expressed its preferred option; it showed leadership, in other words. It had thought about the issue and suggested proposals. However, the local authority was sent off with its tail between its legs and told to rerun the consultation because of having expressed a preference—so much for allowing local authorities to demonstrate leadership. It is hard to believe that the Government are committed to giving local authorities real financial freedom and responsibility. We should allow local authorities to make their own decisions and their own mistakes, for which they may subsequently pay via the ballot box.
The Green Paper refers to the need to be fair to those who need and pay for local authority services and to ensure that people are fully protected. I hope that the Minister will explain what that means and from whom local residents need to be protected. Is it a code word for what used to be called loony left councils? Accountability for financial decisions needs to be clear. If council tax increases are excessive, or services underfunded, people need to know why. It should be clear to people whether council tax increases are a result of something that the local authority has done, or of central Government cutting the grant, or whether they are due to central Government passing on responsibilities to the local authority without giving it the necessary funding to allow services to be delivered.
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The Minister will have seen chart A in the Green Paper, which shows a 4 per cent. increase in revenue support grant in the year 2000–01. Will he confirm what the increase would be if it were weighted in favour of additional responsibilities that local authorities have had to take on? What sum will the real new money be that local authorities will receive? The process of Government finance should be intelligible and transparent to stakeholders. No one could disagree with that. At present, few people understand the way in which local government is financed or realise the impact that the level of grant from central Government has on services.
The Green Paper refers to partnership working, which is again something that we support. We also support consultation, although referendums have to be handled carefully. Local authorities embarking on referendums need to be careful about the promises that they make and how binding they will be. When committing themselves to a council tax increase of a certain percentage, they need to be careful to take into account outside factors, such as the Ken Livingstone factor on precepts, and the impact that that could have on services.
The Green Paper refers to people being held to account if services are not being delivered or are inadequate. That is all well and good, but it is not easy to hold people to account in a first-past-the-post electoral system. My local authority has a massive Liberal Democrat majority, which I hope will continue for years to come, but under the present system, there is relatively little scope for people to achieve a change in local government. It is difficult to hold people to account under that system.
I accept that some progress has been made. It was right to move to a three-year spending round to give local authorities some stability so that they could see what was coming over the horizon in budget terms. However, there have been some unwelcome developments, such as the increase in the use of ring-fenced grants, or grants being given to specific bodies. Does the Minister think that central Government giving grants to schools results in greater clarity in financial decision making or responsibility? Does that help people to understand what is happening with local government finance?
The Green Paper contains much more that is welcome. Liberal Democrats aim to restore local government independence, which can be achieved in part by modernising local government finance. Will the Minister consider local income tax as a means of making accountability much clearer? How can that be achieved other than by shifting the balance of how local tax is raised, from a central Government grant to local people paying for local services and seeing that clearly in local income tax bills? Before anyone starts distributing leaflets saying that council tax will be increased threefold, taxpayers would be compensated by equivalent reductions in national income tax.
Mr. Phil Woolas: Would a local income tax be raised from the residents of the borough or district, or from the employees working

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within that geographical boundary? How would the hon. Gentleman ensure a fair distribution of resources, given the higher incomes in the south-east?
Mr. Brake: There would need to be a mechanism for redistributing the moneys raised, so that deprived areas could be compensated, or given additional grant. That is why we are talking about, say, 80 per cent. of the money required to be raised locally and 20 per cent. raised centrally, with which we could achieve the sort of redistribution to which the hon. Gentleman referred. That would be achieved over a transitional period, so there would not be a heavy impact in year one.
The Government favour trials. We have had some interesting trials on voting procedure, with postal votes and allowing voting to take place in supermarkets, for example. Will the Minister consider allowing local authorities to use different methods of taxing businesses, for example? Many local authorities suffer, as mine does, from businesses or property owners who leave retail premises in prime high street locations empty year after year, waiting for I know not what. In a prime location in Wallington, the premises of what used to be a pizzeria have been empty for about 10 years. Can local authorities be given the flexibility to target empty retail premises and get them back into use, rather than leaving them vacant for many years?
I hope that the Minister will give local authorities financial freedom and responsibility and that he will respond positively to my radical proposals.
10.41 am
Mr. Nigel Waterson: It is a great pleasure to be in this Chamber under your chairmanship, Mr. Amess.
I congratulate the hon. Member for Upminster (Mr. Darvill) on securing this important debate. It would be unfair to describe those who are assembled here as "anoraks". We are not sad people—at least, not in this context. The hon. Gentleman raised some important matters and gave us the opportunity to probe the Government, in the estimable shape of the Minister, about their intentions. The Govt have published the Green Paper, taken consultations and had time to mull things over.
One of the problems about a Government coming to the end of their natural life is the tendency of Ministers to kick things into what is known in Whitehall as the long grass—the grass has never been longer or more widely spread than under this Government. The fly in the ointment is the postponement of the election to 7 June or whenever, because that means some things that are now in the long grass—hunting and so on—will have to be extracted from it.
On the more arcane issue of local government finance, we are entitled to know, in the dying days of this Government, whether Ministers will produce a White Paper on the subject. The last date for responses to the Green Paper was 8 December and it is high time that Ministers gave us their definitive views on the subject.
A problem with postponing local elections to June, or whenever, is that some fragile budgets have been put in place by regimes that expect to be booted out. My county, East Sussex, is a prime example. The Lib-Lab pact has made a complete mess of the budget and has left
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behind—or is hoping to leave behind—a fragile budget replete with booby traps for the incoming Conservative administration. It will be interesting to see how the Lib-Lab pact manages to soldier on, trying to operate the budget for the early part of the new financial year.
The comments made by the hon. Member for Upminster were thoughtful, although it was unfair to blame the Opposition for the lack of time available to debate the rate support grant, which is a matter for Government business managers. However, he was right to mention some of the defects in the current system. He touched on the Government's centralising agenda. Under this Government, local government finance is a major weapon for imposing a tighter grip from central Government on local democracy.
The hon. Gentleman mentioned best value, which has got completely out of control and which will need radical review under the next Conservative Government. He also talked about capping. With the effrontery that only politicians can manage, he denied that he would go into the subject of special pleading, of which he then gave us a lengthy example as it affects Havering. He was not alone in doing so—he thought that the settlement was not as good as it looked and talked about underfunding. He also mentioned large increases in council tax in his area.
The most useful parts of the hon. Gentleman's speech were his comments on floors and ceilings. A complaint about the Government's attitude to local government finance is that they claim to be in a period of stability, as they persist in calling it, with a freeze on standard spending assessment methodology. There are problems with that so-called freeze. At the start of the period, the Government made the conscious decision to shift resources away from shire areas and London—to the tune of hundreds of millions of pounds—and the three-year period of stability cemented in those unfairnesses for a significant period.
The Government are also bumping up against the problem of area cost adjustment. As the hon. Member for Stafford (Mr. Kidney) said, opinions differ on that subject, depending which part of the country an hon. Member represents. A Government faced with new data informing the calculation of area cost adjustment are in a predicament. Do they allow the new figures to be put into effect—that may cause even more steam to come out of the ears of the hon. Member for Stafford and his friends in the F40 group—or do they tinker with the system? In that respect, the hon. Member for Upminster put his finger on a major problem. Havering is one of a group of councils, which includes Newham, that have suffered a 0.2 per cent. loss in grant because of the introduction of floors and ceilings. The hon. Member for Stafford said again that it is a matter of top-slicing the money and redistributing it; it is not new money for people who are being given extra help, but money that is being taken away from all local councils, especially those on the list that includes Havering, which is losing even more grant because of the new ceiling arrangements.
In the middle of a so-called freeze of methodology, when the Government are supposed to be sitting in a darkened room taking account of representations on the Green Paper and taking serious decisions about the future of local government finance, they are merely tinkering with the system at the edges. They are just

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dipping their toe in the water; if it works this year and the Government think that they can get away with it, it is a wonderful opportunity for Ministers to make politically informed decisions about distributing grant around the country.
It was fascinating to hear the hon. Member for Upminster touch on that issue when he sounded a warning bell about ministerial discretion. There are two schools of thought on the Government Benches: first, that they do not want plan-based funding, and secondly, that they want a simplified formula. The only problem is that one authority's simplified formula is another's gross unfairness. The Minister will warn us about the search for undue simplicity in the formulas, but there is a consensus on the Labour Benches that plan-based funding is not the answer. In large measure, that is because of their suspicion and, if they are suspicious, what are the rest of us to say of ministerial power and the centralising power of Government over local authorities? It we are not careful it will be yet another mechanism that the Government will put in place to control the agenda of local authorities.
If there is not to be a simplified formula-based system, there is growing support on the Labour Benches for ministerial discretion, or interference, and we all know what that means. Already, specific grants under this Government have risen dramatically; they have gone up even in this year by more than 18 per cent. as a proportion of total grant. The growth in competition for particular pots of money is often time wasting and expensive for local authorities, especially those who do not succeed and now there is to be a system of floors and ceilings, which will allow Ministers to interfere, subject to representations from their hon. Friends—
Mr. Darvill: I have been listening closely to the hon. Gentleman. Am I to gather from what he said that he would be opposed to a safety-valve mechanism, or does he think that one could be introduced, provided that there were the right safeguards and criteria?
Mr. Waterson: With respect, that begs the question what system there will be at the end of the process. It is true that for a Government bent on centralising in local government there are major attractions in safety valves and other mechanisms based on ministerial discretion.
We heard a great deal about simplified formulas, especially from the hon. Member for Stafford, who speaks with some knowledge about such matters, and from the hon. Member for Stroud (Mr. Drew). The hon. Member for Carshalton and Wallington (Mr. Brake) was sensible not to dwell on Liberal Democrat policies of increased income tax, local income tax and regional tax and support for the Government's imposition of extra burdens on the motorist.
The important aspect of all this complexity, and the interesting and arcane discussions to which it leads, is the effect that it has on real people. Despite the Government's projections, this year there will be a further average increase of 6.4 per cent. in council tax—that is three times the rate of inflation. In Staffordshire, it is more than 8 per cent.; in East Sussex, it is close to 10 per cent. That is wholly unacceptable to ordinary people, especially pensioners, who, in effect, are having to pay a new stealth tax.
10.50 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): I congratulate my hon. Friend the Member for Upminster (Mr. Darvill) on his success in securing the debate. He was one of several Members of Parliament who responded directly with their views on the options for reform outlined in the Green Paper, "Modernising Local Government Finance". I have read his response, which was thoughtful, as was his speech today.
We heard interesting and serious contributions from my hon. Friends the Members for Stafford (Mr. Kidney) and for Stroud (Mr. Drew) and from the hon. Members for Eastbourne (Mr. Waterson) and for Carshalton and Wallington (Mr. Brake). Several hon. Members referred to the unique and compelling reasons why their local authorities should receive a somewhat better deal out of local government finance arrangements, and I should like to have been able to respond to those individual concerns. However, in view of the limited time remaining to me, I propose to confine my remarks to the Green Paper, which has been the underlying theme and connecting link of the debate.
First, on revenue grant distribution, the key point to emphasise is that we have not yet made final decisions about whether we will extend the formula freeze for another year or base the new revenue grant system on a formula or plan-based approach. In the meantime, officials are working with local government on the detail of our proposals for reform. New formulas are being developed only on a purely contingency basis. I shall return to that matter later.
Perhaps the most consistent message in the responses to the Green Paper was that local government needs more stability and predictability in funding levels. That enables authorities to concentrate on medium and long-term planning for improved service delivery rather than on annual fire-fighting and demotivating rounds of cuts when grant figures are announced. As my hon. Friend the Member for Upminster said, we have made progress in that respect. We have sought to provide as much stability and predictability as we could, through three-year plans for total grants and the continued freeze on SSA formulas. This year, we have gone further by introducing floors and ceilings to grant changes. That was much welcome I by my hon. Friend the Member for Stafford.
However, we have promised more than predictability and stability. We all agree that a fairer grant distribution system is needed, but fairness does not mean just "fairness for my authority". Given the complexity of the formulas, it is inevitable that every authority feels hard done by in some respect. Every authority can give compelling reasons why it should get more, and it is the unenviable job of central Government to try to balance all those views and to deliver a fair outcome for all areas throughout the country.
Our present grant system attracts a lot of criticism. It has not made it easy for authorities to improve their services and it is extremely difficult for people to understand. Small wonder, therefore, that authorities doubt whether it is fair. However, our review of the distribution system has been making good progress. We are not rushing ahead with hasty solutions, as some would urge, but taking a long, hard look at our shared

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objectives for the system and the best way in which to deliver them. We are building consensus through working alongside and listening to local government and other stakeholders, but much work remains to be done and we are eager to press ahead.
We are well aware of the F40 campaign, which has been active at grassroots level among local authorities and in the House, and is so ably led by my hon. Friend the Member for Stafford. I thank him for his kind words on the work done through direct grant to schools and through floors and ceilings. He will be pleased to hear that we have made an early start to joint working with local government and wider stakeholders on education funding.
A group has been set up to work on the funding of schools and local education authorities. Its overall aim is to oversee the production of a full proposal for a new funding system and a timetable for its implementation. The group's membership has been drawn from central Government and local government unions, and also includes representatives of teaching and non-teaching staff, schools, governors' organisations and the churches. It is working on a contingency basis and no decisions have been taken about changes for 2002–03.
My hon. Friend the Member for Upminster mentioned the safety-valve grant. The proposal on that was well received by Green Paper respondents. We are now discussing the detailed operation of the scheme with the Local Government Association, and considering the issues that my hon. Friend raised. The grant must be targeted at only a small number of authorities, but my hon. Friend has r lade a cogent case for his borough, Havering.
My hon. Friend the Member for Upminster also mentioned the local public service agreements that we are piloting. They are a new and potentially valuable tool for improving local services, involving closer co-operation between central Government and local government. They allow councils to sign up to challenging targets and to deliver on key national and local priorities in return for agreed freedoms, flexibilities and financial incentives. They allow us to examine ways in which the finance system can encourage exceptional performance. The pilot exercise is now being concluded.
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Some 14 agreements have been signed with authorities around the country and the remaining six should be signed shortly. We will extend the local PSAs to other upper-tier authorities in England on a voluntary basis.
I have concentrated on the distribution of revenue grant, which arouses strong feelings because of the sums involved. The debate, however, is on modernising the whole local government finance system and I will briefly cover other matters raised in the Green Paper.
We are introducing more flexibility to capital finance by the single capital pot—a cross-service allocation mechanism for giving central Government capital support to local authorities. That will be introduced next year, but we are going still further. Green Paper respondents overwhelmingly endorsed our proposals to abolish the complex system of local authority capital controls and replace it with the "prudential system" described in the Green Paper.
Two weeks ago, my right hon. Friend the Minister for Local Government and the Regions announced to the House our decision to implement the changes. Local government has long sought such capital reforms and they are widely welcomed. Under the new system, authorities will be free to invest in their communities without needing permission from central Government each time. Safeguards in the system will ensure that authorities do not run up unsustainable debts, but the increased flexibility will enable them to deliver better value for money, including through partnership working. The necessary legislation will be introduced as soon as there is parliamentary time.
In the past four years, the Government have increased grant to local authorities by £8.7 billion. That real-terms increase of 13.6 per cent. contrasts with the previous four years, when there was a real cut in grant of 6.9 per cent. In our first four years in office, we have concentrated on the biggest problems: inadequate funding for local government and lack of certainty about future funding. The Green Paper and forthcoming White Paper represent the next phase of our agenda to modernise local government. That includes the reform of grant distribution, capital finance and local taxation systems, and we will continue to work in partnership with local government and local stakeholders to achieve our aims.

Nursing and Residential Homes
10.59 am
Mr. Simon Hughes: I am grateful for the opportunity to debate standards of care in nursing and residential homes, although Parliament has spent some time discussing the topic in recent years.
In the past 10 years or so, two constituents of mine—one is over 60 and the other is well under 60—have always begun conversations with me by saying, "What are you doing about the old people?" and this debate is about exactly that.
I am pleased to have secured today's debate and was prompted to do so by a series of events that began in December last year, when some colleagues and I visited Guy's hospital, residential homes and old people's homes as part of a Christmas visit programme. I have made such visits in all but one year since becoming the Member of Parliament for Southwark, North and Bermondsey. Indeed, I inherited from my predecessor, the late Bob Mellish, the tradition that the local MP spends Christmas day at work, and I am very happy to do so. Such visits seem to be much appreciated by those one sees.
This year, Denise Capstick—a colleague who is a state registered nurse and a local councillor in the ward in which I live—and I visited several old people's homes, some of which cater for old people in general, and others for the particularly old or frail, or for those with mental illness. We were troubled by the lack of stimulation, personal attention and care that certain elderly residents in my constituency were apparently receiving. It seemed that minimal interest was taken in them, and that in some cases only mealtime and toileting needs were attended to. They were left staring at a loud television in overheated accommodation—and this was Christmas day—with little else in the way of activities. So troubled was my colleague that she resolved to pay further unannounced visits.
Since then, a particular incident has significantly raised the local profile of the issue. In February, constituents whom 1 already knew approached me and others about the apparent lack of care for, and potential violence and assault on, Walter Cook, a 70-year-old resident of a nursing home in my constituency. The assault on Walter Cook, which took place at the relatively new Tower Bridge care centre, gave publicity to his case, and led to on-going police investigations and to Mr. Cook's removal to other local accommodation.
Concerns arising from our Christmas and subsequent visits, and from the complaint made by the Pitts family—Mr. Cook's family—raised the general profile of the issue. Denise Capstick and her opposite number, Vicky Naish—deputy leader of Southwark council and the person with responsibility, under the cabinet system, for health and social care—resolved to work together to ensure that their concerns were adequately addressed. I should point out that there is no party political division in respect of this matter, which has become one of general concern. There has been the greatest collaboration between Vicky Naish, Denise Capstick and other councillors.
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As a result, one local paper—Southwark News—to its credit ran the story about Mr. Cook. Publicly and privately, I suggested to the council that an independent inquiry or a review of the standards of care in the borough's residential nursing homes would be a good idea. As a result of that correspondence, I wrote to the deputy leader of tile council and she replied positively and helpfully. She accepted my invitation to attend a public meeting in the Beormund centre in Bermondsey about two and half weeks ago and came with the director of social services and other local authority officers. Also in attendance were the chief executive of Lambeth, Southwark and Lewisham health authority—Martin Roberts—and his staff and other councillors, including Denise Capstick who had been with me in the first place. A significant number of people at the meeting had—or had hail in the past—relatives in local residential care and nursing homes. The meeting, which I chaired, was not easy. It was full of angst and difficulty as people recounted stories about discovering that the care and attention offered in homes was not up to the standards that they had expected. I should add that the stories were about events of the past two or three years and so did not necessarily reflect the current situation. However, several unsettling and troubling stories were told and they have prompted me to ask questions and raise issues about the existing situation, before the full impact of the Care Standards Act 2000 takes effect.
I want to mention two other pieces of background information. First, I am conscious that Parliament has paid considerable attention to the matter and I pay tribute to the previous Administration who started the work and to the Government who have continued the work to ensure that we have a better regulatory system for dealing with nursing and care homes. The 2000 Act—I do not pretend to be an expert on it—is, by and large, a good and satisfactory piece of legislation that promises well. A regulatory inspection regime will be in place from next April—in fact, it began as a shadow regime three days ago.
We are looking forward to something that promises a better system of regulation, but as we all know, it takes time to get such systems up and running. I initiated this debate in order to ask Ministers and other hon. Members what we can do between now and next year to ensure that best practice is not delayed while we wait for the new regime to be introduced next April, and for its necessarily later implementation across the country. The process is bound to take a while and it may develop like the Ofsted regime. Not all Ofsted inspections occurred in the first months of the new system and, if we follow the Ofsted principle, there may be some years, certainly some months, before people can carry out the inspections ordered under the Act.
Mr. Philip Hammond: The hon. Gentleman talked about the new regulatory regime, but will he also talk about resources? Does he recognise that, without the appropriate resources available from local authorities, those who operate homes—whether they are local authority or privately owned—will struggle to meet regulations that are handed to them from this place?
Mr. Hughes: I absolutely accept that point, which was the second issue that I wanted to flag up.

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There were two local concerns in December, January and February. One was connected with the private Southwark Park nursing home in Southwark Park road, Bermondsey, which is near where I live, and the other related to Tower Bridge care centre, which is run by Southern Cross Healthcare and has been open for two or three years. I received a letter from the chairman and chief executive of Southern Cross Healthcare, Mr. Moreton, which raised the issue to which the hon. Gentleman referred. I shall quote from the letter because it concerns a proper issue, which also arose in a local authority context. Mr. Moreton stated:
"You will remember that you attended the formal opening of the above home in October 1998 … As you are no doubt aware, over the last two years since the home opened, various factors have contributed to the deterioration of business conditions for the care home sector, and it is extremely worrying that, still, local authorities are not increasing fees to the necessary rate of inflation we are experiencing due to such things as the minimum wage, working time directive, minimum standards etc.
I am extremely concerned that we are not likely to achieve the very necessary local authority fee increases that we require this year to meet these exceptional costs. While I applaud many of these initiatives, given that employment conditions are substantially improved, the reality is that without the necessary fee increases we will face some difficult decisions.
In the case of Southwark, they are paying way behind the going rate for fees and I just hope our representations to them will be heard as we need to pay the right rates to get the right staff, otherwise care starts to deteriorate and that we will not allow. We have had an offer for Tower Bridge for another use and although this is not the way I want to go we are giving it serious consideration. This situation is clearly ridiculous given the need for the beds in the area.
Our current request is for a 6 per cent. increase, which is not at all unreasonable given the exponential growth in costs we will realise this year."
The letter ended with a plea for help, which is one reason why I am here today. It was a plea no only on behalf of that particular nursing home, which was also where the alleged assault happened, but on be half of the whole sector.
At the meeting held in March, there was intensive debate about another nursing home called D'Eynsford House, Camberwell, which is a nursing and residential home run by Age Concern, Southwark, situated in the constituency of the right hon. Member for Camberwell and Peckham (Ms Harman). As far as I am aware, the council currently proposes to withdraw placements and funding because it cannot afford to pay for the home. Eileen McNally, who is the director of Age Concern, Southwark, attended the meeting. She said that costs are higher than the local authority pay, but that those costs are necessary to provide decent care. Residents' family representatives are fighting an intensive battle to ensure that the home stays open because it is a good home where there is great satisfaction with the levels of service. They do not want their relatives to be moved away to other places, but they understand that decent care must be paid for.
The hon. Member for Runnymede and Weybridge (Mr. Hammond) has prompted me to ask a question that arises out of that case. We have started the new financial year and money has been allocated to local authorities, but in Southwark there are relatively high costs because of land values. Furthermore, there are few nursing and residential homes in the local authority, private or voluntary sectors, which has always been a
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problem. What guarantee is there that Southwark council—and others in a similar position—can find the money to guarantee the necessary staffing levels, pay and decent conditions to provide the care wanted by residents and their families?
Local authorities must battle with voluntary sector and private sector providers if they cannot afford to pay what is being asked for placements. They may threaten to place people elsewhere, but where is not apparent to me because I do not know where other beds are available. What can we do in such circumstances?
The second problem relates to what we can do to ensure that between now and implementation of the 2000 Act we can go above the minimum standards of the 1984 legislation. I accept the premise that the 1984 legislation is out of date and does not provide a sufficient base because the threshold is too low. However, that is the present threshold and a local authority or health authority, depending on whether the home is residential or nursing, inspects twice a year. If there is any reason for concern as a result of regular or on-the-spot inspections or in response to complaints, they will return. They then have a blunt choice. They may be able to close a home immediately, but only in the most draconian circumstances—I am aware of the necessary criteria for that—or they must serve notice, after which there is a long drawn-out appeal process.
During our debate a few weeks ago, it was clear that there was sometimes considerable dissatisfaction with the level of care, but if the health authority and local authority cannot find sufficient criteria to enable them to serve an immediate closure notice, they can only start on the long, expensive and ineffectual route for dealing with generally low standards of care.
Dr. Peter Brand: Does my hon. Friend accept that local authorities are sometimes loth to act because they cannot manage without the care that the home may be providing? That applies particularly to nursing homes, because there is a grievous shortage in some parts of the country and that may cloud the judgment of how immediate the action should be.
Mr. Hughes: My hon. Friend's expertise in the matter is greater than mine because of his professional experience on the Isle of Wight. My hon. Friend the Member for Sutton and Cheam (Mr. Burstow) also takes a great interest in the subject, but, sadly, cannot be here today.
There is a conflict of interest in that local authorities must protect their budgets and they want their money to go as far as possible. If they withdraw a contract, they may be unable to place people elsewhere locally. In constituencies such as mine there are very few beds and a great demand for care to be provided locally. That is the case in every community because people prefer their relatives to be cared for in areas that are easily accessible and, if they have no private transport, they need to be able to reach them on foot or by public transport at a small cost. They do not want to have to go out of London or to the south coast where, traditionally, there are more residential nursing homes.
Mr. Hammond: Just to develop the argument, does the hon. Gentleman agree that the key to a sustainable

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increase in quality is to increase supply and not simply to regulate from above? If supply outstrips demand, quality will be forced up as suppliers compete.
Mr. Hughes: That general market economy argument is controversial. If supply is greater than demand, that does not always mean better quality. Logically, that should deal with some of the problems mentioned by my hon. Friend the Member for Isle of Wight (Mr. Brand) and local authorities should then have a choice, but a proper regulatory regime is necessary. Adequacy of supply is important, but we do not have adequacy of qualified and competent people to work in existing homes.
Privately run care homes—or even those in the voluntary sector—need to keep their costs down, so they may employ the least qualified staff because they are cheaper, and offer the poorest quality of care. I have done some work and have examined the legislation, but I am still unclear about the requirements, so should be grateful for a specific answer from the Minister today.
I discovered in a meeting that it is sufficient to have only one qualified nurse responsible for 24 residents in one of those nursing homes. I understood from that meeting that, although the nurse on duty had to have assistance, there was no requirement for any of the assisting staff to have qualifications. I accept that Southwark, like other local authorities, has specifications for the provision of nursing care homes, setting out matters to do with staffing and so on. However, can families be certain now—without waiting for the new regime to kick in—that every member of the full-time, part-time and agency staff working in a care home has no relevant criminal conviction or a previous employment record, rendering them unsuitable or undesirable for work in that environment? What guarantee is there that the staff have sufficient qualifications to do the job properly? Several issues that have been gathering over the years strike me as troubling, such as the issue of general qualifications and capability.
It has been pointed out to me that there have been advertisements for German students to work in a care home as a holiday job, for example. Often residents and retired workers who have tried whistleblowing have let us know that care workers have been found asleep when they should have been awake, that they look after themselves before the residents and do not pay attention to what is going on. I have been told that some residents have found it almost impossible to understand what care workers are saying, as their level of English is so poor. I appreciate that there may be a racism issue underlying that complaint, but whether someone comes from Finland or Zaire, a resident's care is not helped by not being able to understand what is being said. Therefore, we must consider the important issue of basic literacy, numeracy and intelligibility in carrying out care functions.
How can the public get quick, effective, authoritative checking and inspection of homes and achieve resolution of issues of concern? When the community health council in Southwark has had matters brought to its attention, the general secretary has gone to check and look round homes, often amid considerable
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antagonism. An extraordinary story was told by the deputy leader of the council when she and my colleague, Councillor Capstick went to Southwark Park home. They went in without being checked and wandered round. When a fire alarm sounded, the only people who moved were the staff. The person on duty appeared to believe that the two councillors were agency staff and started issuing them with instructions, even though they had never been seen before. That sort of thing causes considerable concern.
I do not pretend that looking after old people is easy. It is tough and I know that I could not do the job well. Some old people can be extremely demanding. I have done my stint as a hospital porter and looked after old people as part of a holiday jobs when I was a student. I know how difficult it is. The objectives of the Care Standards Act 2000 must be achieved. The quality standards are urgently needed. I have heard too many complaints over the years about the standard of care in geriatric wards of good hospitals like Guy's and St. Thomas's. I have been in too many residential and nursing homes, some very expensive ones, where there is no stimulation and very little personal care. People are got up, put in a chair in front of a television, given their food and sometimes assisted with the toilet, although they may have to wait a long time for that. Even though geriatricians say how important it is, residents never enjoy the stimulus of being with young people or animals or of going out in the fresh air.
Having cared for relatives who have become senile and suffered badly from the aging process, I know the frustration that families feel when their elderly relative grows old with no dignity. I had an aunt in an old people's home who was surrounded by people who did not know what day of the week it was and who were talking nonsense. It was sad and depressing and I remember thinking, that I would far rather that she was taken out for a ride every day in her wheelchair with the risk that she might not live as long, because at least she would have been having a good time. If she had a bit of a bumpy ride and a caught a cold while out in the fresh air, it might be far better than sitting cocooned indoors all day in that sterile atmosphere.
There is no difference of aspiration between hon. Members. The debate is not meant to be critical of either Labour or Conservative Governments. We all strive after the same thing, but my concern is what we can offer now until the higher standards to which we aspire are legally required. For some people it is already too late and others need a response urgently. We are going to have an inquiry in Southwark. The local authority will have a scrutiny panel. The local council and the health authority have accepted my request for an independent inspection and an independent inquiry. I hope that that will be carried out soon by someone who does not have a vested interest in the finances. I hope that it will raise the standards. I should be grateful if we could know what the minimum standards are now and what we can do if we find homes where there are so few qualified staff. What can we do to ensure that there are enough good places in nursing and residential homes, which we will need as we have more and more older people?
11.28 am
Mr. Russell Brown: I am grateful for the opportunity to take part in the debate initiated by the hon. Member for Southwark, North and Bermondsey

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(Mr. Hughes). I was somewhat anxious when I thought about this because there are significant differences between social care provision north and south of the border. My local authority of Dumfries and Galloway was the first in Scotland to externalise all its homes. I want to comment on that and to describe some of the difficulties that it has created.
I was elected as a local councillor in 1986. Social work costs in my area were then the lowest per head in the whole of Scotland. Some people might say that that is because it was a well-off area but, on further reflection, it is because we were not spending enough on the family, child care or the elderly. I remember an inquiry into a residential home called Moorheads in Dumfries. One of my colleagues had a traumatic time listening to relatives talk about the regime—I can put it in no better terms—that operated in that home.
Standards in residential homes are important. I agree with the hon. Member for Southwark, North and Bermondsey that the way we treat our elderly people is a reflection of our society. Whether the elderly are frail or still active, the manner in which we treat them affects their day-to-day well-being. It is right to judge society in terms of the provision it makes for elderly people. Each and every one of us in the Chamber should take an interest because we all look forward to growing old gracefully and with dignity until we reach our final days.
The relationship between public and private sector residential homes has been strong in my constituency. Arguments arose from time to time, hut everyone knew that they were trying to provide a service. In the early 1990s, we discovered that some local authority residential homes needed significant capital investment of about £5 million. That might seem a small amount, but it was significant in Dumfries and Galloway. The bottom line was that the council could not afford it, so it had to discover other ways—rebuild, for example—of improving the homes. At the end of the day, the answer amounted to externalisation, which some people call privatisation—selling off or giving away. Whatever phrase people use, the result is that Dumfries and Galloway no longer has any residential homes. They are now all in the hands of other organisations.
The decision to externalise was not taken lightly. Coopers and Lybrand was brought in to carry out a study and it later reported to the council. All that activity was going on in the background. The people who really matter can be placed in three categories—residents, residents' families and staff. All three work closely together, and no one of those categories should be placed above the others. People with an elderly relative in care want to be sure that when they are at home during the evening, their relative is being properly looked after.
I distinctly remember visiting a residential home in my home town in early 1996 and being grabbed by staff to explain the council's proposals to families who were also visiting. In the end, the decision was that two companies would take over the 11 residential homes. A local company called Burnfoot nursing homes took over two homes near its base—one in Lockerbie and the other in my home town of Annan. As it was closest at hand, it was appropriate for the company to do that. Another firm, called Community Integrated Care, took over the other nine homes. The package that was pulled together by the local authority meant that, in effect, all
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the homes would be guaranteed payment for the beds, irrespective of whether they were occupied. Early in the financial year 1998–99, we discovered that the private sector was anxious about not getting referrals. Clearly, people were not being given the choice to which they were legally entitled and the council, through social services, was channelling people towards the homes that it had externalised. We discovered 12 months down the road that one of the homes would not receive its annual pay rise, despite the fact that the council had handed the money to the company. We later discovered that there were serious problems; anxious staff had been promised the world, but the new employer was not prepared to go ahead with the terms of the agreement.
Eventually, the company decided to buy out people's terms and conditions, and we found that people were seeing between 30 and 50 per cent. of their normal earnings being slashed. That is astounding. When we examine the standard of care, we can see that employees' hearts and souls must be in their work. I am not convinced that people's hearts and souls will be in those jobs for much longer.
Mr. David Drew: That is not only a problem in my hon. Friend's locality. A similar situation arose in Gloucestershire some years ago. As a result, there was on-going distrust of the local authority because the smaller homes feel discriminated against in getting placements. That must be overcome quickly if we are to have the full diet of provision in each area.
Mr. Brown: My hon. Friend is right. Our experience is showing a bleaker picture than we would want.
Mr. Hammond: I just wish to complete the picture, because I have similar experiences in Surrey. Can the hon. Gentleman say whether there was a differential in the fees being paid in those externalised homes compared with other independent homes in the locality? The market is distorted not only by the local authority's desire to keep the places filled, but often—certainly in Surrey—by the fact that the local authority has agreed to pay higher fees to those externalised homes.
Mr. Brown: The answer is yes. Those distortions exist and have caused severe problems.
The initial study that was conducted by Coopers and Lybrand clearly overestimated the number of beds needed in our locality. That has already led to the closure of one home and could lead to the closure of another one or two. The impact of that would not be great but the other company, CIC, is implementing more savage cuts. Some of the staff are taking a case, through their trade unions, to the Advisory, Conciliation and Arbitration Service. Three members of staff came to see me recently and one of them said that her earnings had been cut from £16,000 to £8,000 a year. She continues to work constant night shifts and is wondering whether she should stay in the care sector.
As has been said, it is important to provide proper care in a regime based on good standards. What I and other hon. Members have seen does not convince me that such provision exists in all areas. It is tragic that the poor provision reflects on those who provide excellent care in other parts of the country. In my area,

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privatisation has been seen as a quick fix—a way of having some excellent buildings built and others upgraded—but it has not been the answer to providing care in residential and nursing homes. It has been a bad move and staff in the caring sector are beginning to feel the rough end of it. They have had a raw deal. I appreciate that the Minister cannot speak about terms and conditions, but they are vital in regulating how people carry out their day-to-day work, which is then reflected in the care and service that we provide for our elderly people.
11.42 am
Mr. Roger Gale: Before injecting my usual note of discord, I start by agreeing with the hon. Members for Southwark, North and Bermondsey (Mr. Hughes), for Dumfries (Mr. Brown) and with the Minister. I have had the fortuitous opportunity of listening to him speak on the subject for many hours. The hon. Member for Southwark, North and Bermondsey is right to say that one could not put a cigarette paper between the objectives of all hon. Members on both sides of the House on the care of the elderly. We all want our elderly constituents to end their days in dignity and comfort and with a high standard of care.
When I was first elected in 1983, I represented a constituency with a large number of residential and nursing homes, many of which I visited very quickly after the election. I was appalled at the standards that I found. They stank of urine, the control over drugs was minimal, the so-called care staff had little or no training—they did not know how to make a bed, how to change an inco pad or how to lift the clients in their care, leading to back strain for the staff and bed sores for the elderly people. All in all, it was a very depressing picture and the standard of care was well below par.
With others, I began a campaign to change that situation. The Registered Homes Act 1984 went a long way towards improving conditions—even if it did not make us friends. I was assailed by many proprietors of what became revoltingly but appositely named granny farms, who felt that they were being forced into investing vast sums of money. However, the net result was that partition walls made of hardboard and chipboard, which were fire hazards, were taken down and standards of decoration, furnishing, cleanliness, general hygiene and nutrition improved. Most importantly of all, the self-respect of the people working in the homes rose dramatically. My local technical college—Thanet tech, as it then was—introduced a course to teach young people working in the homes, who tended to be between 18 and 22, how to carry out basic tasks. It does not take long to teach that, but it makes a great difference to the standard of care. We quickly found that, apart from anything else, the elderly people liked having bright young people around them who took a pride in their work, and the atmosphere changed dramatically.
The fees being paid increased. Some bad homes went out of business, but the good homes—those that invested—made more money. It is probably fair to say that, by the back end of the 1980s or the early 1990s, a reasonable balance had been struck in most cases
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between a fair return on investment and a fair price for a fair standard of care. It was the standard of care that was important—not the quality of form-filling, bean-counting or political correctness, but the manner in which people were looked after. They are generally elderly, but not exclusively; sadly, there are some younger people with premature senile dementia.
I do not pretend any more than any colleague in the House that I was entirely happy with everything. There were still bad homes, which were being winkled out by the inspection regimes and people such as us visiting them unannounced. I doubt whether any hon. Member who has residential or nursing homes in his or her constituency does not visit quite a few of them over Christmas, if at no other time.
The hon. Member for Southwark, North and Bermondsey made a point about the need for stimulation and an interest in the environment. At the time, that need was being met, because people had time to care. They would go round everyone regularly and ask them whether they wanted a cup of tea, whether their inco pad needed changing and whether they were all right. They had time to talk, help with crossword puzzles and do all the other little things that make the difference between real caring and "looking after" in its loosest sense.
Since that time, however, we have fallen into a downward spiral. It is fair to blame home owners only in part if at all, in many cases—because if we want
such care, it must be funded. It is all very well to say that we have a lot of homes, but there is a free and good market. The commissioning local authority and county council can go into the marketplace, drive down prices and get the best deal possible. For the council tax payer, that may, superficially, be a good thing. However, if we are to have the staffing levels and trained care staff that we need and if nursing homes are to have the nurses that they need and at the levels that the law requires, they must be paid for.
I am certain that most medium-sized residential and nursing homes, particularly the nursing homes in my constituency, make their profit on the last three beds. All the rest of the money that goes into the home is spent on running costs. We are no longer talking about a licence to print money and the bad old granny-farming days, but talking about marginal businesses. If those homes are denied their last three beds or clients, who make the difference between being viable and not viable, there can be only one outcome. Looking the Minister straight in the eye, I must tell him that the standard of care falls, because people start to cut corners on food, cleanliness and staff.
If, as in Kent, the local authority is then competing with London boroughs—which appear to us to have riches beyond the dreams of avarice when it comes to dumping their problems on someone else—we cannot win. The homes closer to London become stuffed full of those whom the London boroughs neither wish nor care to provide for. They are quite prepared to write out a cheque with someone else's money, but we are left picking up the pieces. We cannot and will not go on doing that. Indeed residential and nursing home proprietors are not continuing to do that. They are burdened by bureaucracy, red tape and continual inspection—not of the care given to the elderly ladies and gentlemen, but of the form filling and whether there

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is another half a metre of floor space for someone who will never be able to get out of bed to use it. That is why those people are giving up and going out of business. During the past nine months or so, Kent has lost hundreds of residential and nursing home beds. The result was that, through the winter crisis, the hospitals were jammed full of people who should not have been in a hospital at all, but who had nowhere else to go.
So-called care in the community—in theory, a good idea—in practice, has turned into neglect in the community. Care assistants who would like to be able to care have half a dozen clients to visit first thing in the morning. They rush around, allowing about 20 minutes for each. They need to travel by Tardis—there is little time to get from one to another—get the old girl out of bed at half-past 6 or 7 o'clock, potty her, stick her in a chair, give her a boiled egg and say, Bye-bye, dear, no time for conversation." Somebody else comes in at lunchtime and throws something into the microwave oven saying, "There you are, dear, there is your lunch, and at half-past 4 you go back to bed." The fact that one might not want to go to bed until 9.30 or 10 o'clock at night is neither here nor there. There is no choice but what is imposed by a system that is out of control.
The moment that such people become ill, they are faced with practice nurses and general practitioners who do not have the time, energy or inclination, in many cases, to look after them. Where do they go? They go straight into a hospital, where they clog up the beds that are needed for patients who need elective surgery. They used to go into good, caring, well-funded residential and nursing homes, but that no longer happens. It is a great sadness that, having gone so far forward—we now have a real prize within our grasp, notwithstanding the fact that we have an ageing population and more people who require care—we now deny choice and do not allow even those with a little money of their own to go into home B rather than home A. They are prepared to pay a top-up from their limited resources, but must pay all or nothing. When their money has dwindled to a level such that they can no longer pay, they go where the local authority tells them to go.
I have heard the Minister speak long and often about the subject, and I believe that he cares. He must impress upon his friends in the Treasury that money is required. Counties cannot take on more and more responsibility and statutory duties from Government: for trading standards; for inspection of this, that and the other; for dog wardens, traffic wardens, wardens for whatever and more parking schemes introduced by legislation. Counties cannot do all those things and, in the case of Kent, continue to pick up the b for the fringe requirements that are not paid for by Government of all the asylum seekers who come into the county, and still be expected to have the money that is needed to provide care for the elderly.
East Kent has an inadequate supply of nursing care for the elderly and mentally infirm My constituents have nowhere to go, other than a mental hospital—the very situation from which we tried to move away—because the homes have closed. They have closed because it now costs £500 a week to care for such a client, but the going rate is about £3110 to £320 a week. In the middle of the winter crisis, the Government gave Kent £850,000. They said, "Here is more money, buy some care." The first problem was that the care was no
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longer available because the homes had closed. Secondly, what happens when the short-term money runs out?
I listened very carefully—I had the opportunity to do so—to the debate on the Care Standards Act 2000. I believe that there is much good in that, which hon. Members on both sides of the Chamber would wish to support. However, to echo the point made by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) and others, it will fail unless it is backed up by real, hard cash. If it fails, we shall be failing to ensure that our elderly constituents are provided with the care to which I, the Minister, and every other hon. Member aspires.
11.55 am
Dr. Peter Brand: I congratulate my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) on initiating the debate.
The contributions of the hon. Members for Dumfries (Mr. Brown) and for North Thanet (Mr. Gale) made it clear that market forces have not worked and are unlikely to work, because in most cases the user of the service is not the commissioner of the service. I recognise that there is a move towards allowing more choice, but ultimately people tend to go where there is a space. In the early days, there was massive over-provision. When the tourism industry became less successful in seaside towns, people turned to granny farming, as the hon. Member for North Thanet said. Over-provision does nothing for standards. Matters started to improve only when standards were introduced through inspection and registration regimes. I am glad that some of the homes that I used to visit have closed, because their standards were appalling.
One cannot rely on market forces and not regulate. Regulation is important, and the Care Standards Act 2000 will make a big contribution to that—not only in terms of bricks and mortar, but through training and the way in which employees are valued as a result of the minimum wage. It is right that such measures were, and will continue to be, introduced. However, not every residential or nursing home can continue to subsidise its local authority placements through cross-subsidy from self-funders or top-up fees from relatives, which will be allowed in the near future. The essential point that the Government must recognise is that it is no good taking the view that local authority fees are similar around the country and are therefore right. My local authority justifies its fee levels by saying that they are comparable with those of all other local authorities in similar circumstances. I have had representations from at least six parts of the country in which that argument has been used. There appears to be a conspiracy among local authorities to keep fees down.
Market forces are beginning to work in a negative way. People are moving out of care home provision. Even a respectable organisation like Methodist Homes is shutting its care home on the Isle of Wight because it cannot be bothered to upgrade it. That is extremely worrying.
Mr. Hammond: I am not here to speak on behalf of Methodist Homes, but it is a little harsh to say that it could not be bothered to upgrade the home. I believe

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that its position is that it cannot go on indefinitely subsidising local authority underpayments from its own charitable funds.
Dr. Brand: That is a charitable interpretation of what it is doing. It is sitting on a prime site of potential residential value, and will make money at the expense of its residents on the Isle of Wight.
Mr. Hammond: It is a charity.
Dr. Brand: It is a charity that should feel an obligation to people who have been in its homes for many years, and should offer some degree of stability.
We need care homes and nursing homes. The national health service depends on them and the care of people depends on them. I welcomed the Government's establishment of the royal commission on long-term care, which recognised the continuum between acute and chronic and long-term care. However, I am disappointed that they did not accept the commission's recommendation that personal care—the care that people need owing to their disability or infirmity—should become the responsibility of the NHS. In reality, we have created not care in the community, but a way to enable the national health service and the public sector to shuffle off responsibility by pushing people into the private care sector. Like the hon. Member for Dumfries, I went through the same, extremely difficult process of externalising a group of homes.
If the royal commission's recommendations had been accepted, there would have been greater expert input into residential and nursing homes. Occupational therapists, specialist nurses and community psychiatric nurses would have been much more proactive in the residential part of community care. There would have been many more community geriatricians, particularly psycho-geriatricians. When expertise is brought into such settings, a lot can be done. The use of community pharmacists has to some extent revolutionised older, often confused people's over-dependency on drug regimes. Drugs increased their confusion, so they had to be drugged further to render them confused and quiet rather than confused and disturbed.
The Care Standards Act 2000 will take us a great deal further forward, but without proper funding from the centre, there will be care standards for non-existing provision. That would be tragic. Not everyone can be maintained in their home, although such efforts are indeed welcome. However, not everyone needs to be in a district general hospital or a reconstituted long-term ward. It is right to allow people to remain in their locality in sensitively run residential provision, and the private sector has demonstrated that, with adequate funding, it can provide a service.
It is very worrying that home closures in my island constituency are threatening people with rehousing not only in a different community or village, but away from their own island, on which they may have lived for 70 or 80 years. I hope that the Government will take urgent action and review available residential and nursing home provision. The Minister cannot simply say that the problem affects only 7 per cent. of the population; he must consider the pain felt in different parts of the country and take steps accordingly.
12.3 pm
Mr. Philip Hammond: I, too, should like to congratulate the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) on securing this debate. He expressed the principal worry that something needs to be done immediately—before implementation of the provisions in the Care Standards Act 2000—to ensure higher standards. My concern, which other hon. Members have already articulated, is that it is questionable whether the 2000 Act and the minimum standards that it will introduce will prove deliverable, given t he financial constraints on the sector and local authorities.
I pay tribute to the hon. Gentleman and to others for their contributions, particularly my hon. Friend the Member for North Thanet (Mr. Gale), who must have found it painful to mask his evident knowledge of, eloquence on and passion for this subject during the many hours in which he has chaired relevant Committees. He put his finger on the key issue when he talked about quality of care—it is indeed a question of measuring not size of rooms or numbers of staff, but the quality of care. Although I entirely agree that there is not a millimetre between the positions of the different parties and individuals in our ultimate aspiration to offer dignity and proper comfort to elderly people in their declining years, there are some differences about how to tackle the issues involved.
One of the important differences is the distinction between measuring inputs and outcomes. If we have a criticism of the Government's approach with the Care Standards Act 2000—and the national minimum standards set with in it—it is that it is too prescriptive and too focused on measuring inputs. The Government have too much of a check-the-box mentality, ignoring at their peril the quality of care being delivered, which my hon. Friend the Member for North Thanet emphasised so strongly.
The Minister wrote to me recently in response to a letter that I sent regarding a nursing home in Essex that was under threat of closure. The letter said:
"homes which provide good quality care should have nothing to fear from the introduction of national standards."
There is a narrow definition of what constitutes good quality care. It is evident to me, to people in the sector and to my hon. Friends that homes that provide perfectly good quality care will fail to meet the mechanistic, bureaucratic tests laid down in the national minimum standards regulations. I question the use of a regulatory approach to drive up care standards. None of us disputes that regulations are required to ensure proper minimum standards and the safety and well-being of people living in residential care homes, but the Government seem to believe that we can legislate for everything, including good-quality care. While we need minimum standards to pick out rotten apples and protect people in residential care, it is essential to foster choice and diversity to ensure good standards of care.
Good standards of care are not only about measuring objective things; they are about empowering people. We must remember that residents in homes are people, not numbers or statistics. They will have different needs and wants, some of which may seem strange to those of us from a different generation, but which must be respected none the less. An essential prerequisite of achieving that

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choice and diversity and ensuring that quality provision can be purchased by responsible local authority purchasers is to secure the supply base and the volume of supply. Unless we can ensure that there is such a supply base, we shall run into the trap identified by the hon. Member for Isle of Wight (Dr. Brand) that local authorities will be faced with the dilemma of what to do with a provider who cuts corners and does not comply with the minimum standards regulations. Such local authorities will be placed in an impossible position. They must provide care for the people who need it, but the crisis in which the industry finds it self means that in many parts of the country—although not Dumfries, apparently—there is a significant under supply, which dominates the balance of power between purchasers and providers.
I want to highlight the fact that some of the minimum standards that are laid down under the Care Standards Act 2000 address the matters that need to be considered in a set of minimum standard regulations, and others effectively constrain choice in that they define for people what their choice should be. I put it to the Minister that in practice a prescriptive set of national minimum standards is stifling, not fostering, choice. We believe that that will not enhance the overall quality of care.
The Minister of State, Department of Health (Mr. John Hutton): I apologise to the hon. Gentleman for interrupting his speech because I know that he, like me, does not have much time left. Have I rightly interpreted his remarks as meaning that he is now opposing the national minimum standards that we have published? Does the Conservative party not support those standards?
Mr. Hammond: Some of the national minimum standards address issues that are genuinely the preserve of a regulatory regime. We believe that genuine and sustainable quality will be fostered by the promotion of diversity and choice. We have had this debate many times, and the Minister knows my views. To the extent that the national minimum standards me limiting choice and diversity of supply, and certainly to the extent that they are reducing the amount of supply available, they will do nothing to enhance standards
I am grateful to my hon. Friend the Member for North Thanet for making the obvious but important observation that quality costs. The Government have not recognised that the regime to whit h they aspire has a huge price tag attached to it. In Committee, I repeatedly asked the Minister whether the Government recognised that they must pay for the substantial increase in costs that both independent and local authority homes will face in delivering the quality agenda. No one disagrees with the quality agenda, but it is living in a cloud-cuckoo world to imagine that one can impose it without dealing with the cost issue. Cost pressures have become more acute since we debated the Care Standards Act 2000. The increase in the national minimum wage, which has not had a significant impact on London and the south-east, has had a huge impact outside that area on an industry that incurs 70 per cent. of its costs in wages and salaries.
Most local authorities have increased their fees to independent sector providers in line with the preserved rights fee level increase, which will be 1.8 per cent. from
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this April. Yesterday, the Secretary of State for Social Security interestingly indicated in a written answer that the Government intend to increase preserved rights benefits by a further 1.9 per cent. as soon as possible this year, which would give a total increase of 3.7 per cent. I welcome that, and so will the industry. However, can the Minister tell us how he intends to ensure that local authorities, which have traditionally taken their lead in setting the following year's budgets from the preserved rights settlement announced by the Department of Social Security in the autumn, are encouraged and enabled to follow that lead when they have already set this year's budgets? Most of those budgets do not leave any slack to provide further uplifts in payments to home operators.
The Minister will, of course, quote overall levels of Government support for social services and the level of funding to social services in general. The figures that he will quote are, of course, correct. However, he will acknowledge that there are other pressures on those funds. Even within the social services area, huge increases in the cost of children's services are squeezing available resources for care of the elderly.
I should like to quote to the Minister from a letter sent recently from the leader of Kent county council to the Secretary of State, in which he outlined two additional costs that all local authority social services departments will be facing as a result of legislative changes. The letter states:
"an increase to the capital limits would result in a loss of income, as people with capital between £16,000 and £18,500 would no longer be expected to pay the full costs of their care, but would be part subsidised by us. For that reason … a prudent sum of £1 million was budgeted. In the event, the fact that capital limits for the purposes of assessing income support have not been increased in tandem means that the loss of income is far greater. In effect, this represents £4-£6 per week for every client with capital of between £10k and £16k; and more significantly, £170-£180 per week for every client with capital between £16k and £18.5k."
The total cost for Kent will be about £2.5 million, compared with the £1 million originally budgeted. That is just an example of the pressure from all sides that the sector faces. Will the Minister deal with that point? He will have had a chance to consider it because he has seen the letter from the leader of Kent county council.
There is a crisis in the care sector. Some 15,000 beds were lost in the year to April 2000 and we estimate a loss of up to 40,000 beds in the current year. The impact on the national health service is serious, as the hon. Member for Isle of Wight mentioned, with delayed discharges from hospitals and, perversely, the reopening of the Nightingale format geriatric wards in NHS hospitals to take the patients who cannot be discharged. Those wards offer the kind of conditions that the Government are committed to stamping out, to which end they introduced the Care Standards Act 2000.
Time does not permit me to rehearse in detail all the aspects of the national minimum standards that are causing huge concern to the industry, but the Minister knows what they are. They include physical standards, room sizes and sharing ratios. Although those are not necessarily bad things, they are unrealistic given the inability, or unwillingness, to fund the changes and capital investment required. If rigorously enforced, they will lead to a contraction of the sector and to a reduction in its diversity. Independent family-run homes will

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close, especially those located in listed country properties that cannot be converted easily to meet the standards, and Posthouse-style, corporately owned care homes will take over their role.
Perhaps that is the Government's agenda. Perhaps they find it easier to deal with a handful of big corporations than a large number of independent providers. However, that appears to me to be destructive of choice and diversity and it will not lead to the improvements in care standards and quality to which we all aspire.
I shall give figures from two local authorities that summarise the problem. The cost of delivering care in Coventry's local authority residential care homes is £470 a week. It offers independent sector care providers £121 a week. The London borough of Hackney spends £851 a week on its own homes. It offers independent care providers £284 a week. To anyone with an O-level in economics, it is obvious that the outcome will be a rapid and continuous contraction of the sector, and an inadequacy of supply that will make it impossible for anybody—local authorities or national care standards commissioners—to enforce the quality standards that the Government, and all of us, want.
If the Government cannot address the supply problem, the 244 specific standards required for registration under the national minimum standards will be the straws that break the camel's back in many parts of the independent care home sector.
12.19 pm
The Minister of State, Department of Health (Mr. John Hutton): I congratulate all hon. Members who have contributed to what has been a well-informed debate. A lot of common sense has been spoken, but I shall refer specifically to what was said by the hon. Member for Runnymede and Weybridge (Mr. Hammond) because many of his figures were wrong and his arguments were less than persuasive.
In essence, the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) raised three related issues. He referred to the need for adequate funding and asked whether the funding available to Southwark council would be sufficient this year. He also referred to his concern about existing registration and regulation arrangements, particularly during the interim period between now and April next year when the National Care Standards Commission comes into operation. He then asked some important questions about training arrangements.
I agree with much of what was said during the debate about quality through registration and inspection being an important part of the overall equation, but we must not lose sight of the fact that about 80 per cent. of those who work in social care have no recognised qualifications. Given the importance of the care sector, the essential infrastructure of our wider care system is unacceptable and we must improve the training and qualifications of the social care work force.
Funding is central to everything that has been said during the debate. The hon. Member for Runnymede and Weybridge rightly anticipated, as he usually does,
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that I would read out a long list of statistics about spending on social services. In fact, I shall not do that today because the figures are on the public record and he and other hon. Members are aware that by 2003–04 the money available for social services spending will increase from just under £10 billion to just under £12 billion. That is a substantial increase. The hon. Gentleman and his hon. Friend the Member for North Thanet (Mr. Gale), who spoke well on the subject, particularly when requesting more money, will anticipate what I am about to say. We are making substantial additional resources available. I can tell them, for example, the amount of extra spending that is available for Kern this year. The arguments about additional resources to fund not only national minimum standards but the wider range of services commissioned by local authorities would stack up a lot better if they would say that they would match the resources that we are making available over the next three years.
Mr. Hammond rose
Mr. Hutton: I shall not give way just yet.
I have repeatedly asked the hon. Gentleman and his hon. Friend to say that they would match the resources that we are making available for social services during the next three years and they have conspicuously failed to do so. However, they say that they would match our spending rises on education, which is also a local government financial responsibility.
Mr. Hammond: The Minister quoted a significant rise in Department of Health spending on social services to £12 billion and I am pleased to repeat the assurance that my right hon. Friends the Members for Richmond, Yorks (Mr. Hague) and for Kensington and Chelsea (Mr. Portillo) have given that we are committed to matching in full the total Department of Health budget, including social services spending within that budget.
Mr. Hutton: Yes, but the hon. Gentleman knows, because I have said before, that of the £12 billion only about £2 billion is Department of Health spending. The other £10 billion is local government spending. We are making that resource available to local government to spend on social services. He and his hon. Friends have conspicuously failed to say that they will match that level of commitment.
Mr. Hammond: Will the Minister give way?
Mr. Hutton: No. I will not. I gave the hon. Gentleman a chance to make his point, but he did not do it terribly well.
To be fair to the hon. Gentleman and his hon. Friend, I accept that more spending is required on social services, but we are doing that in an unprecedented way. To compare like with like, let us examine the record of spending on social services during the previous Parliament because that will provide a reasonable indication of the Conservatives likely commitment if they return to office. During the previous Parliament, spending on social services rose by 0.1 per cent. in real terms. That is the reality. We are providing additional resources as quickly as the country can afford and that is a result of the state of public finances and the

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improved state of the economy. Those resources are coming on line. If we compare like with like, social security resources are experiencing unprecedented growth and that is the reality. If the hon. Member for North Thanet is saying that he wants more than that to be made available, he should have that discussion with his Front-Bench spokesmen.
Mr. Gale: My concern is that the increase in cost is not directly related to care. Many of the burdens of cost are directly related to bureaucracy, which has nothing to do with care. Costs are ratcheting up in a way that, I suspect, they would not under a Conservative Government.
Mr. Hutton: I guess that that is something we will never know because there will not be a Conservative Government to put that theory to the test. I am as concerned as the hon. Gentleman to minimise bureaucracy, and what can loosely be described as red tape. I am not in favour of a red tape system of regulation for the care home sector and that is why we have worked closely with care home providers to produce national minimum standards. Contrary to what he says, such standards have been widely welcomed by the care home sector. They represent a substantial step forward, particularly in the difficult area of fiscal standards. We have tried to compromise to reach a sensible set of working standards that will improve the quality of care, which we all want, without imposing unworkable burdens. That is why the original proposal of 10 sq m as the minimum useful floor space has been reduced to 9.3 sq m where there is compensating space elsewhere in the care home; that is a sensible compromise. We are not trying to drive anyone out of business; we want to support diversity and choice of provision across the sector.
The hon. Member for Southwark, North and Bermondsey's point about spending was well made. I share his concern that there must be adequate resources available to local authorities. As I am sure he knows, there will be a 6 per cent. cash increase in resources available to Southwark social services—a sufficient resource envelope that is available to the local council to address some of his concerns. I am aware of the concerns that he raised about the two care homes. I will make sure that my officials maintain close contact with Southwark council to ensure that his concerns, and those of his constituents, are properly addressed as work progresses.
The training issue is also important. The hon. Gentleman might want to examine the national minimum standards—I see that he h as that information with him. He will see that standard No. 28 addresses how we might improve the training qualifications of staff in care homes. We have said tit t from 2005, 50 per cent. of care staff, excluding registered nurses, should have a proper professional qualification—initially a national vocational qualification at level 2. That will be a substantial improvement. I accept that there will be resource implications attached to that, which is why we have begun funding the national training strategy about which the Training Organisation for Personal Social
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Services published information last year. That will be a three-year programme of investment and we will examine ways of proceeding with such investment. We must start somewhere, and we would obviously not have chosen to start from our current position where we find that there are not enough properly trained care staff. I think that the hon. Gentleman's description of care standards in Southwark is pretty accurate, and could apply to other parts of the country. We must start from this position, but we are making improvements.
Wider concerns have been raised by many hon. Members relating to the general efficacy and efficiency of the existing registration and inspection arrangements. We changed the law because we are not satisfied that the present arrangements are sufficiently independent or robust. The hon. Members for Runnymede and Weybridge and for Isle of Wight described the dilemma of local authorities finding themselves in the catch-22 position of being inspector and regulators, while also being commissioners and providers of care. Those are difficult roles to discharge simultaneously, which is why we have removed the inspecting-registration function from health and local authorities and given it to the new National Care Standards Commission.
Mr. Hammond: Will the hon. Gentleman give way?
Mr. Hutton: With respect, I will not give way because I have only a short time left.
We have removed the Hobson's choice that faced local authorities and allowed them to concentrate on what they should be concerned with: the commissioning process. In some cases, local authorities are still directly providing services, which is a local choice.
Dr. Brand rose
Mr. Hutton: With great respect to the hon. Gentleman, I will not give way.
Through the Care Standards Act 2000 we want to remove the difficult dilemma that local authorities face, and put in place robust independent inspection arrangements. The difficulty raised by the hon. Member for Southwark, North and Bermondsey will be addressed by what is to happen in April next year. He knows the answer to his question about what will happen between now and then. It is currently the responsibility of both local and health authorities to apply their local standards and to inspect homes against set criteria. From next April, that function will transfer to the National Care Standards Commission and a new set of national minimum standards, that have been set centrally in the Department of Health after consultation, will form the benchmark against which care homes will be inspected. We have consistently told local authorities that in the next 12 months or so as we move from the current arrangements to the new system, no one must take their eye off the ball. Change is difficult—
Mr. John Cummings (in the Chair): Order. We must move on to the next debate.

Pensions (Expatriates)
12.30 pm
Mr. Tom Cox: I welcome the debate and the opportunity to raise an issue of great concern to many British-born people who now live in Commonwealth countries. I have an interest in that I chair the United Kingdom branch of the Commonwealth Parliamentary Association and the subject has come to the attention of our executive committee. At a recent meeting of the British-Canadian parliamentary group, the Canadian high commissioner raised the issue with hon. Members and expressed his concerns. I recently had a long discussion with the Australian high commissioner on this subject.
In May last year, I asked a parliamentary question and I have with me today the reply given by my right hon. Friend the Minister of State, Department of Social Security. The issue is clear cut. When United Kingdom citizens retire to certain Commonwealth countries they find that their state retirement pension is frozen at the rate it was when they left the UK. That happens in Canada, Australia, New Zealand and South Africa. A system is in place in many other Commonwealth countries to enable British expatriates who receive their state retirement pension to benefit from any increases that may be made by the United Kingdom Government.
This is not a new issue. It has prevailed for many years. Early-day motions have been signed by many right hon. and hon. Members from all parties. A great number of questions have been asked on the matter. The problem is therefore very well known. It greatly angers retired people from the UK who now live in Commonwealth countries and who receive no uprating in the state retirement pension. N o matter how long they may have worked in the UK or how many contributions they have made towards the cost of their state pension, no increases are paid.
There are organisations that represent United Kingdom pensioners in many Commonwealth countries. The Canadian Alliance of British Pensioners feels angry and badly let down by successive UK Governments and says:
"By ending this shameful pension discrimination the British Government would display the integrity its citizens expect, enable pensioners to afford the personal care and standard of living required in their retirement years, help return some degree of pride to the lives of pensioners and bring Britain in line with all other developed countries."
That clearly spells out the views of a major pensioners group in Canada. I am certain that it also reflects the views of pensioner groups in any Commonwealth country where United Kingdom state pension increases do not apply.
All hon. Members will know about an organisation that works with retired people in the United Kingdom—the highly regarded Age Concern, which is currently campaigning to secure dignity and security for elderly people in the United Kingdom. People from the United Kingdom now living in Commonwealth countries where the state pension is never increased want precisely the same commitment. They want dignity and security in their retirement and they are absolutely right to expect it.
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This month sees pension increases of £5 per week for a single person, £8 for a married couple and a £200 winter fuel allowance. The decision to implement those increases was taken by the Government. I am sure that my hon. Friend the Minister will have played a major role in securing those measures, which are a step in the right direction and have been warmly welcomed on all sides of the House. Hon. Members contemplating doing away with them quickly changed their minds when they realised how popular they were with retired people in the United Kingdom.
It is easy to understand the deep concern of retired people in receipt of a state pension from the United Kingdom that will not be increased because they live in a particular Commonwealth country. How unfair and unjust that policy must seem. Under the present system, those people will never receive a pension rise simply because they have retired to a specific Commonwealth country. Had they Haired to a different Commonwealth country, they would have received any and all pension increases introduced since they left the United Kingdom. For example, elderly people who have retired to Canada fail to receive pension increases, but those who have retired to the country next door—the United States—receive those increases.
About 138,000 pensioners from the United Kingdom currently live in Canada. In 1972 the United Kingdom proposed a new agreement with the Canadian Government under which pension increases could take place. The Canadian and UK Governments held discussions, so will the Minister tell us what went wrong with them? In a written answer to my question on 16 May last year—at column 120W in Hansard—I was told by my right hon. Friend the Minister of State that 470,000 UK retired people living overseas did not receive any pension increase because their pensions were frozen when they left the UK.
The other Commonwealth country that is badly affected is Australia, where 215,000 UK pensioners now live. The Minister will be fully aware of the changes that were made last month by the Australian Government. Can he tell us what the effect of those changes will be on retired British citizens who are living in Australia or who may go to live there in future? I understand that there have been discussions with the Australian Government and the Department of Social Security. Will the Minister tell us about those discussions? Will the position of UK citizens living in Australia now or in the future be protected? There are 215,000 retired UK people living in Australia, so we can understand their interest and concern about the issue.
So far, I have spoken about Canada and Australia, but other Commonwealth countries have no uprating of pensions for retired people from the UK. Those countries are South Africa and New Zealand. We are not talking about large numbers of retired people from the UK compared with the figures for Canada and Australia, but numbers should not be the key factor. Retired people from the UK who contributed to their state retirement pensions have gone to live in Commonwealth countries and then found that their state pension had been frozen, so that they do not receive any increases made in the UK. I can well understand such people complaining about how unfair the system is, and my hon. Friend the Minister must recognise that it is hard to defend.

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Let us examine the countries in which UK citizens will receive UK increases in their state retirement pension. I have already mentioned the pleasure expressed by pensioners here at the increases of £5 and £8 that will apply from later this month. How popular those increases will be in places such as Bermuda, Cyprus, Jersey, Malta, Jamaica and Barbados; all are Commonwealth countries where state pensions are uprated when increases happen in the UK.
UK citizens who have gone to live in countries such as the United States, the Philippines Turkey, Israel, or Switzerland—not one of them a Commonwealth country—will, in time, have any UK pension increase paid to them. How does the Minister think that UK citizens feel if they live in a country where there will be no uprating? I know that I would feel very bitter. The problem has continued under successive Governments who did not take the right decision. Hon. Members from all parties support the proposed changes because, like me, they believe that the existing system is unfair. If Members of Parliament had a free vote on the issue there would be massive support for changes to the present system, and no one, not even my hon. Friend the Minister, could say, "Oh, it could not be done." I accept that cost is a major issue, but it should not be used repeatedly as the reason for doing nothing and simply saying, "Oh, we know of the concerns in countries such as Canada, Australia, New Zealand and South Africa, but we can't change the system b cause of the cost involved." Governments can implement change and discuss with other Governments how new policies can be introduced. What discussions are the Government having with the Governments of the countries to which I referred?
As I said, I know from my role as chair of the United Kingdom branch of the Commonwealth Parliamentary Association that the high commissioners of Canada and Australia and many other people will follow the debate closely, especially the Minister's reply. Cost should not be the only concern; there is also the issue of fairness, and the present system is most unfair.
12.46 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley): I congratulate my hon. Friend the Member for Tooting (Mr. Cox) on securing the debate on such an important subject. He made his case very powerfully. As he said, the matter has been discussed by the UK branch of he Commonwealth Parliamentary Association; I know of the association's value as a point of contact between parliamentarians in this and other Commonwealth countries as I was a member of the CPA executive before I was given my present job by the Prime Minister.
My hon. Friend may be surprised that I am replying to the debate; I was asked to do so by my right hon. Friend the Minister of State, who is in Committee considering the Social Security Fraud Bill.
As my hon. Friend knows, the issue has been discussed for many years. He has tabled several parliamentary questions on the matter and it was the subject of a short debate in January in the House of Lords. I am aware of the strength of feeling of many British pensioners overseas who have raised the issue over the years.
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Pensioners overseas have paid national insurance contributions; however, the money that an individual pays to the national insurance fund is not earmarked for that person and never has been. The national insurance system works on a pay-as-you-go basis and has done so ever since it was established. Contributions paid into the scheme in the past were paid out long ago to people who were entitled to pensions and benefits at that time.
The contribution rate paid in the past took account of the range of benefits payable at the time which, of course, did not generally include the uprating of pensions in all foreign countries. If the scheme had uprated pensions in all countries, the cost would have been higher and would not have been covered by the contributions.
Paying contributions has never given an automatic entitlement to benefits. The national insurance scheme is different from a commercial insurance scheme in which premiums are linked to expected benefits. Although national insurance contributions provide a foundation for calculating personal future benefit entitlement, the contributions do not actually pay for those benefits.
The agreement between the individual and the state is that the payment of contributions gives entitlement to a package of benefits subject to certain conditions. One condition is that retirement pension upratings are generally not payable abroad. That comes from the 1955 legislation, which provided for pensions to be paid abroad, but not for uprating.
The rate of national insurance contributions has never included an element for the indexation of pensions payable abroad, because the social security scheme is designed primarily for those living in the United Kingdom, and any uprating in the pension is designed to meet the cost of living here. Overseas pensions are annually uprated only if the pensioner lives in the European Economic Area or if we have a reciprocal agreement with another country that specifically provides for upratings. Over time, we have concluded agreements that allow for annual upratings with more than 30 countries. Bilateral social security agreements can be the means of providing for the uprating of UK pensions, but their function is mainly to provide co-ordination between social security schemes, so that workers moving between the UK and another country obtain a degree of cover for contributory benefits from one country to another. The costs of making such agreements are an important factor, as I am sure that my hon. Friend the Member for Tooting will recognise.
UK pensions are payable anywhere in the world. We pay about 900,000 pensioners in more than 200 countries, but only about half of them receive annual cost of living increases. Elsewhere, retired people continue to receive their pensions at the rate that was payable when they left this country. Those who left the UK when they were younger receive a pension payable at the rate in force when they claim their state retirement pension.
My hon. Friend compared the situation in America with that in Canada and asked why different arrangements operate in respect of our retired pensioners in those countries. There is a historical explanation. In 1969, the UK made a social security agreement with the USA, which provided for future increases in UK state pensions and widows benefits to be

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received by UK pensioners living in the USA and for the USA to pay its retirement pension to American citizens living in the UK. It also pays upratings to those pensioners living in the UK.
Between 1969 and 1972, discussions about a reciprocal agreement took place between officials from the then Department of Health and Social Security and the Canadian authorities—on the DHSS's initiative. The UK proposed a comprehensive agreement with Canada and tried to persuade it to export its old-age security pension under such an agreement, but the Canadian Government were unable to agree. It seems that Canadian legislation precluded the inclusion of its old-age security pension in reciprocal agreements.
In 1977, Canadian legislation was amended to allow the making of reciprocal agreements involving the export of the Canadian old-age security pension, and Canada indicated its willingness to resume negotiations. At that time, however, UK Ministers decided that insufficient resources were available for increasing the rates of UK pension payable in Canada. There are, therefore, reasons why differences occur in social security agreements, for instance, the different histories of negotiations on an agreement with the USA and with Canada. More than 90 per cent. of those pensioners who do not receive upratings live in Australia, Canada, New Zealand and South Africa. Although we have social security agreements with Australia, Canada and New Zealand, they do not provide for upratings.
My hon. Friend asked about the effects on UK citizens of Australia's decision unilaterally to revoke its social security agreement with us. The agreement helped people who went from this country to live in Australia to satisfy the 10-year residence test for the Australian retirement pension, which is called an age pension. An age pension is means-tested, so a person receives it only if his or her income is below a certain level. It is not like our basic state pension, which is a universal pension. Therefore, the amount of age pension that a Briton retiring in Australia receives depends on his or her financial circumstances. As a result of Australia's termination of the agreement, people who go to Australia after the end of the agreement will, because of its 10-year residence rule, have to wait 10 years before they can get any Australian pension. The Australian Government have estimated that in the first year around 850 people living in Australia will be affected by the termination of the agreement. Those who benefited from it before its termination will continue to do so. However, people who leave Australia to live in the UK
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before reaching pension age cannot get Australia's age pension because, unlike our pension, it is based on a residence requirement.
The British Government are protecting people in the UK who lived in Australia when the agreement was in force by continuing to allow residence in Australia to count towards a basic pension. To unfreeze pensions entirely in all four Commonwealth countries would cost about £310 million in 2001–02, an increase of more than 20 per cent. on current expenditure on overseas pensions. To pay future cost of living increases in those countries alone would cost around £30 million in the current year, rising each year until all pensioners in those countries were paid the full UK rates and eventually reaching a similar cost of more than £300 million a year. The principal difficulty in extending the payment of pension uprating abroad is the cost of doing so. This year the Government will spend about £1,410 million on payments to pensioners living abroad and if, from this month, all pensioners living abroad were paid at the same level as pensioners in this country, the figure would rise to around £1,740 million, an increase of more than 20 per cent. or around £330 million.
There are huge demands on the UK social security budget and there are many unmet needs. The Government have to make choices about priorities. Our priority is to spend any available resources on pensioners in this country, concentrating on the poorest. We have made a start, but there is still much to do to relieve pensioner poverty. It is sometimes argued that the cost of pensions uprating should be offset by the saving to public services here, in particular the national health service, which pensioners overseas do not use. However, we do not know what calls such pensioners might make on the national health service; many of them went abroad long before reaching retirement age and so for many years did not contribute towards health service costs. To pay them uprated pensions would still constitute a major cost.
As I said earlier, the issue of pension uprating has periodically been bought to the Government's attention, as it was brought to the previous Government's—as my hon. Friend the Member for Tooting acknowledged. However, successive Governments have followed the same policy since the regulations were introduced in 1955. I understand and have sympathy with the arguments in favour of a change in policy, but we cannot disregard the huge cost involved. Therefore, I cannot hold out any prospect of adding to social security expenditure by increasing our spending on pensions overseas. As I said, our priority must remain to spending available resources on pensioners in this country, particularly the poorest.

Magistrates Courts (Devon)
12.59 pm
Sir Peter Emery: I have not spoken in a debate in this Chamber since it ceased to be a hemicycle; the new layout is slightly more appropriate and lends itself more to debate.
I have crossed swords with the Parliamentary Secretary, Lord Chancellor's Department, the hon. Member for Liverpool, Wavertree (Jane Kennedy), on this subject a number of times. I first raised the closure of magistrates courts in Devon on 1 January 1989. I try to be logical and reasonable in my approach, as I may then stand a chance of persuading people to listen to my views, and perhaps to act upon them. Therefore, I have tried to be logical and reasonable in my arguments for keeping open seven magistrates courts in Devon, which the Government have now condemned to extinction.
I start by asking the Parliamentary Secretary why—and when—the Government turned away from their declared policy of strengthening local justice. In a recently published pamphlet, the Lord Chancellor stated:
"To achieve all our ambitions will not be an easy or simple process but this Government is committed to making a real difference in the quality and the range of services that can be delivered for the civil justice system."
Does the Lord Chancr honestly believe that closing magistrates courts in Devon and other parts of the country will achieve that aim? In Wales, in Wessex, and in the midlands people are shouting that it is not right or fair that magistrates courts, which exist for citizens' benefit, should be closed in this manner.
Is it logical to ask people to travel 32 miles from Axminster to Exeter, for example, for their case to be heard? It is like asking people from Reading to travel to Ealing; I use that example because, as the Minister knows, I once represented Reading in the House. Would not the hon. Lady think it mad if people living in Ealing had to travel to Reading to attend a court hearing? It is exactly the same distance as from Axminster to Exeter. If the Government suggested that people in Ealing, or any other part of London, should travel such a distance, they would say that the Government were mad. Why is it mad in London but not in Devon?
Mr. Richard Livsey: I congratulate the right hon. Member on securing the debate. I agree with what he says, although Ealing and Reading have public transport. In my constituency in mid-Wales, we ask whether people should travel from Llandrindod Wells to New Town, which is 30-odd miles and from Ystradgynlais to Brecon, which is another 30 miles, making a 60-mile round trip. I entirely agree with the right hon. Gentleman that what is proposed is completely unreasonable because people cannot get to court by 10 am.
Sir Peter Emery: The hon. Gentleman has moved on to the next piece of logic. Is it logical to ask people who live outside Axminster to get to court at 10 am or 10.30 am? They have to go the night before, or they cannot get to court on time. The Minister said in her letter to me that courts would be understanding about the timing. I
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have an illustration of that. The judge told one lady, "We will hear your case at 2.30 pm." She said, "That is very kind of you, your honour, but I hope that it will be over by five to 3, because I have to catch the 3 o'clock bus or I can't get home." Is that logical or reasonable? Does it make sense in terms of local justice, which the Minister claims that she wishes to further?
I turn to the availability of justices of the peace. One of the foundations of local justice has been not only that it could be heard within the area in which crimes—often petty crimes—are dealt with, but that justices of the peace were people who knew the area and often knew some of the laggards who kept appearing before them. That was local justice being administered fully and properly. Now, JPs from the Axminster area have to sit in Exeter, where there is no assurance that they will hear cases relating to the area that they come from. One JP said to me, "The only cases I ever heard were from north Devon, of which I knew absolutely nothing." Another said, "I am giving this up. Having to travel 70-odd miles to court and back just to sit is not what I was contracted to do. That is not how the deal was set when I was happy and willing to become a JP."
What does that logically portend? I believe that it portends something about which the Lord Chancellor would be very happy, but which I believe to be wrong, and condemn—that is, moving away from having local magistrates to having only stipendiary magistrates sitting all the time as, one might say, junior judges. That is not local justice as it has been built up in this country, and it should not be encouraged by any right hon. or hon. Member of whatever party.
Problems arise in relation to solicitors. A solicitor in my area has complained about the way in which the magistrates courts committee undertook the lengthy period of consultation before Axminster magistrates court was closed. There is a panel of duty solicitors at Axminster, and I should have thought that the committee would have had to insist that that was one of the first areas of consultation, but consultation there was none. The hinterland of Exeter, Taunton, Yeovil, Dorchester and Weymouth is about 50 miles wide by 20 miles deep and has a population of about 1.2 million. In that area, only four firms and one sole practitioner undertake work for the new criminal defence service. Of course, solicitors in those towns undertake criminal work, but defendants have to travel to see them and have to travel to court.
The Legal Services Commission and the criminal defence service are beginning to realise that that sort of local justice gives rise to several problems. It would be unrealistic and hopelessly uneconomic to open a criminal defence service office outside every major town, but that might be what we are coming to. Firms that undertake criminal defence service work are unlikely to have a dedicated criminal defence solicitor to replace those who have worked on the panel, and distance again becomes a major concern.
The unreasonableness of all this can be shown by a number of factors. For example, a constituent of mine from Hawkchurch arrived for court at Axminster. He shouted to the clerk, "The bus has only just got in and I have run all the way up the hill." The clerk told him that he should have taken an earlier bus, but my constituent,

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whom I know very well replied, "I caught the only bus. There is not another. It is the only one and runs once a week on a Tuesday."
I know that that sort of thing makes the Parliamentary Secretary and those who live in London and other cities smile, but we are talking about local justice in country areas. Another example is of a man from Sidmouth being summoned to appear on an allegation of driving without due care and attention. It was probably true as I think that he had hit some parked cars. He was a widower and dependent on his car for shopping. He had not driven out of Sidmouth for 20 years, but he drove to Axminster for the privilege of being disqualified, and he had to leave his car there.
The journey was only 20 miles, but there are no such problems in the cities. I am concerned that the decision that was taken in Devon was breached as a matter of convenience for those running the service, rather than for the customers or solicitors. The police are happy not to have to go to certain courts. Reliance—the private company that drives people to and from the courts—is more than happy not to have to travel to Axminster twice a week. The magistrates courts committee sees that as an easy way of dealing with the matter, but that is not how everyone feels. The Government claim to be a listening Government who want to hear from and act for the people whom they represent. That is not happening here. I have letters from local parishes in Hawkchurch and Seaton and a petition signed by 2,300 people from Exmouth who are against the closure of Exmouth court. There was a march through the town with people carrying banners, and that does not happen frequently. For the measure to stir up that sort of feeling in Exmouth is a great demonstration of local views.
I have referred to East Devon district council, but Devon county council, which used to run the court appealed against closure, said that the magistrates courts committee was mad and put its case to the Minister. I suppose that it is thought to be unreasonable or illogical that the people who know the job, having done it, were some of the strongest contenders—other than myself—urging the Government not to take the route that they did.
I am concerned that local crime is no longer reported in the local newspapers. It happens in Exeter and Honiton, but local reporters do not know when cases will be heard. One of the condemnations of the magistrates courts service inspectorate is that steps should be taken to improve the turnaround of local aid decisions as only the east Devon and west Cornwall clerks consistently comply with the two-day limit. One of the major factors in local crime is to expose local criminals to the community. The embarrassment of publicity no longer applies in east Devon.
Will the Parliamentary Secretary read the annexes to the report? East Devon comes either first or second in the table giving the percentage of defendants waiting for an hour or less for court and the staff costs per weighted case are the lowest but one. Such achievements are being thrown to one side and it is worrying that local justice is being thrown overboard. The Government have proved that they do not care that local justice was denied in seven courts in Devon last week. The Government are seeing to it that local justice does not exist in those
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localities. They are not listening and they do not seem to care. I condemn their policy in all logic and with all reasonableness.
1.16 pm
The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): May I say what a pleasure it is to reply to an Adjournment debate under your chairmanship, Mr. Cummings? It is the first time and I look forward to many future occasions.
I congratulate the right hon. Member for East Devon (Sir P. Emery) on securing a debate on this important issue. I have listened carefully to all the points that he has so eloquently made. As he said in the debate that he secured in February last year, magistrates courts are managed by locally based magistrates courts committees. Hon. Members need to be continually reminded of that fact, which bears down heavily on the process that we go through when magistrates courts committees consider their accommodation strategy. Each committee is solely responsible for the efficient and effective administration of the magistrates courts in its area.
I have said it before, but it is worth repeating, that it is for MCCs—whether urban or rural—to determine how many courthouses are required in consultation with the relevant paying authority. They must also determine what other accommodation is needed. In discharging their statutory responsibility, we expect MCCs to undertake regular reviews of their accommodation requirements. The strategic aims of the MCCs, the facilities needed and the results of their user surveys are just some of the factors that MCCs take into consideration when undertaking reviews. They have to achieve a balance between providing an efficient and effective service to court users, while maintaining secure, well-equipped court accommodation and the full utilisation of courthouse facilities.
Mr. Livsey: Will I he Minister give way?
Jane Kennedy: I resist the hon. Gentleman, who did not give me notice of his intervention. I want to reply in full to the right hon. Member for East Devon, who secured the debate. I have a lot to say to him.
Sir Peter Emery: Perhaps the hon. Lady will give way to me. I am sorry to interrupt her speech, but will she please point out that magistrates courts committees have to operate within the budget allocated by the Government and that there will be a 10 per cent. cut in the money available in the next three years as a matter of policy? The MCCs cannot do what they want; they must act within the framework dictated by the Lord Chancellor and the money that he provides.
Jane Kennedy: Clearly, magistrates courts committees must operate within a budget, but in Devon and Cornwall the final cash limit for 2000–01 was £7.43 million. That includes the initial allocation to the magistrates courts committee, plus additional sums made available during the year. For 2001–02, £8.47 million has been made available to Devon and Cornwall, and there is a bid outstanding for a further

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£1 million. I am unsure where the right hon. Gentleman obtained the figure of a 10 per cent. cut, but I shall examine that in detail as a result of his intervention.
Sir Peter Emery: Just from the Lord Chancellor.
Jane Kennedy: It is worth pointing out that, originally, the magistrates courts committee proposed the closure of 13 courts when consulting on its accommodation strategy. Although it will be no comfort to the right hon. Gentleman, who will lose his court in Axminster as a consequence of that decision and the failure of the appeal, the magistrates courts committee reduced the proposed number of courts to be closed to nine. It therefore listened to local representations and took on board local points of view.
I should like to discuss what we mean by local because one definition will not serve in every case. Local, which may denote the town, the village or the magistrates courts committee area, means different things to different people. For example, some people may view local as centred on a particular courthouse or petty sessions area, whereas others may interpret local as meaning the magistrates courts committee area. Much may depend on the size of the magistrates courts committee, but again that is for the magistrates who form the local committee to decide.
All users of magistrates courts deserve an efficient service that is delivered in well-equipped and secure buildings. Most magistrates courts that have closed have been courts that magistrates courts committees no longer felt able to justify because they lacked necessary facilities such as secure accommodation, separate waiting areas for victims and witnesses away from defendants, and access for disabled people. Those are basic standards of accommodation that all court users expect from a modern, 21st-century service.
Improvements have to be balanced against other factors such as local transport difficulties. The right hon. Gentleman ably illustrated some of the problems that local people face. The Government are particularly concerned to ensure the provision of courtrooms that enable cases to be listed in a manner that will achieve our aim of reducing delay in the criminal justice system. Users want their case to be heard on the day that it is listed; they do not want to make a long trek on public transport because their case has been deferred.
Transferring the work load to better-equipped centres is one way to modernise and improve the overall service that magistrates courts committees provide. Magistrates courts committees have local knowledge and are best placed to make judgments on how to use resources such as finance, staff or buildings. It is only in the event of a decision being challenged by the paying authority—as happened in this case—that the Lord Chancellor becomes involved.
The right hon. Gentleman has expressed his views on the recent appeal decisions clearly and forcefully. I should like to assure him that the decisions were made after careful consideration of the arguments, which included all representations for and against the magistrates courts committee's proposals. Indeed, he has ably and prolifically registered his views on the magistrates courts committee's proposals, not only during the debate last February, but in his question in the House last May, and when he met the Lord Chancellor in November last year.
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The right hon. Gentleman will know that he was not the only hon. Member to make representations. Several meetings were held with each of the parties to the appeals, together with local Members of Parliament, to discuss the proposed closures. The cases for and against the appeals were made vigorously at those meetings.
I will remind the right hon. Gentleman of the reasons for the decisions. In the case of each closure, the most persuasive arguments proved to be the severe under-use of courts and the inadequacy of facilities. Last year, courtrooms in Devon and Cornwall magistrates courts committee area were used for an average of only 40 per cent. of their available hours, which is significantly lower than the national average of almost 58 per cent. The Devon and Cornwall MCC demonstrated that the work could easily be absorbed by alternative venues. It carefully considered travel. Details of public transport to alternative venues, with times and costs, and the results of court user surveys, indicated how people travelled to court.
The Crown Prosecution Service and probation service support each proposed courthouse closure. As I stated in my letter of 16 March, the magistrates courts committee has given an assurance that it will be flexible in listing cases, to meet the needs of all court users, including those the right hon. Gentleman mentioned.
The Lord Chancellor is committed to making better use of the court estate, including magistrates, crown and county courts. There is scope for further joint use of courthouses, creating more "justice centres" for the hearing of different types of case. Magistrates courts committees and local court service managers have been asked to draw up local plans, which might include other judicial users such as the coroners court, immigration appellate authorities and local tribunals. Such close working will have many benefits. For example, where two courthouses, such as a magistrates court and a county court, are close together, one might be able to accommodate all the work and only one will have to close. Such measures will improve the efficient use of our estate assets, while maintaining access to justice and releasing funds to improve facilities.
I was encouraged to learn that in Camborne, in the Devon and Cornwall MCC area, the MCC is seeking to provide a community resource in partnership with other local agencies. An old school will provide a range of facilities, including some court hearings, access to the citizens advice bureau and the local town council. Although plans have yet to be finalised and formal bids made, we welcome such an initiative in local joined-up working. A total of nine magistrates courts in Devon and Cornwall are already shared with other agencies including the Court Service, the coroners court, valuation tribunal and tax commission.
When preparing their strategic plans and consultation papers, MCCs examine everything that is relevant, including Government targets, funding details and population. They set out their strategic aims and objectives, and their plans take account of court user survey results, strategies for the use of buildings, staffing and security.
By statute, MCCs are required to consult only with paying authorities on proposals to close magistrates courts. In a spirit of good practice, and as recommended by the central council's guidance, MCCs invariably

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consult more widely. Consultees typically include magistrates, staff, police, probation services, the Crown Prosecution Service, MPs and professionals such as the solicitors whose views the right hon. Gentleman brought to our attention.
We look to provide a modern system of justice with well-equipped and secure court rooms. We want to reduce the delay in the passage of cases through the courts. That will help to achieve our aim of reducing delay throughout the criminal justice system. The local initiatives that I have described demonstrate our on-going commitment to the delivery of justice.
Mr. John Cummings (in the Chair): Order. We move to the next debate.

Bed-and-breakfast Accommodation
1.29 pm
Ms Oona King: I am grateful for the opportunity to raise some very serious concerns about the use of bed-and-breakfast accommodation for homeless families.
The Government have adopted robust measures to reduce homelessness, and have rightly committed themselves to reducing by two thirds the number who sleep rough on our streets. The rough sleepers initiative has shown that significant extra funding can enable the rough sleepers unit to make considerable progress towards achieving that target. I welcome the Government's commitment in that regard, and I have initiated today's debate because I want a similar target to be set in another area of housing policy.
The extended use of bed-and-breakfast accommodation for families with children is an aspect of housing policy that shames us all. In Tower Hamlets, the local council currently accommodates about 1,200 homeless households. As a result of initiatives undertaken by its Labour administration, almost half those households are housed in temporary accommodation in the borough. They, at least, have the small comfort of an assured shorthold tenancy near the supportive network of family and friends. The lot of a further 300 or so who are housed in similar assured shorthold tenancies outside the borough is not so good, but at least it is better than that of the remaining 300 or so households who are in bed-and-breakfast accommodation.
Anyone who has taken time to visit such accommodation will recognise that it is inappropriate to house vulnerable adults there for extended periods. It is important to recognise that we are not talking about a room with a view and a friendly landlady serving a full English breakfast with a wry joke about the weather. Often, those who flee, domestic violence have to share a cramped space and inadequate facilities with people with mental health problems, or problems involving alcohol, drugs or substance abuse. It is deplorable that families with vulnerable young children and impressionable teenagers are often forced to live in such an environment. The detrimental impact on a child's health, welfare and educational opportunities is undeniable. The stress for parents is unimaginable, and the problem is one that more and more families face.
According to recent figures, the publication of which has coincided with this debate, the number of households in bed-and-breakfast accommodation is rising again. Some 10,000 households across England are in such accommodation, more than 7,000 of which are in London. That highlights the capital's problems in dealing with this issue. Moreover, several thousand other households are in bed-and-breakfast annexes.
In Standing Committee, my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) tabled new clause 16 to the Homes Bill, which would have established targets for reducing the use of bed-and-breakfast accommodation. I am not entirely sure what the Minister's view was at that time, but today we ask him the same question: are the Government willing to set targets for reducing the use of bed-and-breakfast accommodation?

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I accept that the commitment will place significant additional burdens on local authorities and I knew that the chance of new clause 16 being incorporated was very slim. In the nicety of parliamentary language, it was described as a probing amendment. I want to take a moment to probe the harsh realities of life for every child who went to sleep last night surrounded by the mayhem and insecurity that often characterise bed-and-breakfast accommodation. We have an opportunity now to do something about that. Despite recent performance improvements, many local authority homeless persons' units are still a long way from being able to complete assessments within the six-week period specified in the code of guidance. Many families with children for which local authorities accept a duty are not, even then, immediately moved into assured shorthold tenancies and many vulnerable adults must remain in bed-and-breakfast accommodation for up to a year before they are found alternative accommodation.
Ms Karen Buck: I wonder whether my hon. Friend has come across cases such as that of my constituent, Jane Dennis, who came to me having been told that she could expect to wait up to two years in bed-and-breakfast accommodation and is currently expected to wait another nine months. I have a later from a locum psychiatrist describing her depressive illness, which includes
"a decrease in energy, poor concentration, initial and terminal insomnia … feelings of"
unworthiness
"guilt and self blame about her current situation."
It says that she was
"tearful throughout the assessment, her sense of control had ceased and she was becoming increasingly distressed in the presence of her son."
That is a mild illustration of the sort of mental stress that people experience when told that they can expect to wait a long time in bed-and-breakfast accommodation.
Ms King: I thank my hon. Friend for breathing life into the examples that I was giving, explaining the stress suffered by many people in bed-and-breakfast accommodation, particularly children, and the damage that occurs to the relationship between parents and children. My hon. Friend's illustration bears out the fact that prolonged stays in such accommodation are simply unsuitable.
The figures for the average length of time spent by families with children in bed-and-breakfast accommodation are not readily available. However, anecdotal evidence from hon. Members' advice surgeries, such as that outlined by my hon. Friend, as well as the eagerness with which many families accept temporary accommodation in cold, damp, expensive and poorly furnished flats of their own, reveal the extent of the problem.
There are problems with the approach that I advocate. I know that the introduction of tougher guidance demanding quicker assessment will not work without extra investment in services for homeless people. I know that those services are already over-stretched and would risk judicial review if they did not promptly move successfully assessed applicants out of
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bed-and-breakfast accommodation. I know that the targets do not distinguish between families with children and vulnerable single adults, whom we also want to move into more suitable accommodation more quickly. I know that the targets fail to take account of the desperate shortage of affordable housing and temporary accommodation in London. I also know that the Government are committed, as no other in the past 20 or 30 years, to increasing investment in social housing. I know that if children are not moved out of bed-and-breakfast accommodation, we fail them miserably and perhaps damage them for life. We must overcome those problems.
If the Government have succeeded in reversing the decline in the investment in social housing, the next step is to improve the service for homeless people. If, when setting targets, Ministers take the opportunity to allow local authorities more freedom to lease private sector accommodation and to improve the temporary social housing grant regime for registered social landlords, we can end the use of bed-and-breakfast accommodation for anything other than a reduced four-week assessment period.
I have learned during the past four years not to expect Ministers to cave in to impassioned pleas from a couple of Back Benchers in an Adjournment debate. That is astonishing, but I have learned that lesson. However, I am an optimist and I hope that my exceptionally right hon. Friend the Minister will at least assure us today that he will give sympathetic consideration to developing a series of targets—stepping stones to the abolition of prolonged use of bed-and-breakfast accommodation. I hope also that he will examine Shelter's proposals to increase the amount of temporary accommodation, particularly in London.
Britain is rich enough and the Government are bold enough and compassionate enough to consign bed-and-breakfast accommodation to the past. I trust that the Minister will do everything in his power to do that within the next three years.
1.42 pm
The Minister for Housing and Planning (Mr. Nick Raynsford): I thank my hon. Friend the Member for Bethnal Green and Bow (Ms King) for raising this important matter and for the way in which she presented a strong case for more effective action to tackle the problem of homeless families in bed-and-breakfast accommodation. I share her concern about the large number of households that are in that position and the human impact that she graphically described, as did my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck). Both my hon. Friends have been assiduous in pressing the issue during this Parliament. I have no hesitation in agreeing with my hon. Friends that the number of households in bed-and-breakfast accommodation is too high and must be reduced. The constraints and limitations of living in one or two rooms, with bed and breakfast only, can have a debilitating effect on family life and particularly the development of young children. We must discourage that.
The Government have a clear policy on the use of temporary bed-and-breakfast accommodation for families with children. It should be used only as a last

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resort when nothing more suitable is available and its use should be limited to the minimum possible time. That is stated clearly in our statutory guidance to local authorities on the discharge of their responsibilities to homeless people.
Bed-and-breakfast accommodation is used by local authorities as one way of discharging a legislative duty to secure accommodation for homeless households. In many cases, an authority owes an interim duty to homeless families while it completes inquiries to determine whether a substantive duty is owed under legislation. The authority may decide that the applicant does not have a priority need or is found to have become homeless intentionally or not to be without alternative accommodation. In such cases, the authority will not have a substantive duty and the use of temporary bed-and-breakfast accommodation for a short period is understandable. It is less appropriate as a discharge of the substantive duty to provide accommodation for homeless households that have been accepted as the responsibility of the local authority. However, I know that some local authorities have to use it for that purpose. I would be particularly concerned if authorities were using temporary bed-and-breakfast accommodation when that could be avoided.
Homeless families are generally placed in bed-and-breakfast accommodation because no better options are available. Having said that, not all authorities facing serious pressures are making extensive use of bed and breakfast. Indeed some, including my own local authority in Greenwich, have avoided bed and breakfast even though they accommodate substantial numbers of homeless households. Often that is because they have been more successful in directly re-housing homeless households into permanent housing, or they have secured better alternative forms of temporary accommodation. We should remember that those in bed and breakfast are just a small proportion of the total number of households placed in temporary accommodation pending the availability of a more settled housing solution.
The problem is concentrated in a relatively small number of areas. At the end of December 2000, only 36 local authorities in England reported 50 or more homeless households in bed-and-breakfast accommodation. Those 36 authorities accounted for 7,980 of the total of 9,860 households in bed-and-breakfast accommodation. Of those 36 authorities, 25 were in London, five in the south-west, four in the south-east, one in the north-west and one in Yorkshire and Humberside. That reinforces my hon. Friend's point that the problem is heavily concentrated in London.
The London borough of Tower Hamlets, which covers my hon. Friend's constituency of Bethnal Green and Bow, is one of the inner London authorities that had more than 50 households in bed-and-breakfast accommodation—a total of 145 at the end of December 2000. I am pleased to say that Tower Hamlets council is working hard to keep that number as low as possible. While the total number of households in temporary accommodation in Tower Hamlets increased by about 806 during the period from December 1997 to December 2000, the numbers in bed-and-breakfast
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accommodation decreased by 19, and in December 2000 represented just 9 per cent. of the total number of homeless households for whom the authority had accepted responsibility. That is much better than the London average, which is 15 per cent.
The picture in Regent's Park and Kensington, North is not so happy because my hon. Friend's constituency straddles two boroughs. Kensington and Chelsea has the highest percentage of all homeless applicants placed in bed and breakfast At the last count it was 68 per cent. The City of Westminster had the fourth highest percentage with 36 per cent. of homeless households accepted by the local authority being placed in bed and breakfast. That is an indication of how the pattern varies between areas and how, despite considerable pressures, some authorities can do much better than others to minimise the use of bed and breakfast. Tower Hamlets has also made good use of its own housing stock to meet the needs of 39 per cent. of its households in temporary accommodation; that compares with an average of just 16 per cent. across London generally.
Having accepted entirely the case that my hon. Friends have made that this is a serious and highly regrettable problem and having described the concentration of the problem in a limited number of areas, I come to the obvious question of what can be done to ensure that the use of bed-and-breakfast accommodation is reduced to an absolute minimum. The best solution is to minimise the incidence of homelessness in the first place. That is easier said than done. The causes of homelessness can be complex and personal. One cannot wave a magic wand to ensure that all homelessness is eradicated immediately. However, the Government are doing a great deal and will do a great deal more to prevent homelessness.
The Homes Bill, on which both my hon. Friends served, is currently under consideration in another place. It will require local housing authorities to have a homelessness strategy and ensure that adequate provision of accommodation and support is available to those who cannot avoid homelessness. That will require a multi-agency approach, involving not just the local housing authority, but the social services authority and public, private and voluntary bodies whose activities can contribute to meeting the strategy's aims.
Some authorities already operate this sort of strategic and multi-agency approach, and we expect others to consider doing the same without waiting for the Bill to be enacted. Having said that, we expect the Homes Bill to reach the statute book soon to make clear our commitment to more effective and strategic responses to the challenge of homelessness throughout the country. Local authorities are best placed to tackle the problems of homelessness on the ground, but they need the tools to do the job. A supply of affordable accommodation is clearly the key and the Government are acting to achieve it.
Ms Buck: I am grateful to my right hon. Friend and would not expect him to be able to make a clear commitment now. Can he assure me, however, that the Government are always open to representations from local authorities and others about high development costs, especially in central London? Shared ownership and social housing development for larger family units—dear to the hearts of Labour Members—is

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difficult, so we must engage in continuing discussions to find ways of making such developments economically feasible.
Mr. Raynsford: I can give my hon. Friend the assurance that she seeks. We are mindful of the pressures and open to representations from Members of Parliament, local authorities and other interested parties—from any area—with proposals to tackle the highly difficult and complex problems that I have described. I hope that my hon. Friend will be satisfied, by the end of my remarks, that the Government are taking the necessary steps to achieve our shared objective to—reduce dependence on bed and breakfast for accommodating homeless households.
The underlying problem that has produced the current pressures on many authorities is the chronic under funding of social housing by previous Administrations. The Conservative Government presided over a massive decline in housing investment, and the level of resources provided to local authorities halved between 1992–93 and 1997–98. We have more than reversed that decline: the resources for local authorities in 2001–02 will be about twice the amount made available on average each year by the previous Government during their last five years in office. We shall increase resources further in the subsequent two years.
The Government took action at an early stage to reverse the decline through the capital receipts initiative, which provided an extra £1.3 billion for housing investment in the years from 1997–98. Following the comprehensive spending review in 1998, a further £3.3 billion was provided for housing investment. In last year's spending review, we added another £1.6 billion to housing budgets.
Much of the increase in funding will be directed at tackling the backlog of repairs in existing local authority stock arising from years of neglect. It is estimated that that will cost £19 billion. Improvements in the condition of the stock can free up additional lettings and assist authorities to meet the pressures of demand that they face. Authorities can also reduce the numbers of dwellings that are unpopular because of their poor condition or need for major renovation to make them acceptable as modern living accommodation. It is an uphill task, but we have begun in earnest and are making good progress.
However, a significant part of the additional resources from last year's spending review were provided for investment in affordable housing through the Housing Corporation's approved development programme. Funding is set to increase to more than £1.2 billion by 2003–04—almost double current levels. We cannot expect that to translate into an equivalent doubling in the output because of the problems to which my hon. Friend the Member for Regent's Park and Kensington, North alluded, namely the pressure on land and construction costs in London and the high cost of acquiring property. Indeed, the costs of development in London are substantially higher than in other areas, which means that any additional provision is likely to reduce the overall number that can be achieved on average throughout the country. However, we are substantially increasing investment to help tackle the problem.
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We are also providing £250 million during the next three years through the starter home initiative to assist key workers to purchase homes in areas where high prices would otherwise prevent them from living within a reasonable distance of the communities that they serve. Many of those people would not actually face the horror of homelessness, but the fact that they have an alternative means that some of the pressures on local authorities to provide accommodation will be eased. That all contributes to meeting needs.
The situation is particularly acute in London, where pressure on all forms of accommodation is intense. That is an unfortunate consequence of a bustling capital city operating in a thriving economy. The main difficulties for those seeking affordable homes are the buoyant housing market and the shortage of affordable housing. We have increased the resources available for housing investment. In London, the Housing Corporation's approved development programme has been increased by £20 million this year to just under £300 million and is set to rise to over £540 million by 2003–04.
In the immediate term, the London Housing Partnership should help London authorities to access additional properties that can be used to provide permanent housing for homeless households on a London-wide basis. Under that scheme, resources are used to create a pool of accommodation to be provided or brought back into use through purchase and repair schemes. Each London authority has access to a share of the accommodation pool, relative to its housing need. Last year, a total of £40 million was made available for the programme, funded partly from the approved development programme and partly by a top slice of the regional allocation of the housing investment programme. The programme has been expanded in the current year, with the Housing Corporation contributing approximately £90 million.
I have outlined several measures that the Government have put in place since 1997 to reverse the decline in housing investment and tackle the problem of an insufficient supply of affordable housing. Unfortunately, the measures will take time to come to fruition and have a practical effect. In the light of the continuing pressures in London and the south-east, we are looking to work closely with the Housing Corporation and the local authority associations to consider the scope for other initiatives that could have an immediate effect on reducing the need to use bed-and-breakfast accommodation for homeless families.
I hope that my hon. Friends the Members for Bethnal Green and Bow and for Regent's Park and Kensington, North will accept the Government's absolute commitment to tackling the problem that they highlighted in the debate and our determination to explore all the available options to ease the pressure on families that have to endure the unpleasant and disagreeable conditions that too often exist in bed-and-breakfast accommodation.
Question put and agreed to.
Adjourned accordingly at two minutes to Two o'clock.