HC Deb 16 June 2003 vol 407 cc88-90W
Mr. Michael Foster

To ask the Deputy Prime Minister what evidence he has collated of cost differences between Worcestershire and Warwickshire when credit approvals are given for capital allocations. [118946]

Mr. Raynsford

Although basic credit approvals are mainly issued by my right hon. Friend the Deputy Prime Minister, the total is determined as part of departmental spending plans. For 2003–04, each individual local authority's share of the total depended on

  1. 1. the total of service based allocations for those services for which it is responsible (in this instance, Warwickshire and Worcestershire will comprise Education, Personal Social Services, Transport, and Environmental, Protective and Cultural Services (EPCS)); plus
  2. 2. adjustments to reflect updated receipts information for previous year and to provide for the EPCS Annual Capital Guideline; and
  3. 3. the amount distributed according to ministerial discretion.

The basis for distributing basic credit approvals for each of the individual service elements identified at 1. above differs:

The Department for Education and Skills uses a needs based formula for credit approvals which is split 40 per cent. based on pupil numbers and 60 per cent. on the building condition need. This formula does have a regional weighting factor, which is based on a relative assessment of building costs in the area. Worcestershire's weighting factor is 0.96 and Warwickshire's is one.

The Department for Transport bases its allocations on the length of networks and numbers of bridges etc. It also factors in the relative size of backlogs compared to the national picture. Some adjustments may be made to allocations based on information supplied by the Government Office, local authority and Department for Transport, which can take account of cost differentials.

The Department of Health allocation of BCA is based on two factors: tender price indexing for social housing (TPISH) and an authority's population figures. As both Worcestershire and Warwickshire are in the West Midlands region, the same TPISH figure will apply. Population figures are split into three age groupings (based on Census 2001 data) which are weighted. Allocation differences will arise from the individual local authority population differences.

In addition to basic credit approvals, local authorities also receive supplementary credit approvals from Departments and these are mostly allocated following a bidding process. In these instances, local authorities supply the cost data supporting their, bids, which are then assessed and processed by the relevant Government Departments.

Mr. Michael Foster

To ask the Deputy Prime Minister what size of shire county he estimates is sufficient to produce reliable statistics for the calculation of the labour cost adjustment made by his Department. [118947]

Mr. Raynsford

The Office of the Deputy Prime Minster considers that each pre-reorganisation county area outside London and its fringe area is of sufficient size to produce reliable labour cost factors for use in the funding formula, with the exception of the Isle of Wight.

During the consultation on the 2003–04 local government finance settlement, the Office of the Deputy Prime Minister accepted that the Isle of Wight has a New Earnings Survey sample size, which is not large enough to ensure stable labour cost factors over time. Accordingly, the Isle of Wight has been grouped together with Hampshire for the calculation of the area cost adjustment.

Mr. Michael Foster

To ask the Deputy Prime Minister what representations he received from Berkshire county council about area cost adjustment. [118949]

Mr. Raynsford

The Office of the Deputy Prime Minster has received no correspondence regarding the area cost adjustment in recent years from Berkshire county council, which ceased to exist in 1998.

Mr. Michael Foster

To ask the Deputy Prime Minister (1) what assessment he has made of(a) the impact of allocating additional resources to (i) Warwickshire, (ii) Gloucestershire, (iii) Birmingham and (iv) Dudley in the form of area cost adjustment, and (b) the impact on Worcestershire of not receiving such resources; [118950]

(2) what impact he estimates area cost adjustment has had on Dudley metropolitan borough council's ability to recruit and retain staff. [118948]

Mr. Raynsford

The area cost adjustment (ACA) is a top up in the grant formula, which provides extra grant to areas with higher labour and business rate costs. It is directed at those areas which, because of labour market pressures, have higher recruitment and retention costs. The following table shows the size of the ACA formula top up for four key services for the authorities named above. These figures correspond to those given in the `simpler presentation of formula outcomes tables', produced for the 2003–04 local government finance settlement, detailed in the table.

—000
Area Education Social Services EPCS Highways
Warwickshire 6,646.29 2,791.56 1,046.52 552.81
Gloucestershire 5,663.51 2,383.59 929.15 545.40
Birmingham 16,674.65 8,053.96 7,147.23 1,038.61
Dudley 4,195.87 1,863.48 1,808.79 310.88

Although Worcestershire does not receive an ACA top up, it does benefit from the ACA's lower limit floor mechanism. This raises Worcestershire's ACA factor to the ACA's minimum value of one.

Further information on the effect of the ACA on grant allocations by formula and area can be found in the "Simpler Presentation Guide to the Local Government Finance Settlement 2003–04", which can be found on the Office of the Deputy Prime Ministers website at: http://www.local.odpm.gov.uk/finance/0304/simppress/index. htm

Mr. Michael Foster

To ask the Deputy Prime Minister (1) what plans he has to treat Worcestershire and Herefordshire as separate counties for the purpose of calculating area cost adjustment;[118951]

(2) what plans he has to smooth the impact of area list adjustment on neighbouring authorities not in receipt of this. [118945]

Mr. Raynsford

In the 2001 local government White Paper, "Strong Local Leadership—Quality Public Services", the Government announced that the local government funding formula would be frozen for 2004–05 and 2005–06, following the completion of the recent formula review. The Office of the Deputy Prime Minister has not plans to alter the basis on which the area cost adjustment is calculated, other than to update the data on which the adjustment is based, or to take account of any changes to local authority functions.