§ Mr. TippingTo ask the Secretary of State for the Environment if he will estimate the amount of extra grant each county council in the east midlands would receive in 1995–96 if there were no area cost adjustment in the standard spending assessment system. [38919]
§ Mr. Curry[holding answer 26 October 1995]: The contribution of the area cost adjustment to authorities' standard spending assessments is some £1.5 billion. It is widely believed, incorrectly, that the abolition of the area cost adjustment would release this amount for addition to the SSAs of authorities throughout England.
If the area cost adjustment were abolished, it would be necessary to revise the analyses on which the SSA formulae are based. Most of the formulae are based on analyses of expenditure from which the element related to higher costs in London and the south-east has been deducted. If there was no area cost adjustment, the analyses would have to be carried out afresh, based on expenditure without any such deduction.
We would wish to discuss with the local authority associations what would then be the most appropriate formulae. But if the formulae were recalculated retaining the existing indicators, those indicators would have different weights from those which applied in 1995–96. The resulting standard spending assessments, for all 58W authorities in England, would then be as shown in the table which I have placed in the Library. The table also shows the differences between the actual SSA and the alternative SSA. These differences are virtually the same as the differences in each authority's revenue support grant.
The Department has prepared a technical note about these calculations for the local authority associations. A copy has been placed in the Library.