House of Commons Hansard Debates for 3 Feb 1993

Mr. Ken Livingstone (Brent, East) : On a point of order, Madam Speaker. Would you be prepared to consider adjourning the House so that the Leader of the House might propose a period in which we could debate the defence statement we have just heard so that the position of the Labour party could be put, as that was not mentioned in questions on the statement which announced a further 25 per cent. cut in the military budget?

Madam Speaker : Of course I would not consider adjourning the House, but I remind hon. Members, if they need reminding, that there are business questions on Thursday, when questions can be put to the Leader of the House.

Mr. Nicholas Brown (Newcastle upon Tyne, East) : On a point of order, Madam Speaker. The Secretary of State has, I am sure inadvertently, misled the House, or at least partially misled the House, in the statement that he has just made and I wonder whether you can advise me on how the matter can best be rectified. He said that he intends to spend an extra £80 million from a fixed budget, but he has not told the House from where that money is to come. You will be aware that there is widespread concern, not least on Tyneside where the future of the shipbuilding programme is of vital importance--

Madam Speaker : Order. That was a very good try on the part of the hon. Gentleman, who I know was standing during the statement seeking to be called. He must not try to put that one over on me.

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Mr. Barry Jones (Alyn and Deeside) : Yesterday, in answer to question 7, the Secretary of State for Education made an inaccurate series of references to me and I thought that in subsequent supplementaries he used the words, "I apologise". However, nowhere in my scrutiny of Hansard can I see those words. I wonder whether it is your recollection that he used those words. May I also say, to help progress, that I am sure that the right hon. Gentleman's personal attack on me was made in good faith.

Madam Speaker : I know that the Minister concerned did apologise to the hon. Gentleman, and it has been brought to the attention of the Editor. Perhaps we might now make some progress with the day's business.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 01(3) (Standing Committees on Statutory Instruments, &c.),

Fish pollution

That the Food Protection (Emergency Prohibitions) (Oil and Chemical Pollution of Fish) (No. 2) Order 1993 (S.I., 1993, No. 143) be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Patnick.]

Question agreed to.

WELSH GRAND COMMITTEE

Motion made, and Question put forthwith, pursuant to Standing Order No. 98(5) (Matter relating exclusively to Wales),

Unemployment (Wales)

That the Matter of unemployment in Wales, being a Matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.-- [Mr. Patnick.]

Question agreed to.

Motion made, and Question put forthwith, pursuant to Standing Order No. 98(5) (Matter relating exclusively to Wales),

Structure of Government (Wales)

That the Matter of the structure of government in Wales, being a Matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.-- [Mr. Patnick.]

Question agreed to.

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Widowed Father's Allowance

4.15 pm

Mrs. Judith Chaplin (Newbury) : I beg to move,

That leave be given to bring in a Bill to apply the National Insurance Fund to provide an allowance for widowed fathers with dependent children equal to that provided for widowed mothers with dependent children.

This is a Bill about equality, fairness and the importance of family life. I am sure, therefore, that it will commend itself to all hon. Members on both sides of the House.

When the national insurance system was introduced in 1948, following the Beveridge report of 1942, the majority of married women stayed in their homes. Indeed, the Beveridge report was drawn up on the explicit assumption that wives were financially dependent upon their husbands and should receive benefits based on their husbands' contribution records.

Many women, of course, still choose to stay in their home when their children are young, and I am sure that most hon. Members believe that they have a right to do so. If that is the case, if the husband dies and the principal source of income is lost, it is right that the widow should receive a replacement income based on her husband's contribution to the national insurance fund. Widows with children receive such an allowance-- the widowed mother's allowance--£54.15 a week, with additions for each dependent child, based on the husband's contribution.

Fifty years on from the publication of the Beveridge report, we need to look again at whether the assumptions in that report are still appropriate and whether the benefits on which those assumptions are based give an equitable system. Circumstances have changed radically. In those days, fathers were not expected to look after their children and, if the mother died, would obtain paid help or help from family or friends, or the children might be put in care. Nowadays, many fathers--indeed, I hope many fathers in the House--are perfectly capable of looking after their own children, and play a full role in bringing them up. In some cases, parents have chosen to reverse their roles, with the woman being the main breadwinner and the man staying at home to look after the children. If a wife dies, the man may well wish to stay at home to ensure that one parent, at least, can have a full-time role in bringing up the children. In these circumstances, however, there is currently no help from the state through the national insurance fund. Despite the fact that it is the man's contribution to national insurance that qualifies his widow to receive widowed mother's allowance, that contribution by him does not secure benefit which would enable him to stay at home. Nor can he receive other contributory benefits, for he is disqualified for unemployment benefit because, by definition, he is not available for work. He may, of course, be eligible for income support if his savings fall below a certain level, but that does not compensate him for not receiving a contributory benefit to which he should be entitled through his contribution record.

I therefore believe that a widowed father's benefit should be introduced to enable widowers to stay at home to look after their young children, if that is what they choose to do.

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In recent years there has been discussion of the need for the equalisation of survivor's benefit. In 1989, the House of Lords European Communities Select Committee recommended that men and women should be provided with survivor's benefit on the same terms, but that a substantial period should be allowed to introduce this. The Committee feared that compulsory equality immediately might deprive widows of benefits they still need because of their different position in society.

I do not believe that there should be total equality of survivor's benefit. A widow can receive a widow's pension if she is aged 45 or more when her husband dies. This is in recognition of the difficulty that she may find in re-establishing herself in the labour market if throughout her married life she has not worked outside the home. Such a benefit would not be necessary for a man, who would be more likely to have been in full-time work previously, and would be able to return to work when his children no longer needed his full-time care.

Nor does it seem necessary to have the same conditions for the widowed father's allowance as currently apply to the widowed mother's allowance. A widowed mother's allowance continues to be paid based on her late husband's contributions, regardless of her own earnings if she returns to work. It is taxable, but it is not withdrawn while she has dependent children. Since the main feature of our social security system is that it is a social insurance against the interruption and destruction of earning power, it is perhaps odd that a widow can both earn and receive this benefit. It is because it is based on her husband's contributions, and perhaps we should look again at the circumstances there.

Certainly any widowed father's allowance should be designated to compensate for loss of earnings while the father is not employed outside the home, and should cease when he returns to full-time work. That would substantially reduce the cost of such an allowance, recently estimated at some £90 million a year. If it was given only to those fathers who chose to stay at home on the death of their wives to look after their children, as is the case with one of my constituents, and ceased when they returned to full- time work, the cost would be relatively small.

Its value to the family, however, would be immense. It would ensure that the best care was available for children who had already suffered a tragic loss and who would benefit greatly from the full-time care of their fathers. The number who choose to do this may not be large, but, in all fairness, they should receive a benefit equal to that of widows in similar circumstances.

Question put and agreed to.

Bill ordered to be brought in by Mrs. Judith Chaplin, Mrs. Angela Browning, Mrs. Edwina Currie, Mrs. Cheryl Gillan, Mrs. Angela Knight, Mrs. Jacqui Lait, Lady Olga Maitland, Mrs. Elizabeth Peacock and Mrs. Marion Roe.

Widowed Father's Allowance

Mrs. Judith Chaplin accordingly presented a Bill to apply the National Insurance Fund to provide an allowance for widowed fathers with dependent children equal to that provided for widowed mothers with dependent children : And the same was read the First time ; and ordered to be read a Second time upon Friday 19 February, and to be printed. [Bill 126.]

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Local Government Finance (England)

4.22 pm

The Secretary of State for the Environment (Mr. Michael Howard) : I beg to move,

That the Local Government Finance Report (England) 1993-94 (House of Commons Paper No. 422), which was laid before this House on 28th January, be approved.

Madam Speaker : I understand that with this it will be convenient to discuss at the same time the following motions :

That the Special Grant Report (No. 5) (House of Commons Paper No. 423), which was laid before this House on 28th January, be approved. That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1993-94 (House of Commons Paper No. 424), which was laid before this House on 28th January, be approved. That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) (Amendment) Report (England) 1993- 94 (House of Commons Paper No. 443), which was laid before this House on 1st February, be approved.

Mr. Howard : The four reports, taken together, embody the local government finance settlement for the coming year. They represent the culmination of a long process which began a full 12 months ago. During that time, the Government have held extensive discussions with the local authorities and their associations about the cost of local government services. We have examined at length the methodology and formulae for standard spending assessments. We have also developed a method for calculating each authority's tax base for the new council tax.

Last November, in the light of those discussions, I announced my proposals for the coming year. I made proposals for the total provision for spending and grant, and the methodology for SSAs. I also made proposals for the relevant notional amounts which will be used as the basis for determining whether the increases in authorities' budgets should be capped.

Since then, we have gone through a further formal consultation process with local authorities. We have received 400 letters about the settlement and a further 250 about notional amounts. We have also held 90 meetings with local authorities and hon. Members. We have carefully considered everything that we have heard, and my decisions--in the light of all of this--are set out in these reports. My aim has been to satisfy myself that the settlement which I have proposed is appropriate and realistic, and that the legitimate concerns of local government are taken into account.

We are planning for local government to spend a total of £41.2 billion next year. That is £1.2 billion more--an increase of 3.1 per cent.-- over the provision that we made for the current year, after adjusting for changes in local authorities' functions. We are providing £33.5 billion--an increase of £1.2 billion, which is 3.7 per cent. on the same comparative basis--in Government support. Against a background of inflation at 2.6 per cent. and falling, and with a public sector pay policy limiting increases to a range between zero and 1.5 per cent., that is an eminently realistic settlement. I suspect that we shall hear ritual protests from Opposition Members that the settlement is inadequate. When they make those protests, I hope that they will tell

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us how they would finance the additional amounts which they doubtless say they would make available. Perhaps they would increase income tax. Perhaps it will be another penny on the standard rate to deliver an extra £1.5 billion of spending. Perhaps they would have higher council taxes. Every extra £1 billion of spending would mean another £60 on the band D council tax. I invite the hon. Member for Barnsley, Central (Mr. Illsley) to give us his prescription. Which of the two prescriptions does he recommend?

Mr. Eric Illsley (Barnsley, Central) : Does the Secretary of State accept that, within the funding available, the difference between the authorities should be reduced? Why does my authority have 70 per cent. less than Manchester, for example, to provide the same level of service? Surely, within the total amount of funding available, there can be a more equitable distribution.

Mr. Howard : The answer to the hon. Gentleman's question is to be found in the reports which I have referred to and which are available in the Library and the Vote Office. They set out in some detail the methodology which leads to the results which form the basis of the report. If the hon. Gentleman restrains himself for a moment, he will hear even more about how we propose to deal with those matters not only in 1993 but in future.

I give the hon. Gentleman credit at least for saying that he was protesting not about the overall level of the settlement but about the distribution. I hope that no one will participate in any protest against the adequacy of the settlement as a whole without telling us in detail how they would raise the extra money they want. I have one prescription to offer. All local authorities need to ensure that they make the best possible use of their money. Over the past week or two, we have become all too well aware of just how badly several local authorities are short changing the people whom they were elected to serve. Some of the stories of incompetence and mismanagement are truly dreadful, and time and time again Labour councils are seen to be responsible.

Eighteen of the top 20 community charges this year were set by Labour councils. Seventeen of the 20 councils with the worst community charge collection records are Labour councils. That is little wonder when they have councillors such as the three in Lambeth who owe £3,000 themselves, despite collecting £35,000 in allowances for the year in question.

Examples are legion. For example, Sheffield proposes to spend £54, 000 on offices for hon. Members opposite, when it has just lost more than £10 million on the world student games.

Mr. Clive Betts (Sheffield, Attercliffe) rose

Mr. Howard : The hon. Gentleman rises to the bait.

Mr. Betts : Has the Secretary of State read in the Local Government Chronicle of the survey carried out on behalf of the Local Government Management Board, which showed that chief executives of all local authorities throughout the country have named Sheffield as one of the 16 best-managed local authorities in the country? Sheffield has shown that it is an efficient local authority. Other authorities such as Birmingham, Bradford and Islington are included, but not Wandsworth or Westminster. Perhaps the Secretary of State will take account of those findings in what he says about Sheffield in the future.

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Mr. Howard : I am surprised that the hon. Gentleman, who led Sheffield council when it lost the £10 million on the world student games, has the temerity to rise on such matters. I suppose that the best way to describe the study to which he referred is to say that it is little more than a "straw survey". It is totally unrepresentative.

Mr. Illsley : I apologise for rising on a point of order so early in the debate, Madam Deputy Speaker, but the Secretary of State could have misled the House by saying that Sheffield made available finances for "hon. Members opposite". If he checks, I think that he will find that Sheffield makes available finance for hon. Members from both sides of the House.

Madam Deputy Speaker (Dame Janet Fookes) : Whether or not that is correct, it is not a point of order for the Chair.

Mr. Howard : Not only was it not a point of order--it was not accurate. We have canvassed that matter at length, and the hon. Gentleman is a wee bit behind the game.

I was about to mention Monklands, which is represented in this House by the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition, who has maintained a studious silence over the serious allegations about Monklands council contained in the Sunday Times recently.

Mr. Ian McCartney (Makerfield) : On a point of order, Madam Deputy Speaker. The Secretary of State is making a statement about the rate support grant settlement for England. He should stick to that and give Opposition Members an opportunity to question him about it.

Madam Deputy Speaker : The Chair normally allows a certain latitude, but that has been considerably extended. Perhaps the Secretary of State would return to the main subject of debate.

Mr. Howard : Of course--that is exactly what I shall do. It is understandable that Opposition Members should be so touchy about such matters ; we quite understand.

I do not intend to predict levels of council tax, but I note in passing that others have not been so coy. The Local Government Chronicle conducted an independent survey of local authorities at the start of the year, which predicted an average tax payable of £505--far less than some of the scare stories bandied about by Opposition Members. What is more interesting, it concluded : "Labour councils cost you more."

It found that an average Labour band D council tax was nearly 20 per cent. higher than the comparative figure for Conservative councils.

Surely it is significant that, on that evidence, Labour-controlled councils will charge on average nearly £100 more council tax than Conservative- controlled councils, and that Liberal

Democrat-controlled authorities will charge nearly £50 more. Time and time again, we find that Labour councils cost more and give little but waste and inefficiency in return.

Mr. Betts rose --

Mr. Graham Riddick (Colne Valley) : Will my right hon. Friend give way?

Mr. Howard : As the hon. Member for Sheffield, Attercliffe (Mr. Betts) has already made one intervention, I give way to my hon. Friend.

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Mr. Riddick : Is it not the case that one reason why council tax bills will be higher in Labour authorities this year is that last year many Labour authorities grossly overspent, in the hope and expectation that an incoming Labour Government would bail them out? Is it not the case that the chickens of Labour's incompetence and profligacy are coming home to roost?

Mr. Howard : My hon. Friend is entirely right. That was the attitude taken by many councils controlled by the Labour party. The sadness is that those people whom they were elected to serve are having to pay the cost of their profligacy because of those expectations.

The settlement is designed to ensure that the burden on local tax payers can be held down to fair and reasonable levels. Overall there should be no need for councils to raise any more in real terms in the coming year from their local tax payers than they have budgeted to raise this year, but clearly it will help if one lives in a Conservative-controlled authority.

Of course, the introduction of the council tax will mean some differences in the burden on individual households. I understand the concern which many hon. Members have expressed on that score. We have therefore provided for a scheme of transitional relief to give protection to any household which would otherwise face an excessive increase in its local tax bill. I estimate that the scheme will cost about £340 million in the coming year.

Our grant scheme is designed to ensure that different authorities, however different their circumstances, are able to deliver the same standard of service for broadly the same level of council tax. The function of standard spending assessments is to measure the differences between authorities, so that those differences can be properly reflected in the grant that they receive.

With that system, it is inevitable that many authorities will feel that their particular circumstances are not being properly reflected. In other words, they want a larger share of the cake, and they are not short of good arguments why they deserve more. But there are more than 400 local authorities in England--excluding parishes--from Cornwall to Northumberland, taking in London, the metropolitan boroughs, the districts, the joint police and fire authorities, each with their own individual characteristics and their own, often very divergent, views. When I came to make my proposals for standard spending assessments, last November, I knew in advance that I could not satisfy everyone.

But the world does not stand still. In the coming year, there will be changes in authorities' functions and a change in the method of local taxation. New sources of data, such as the 1991 census, have become available, and other sources of data have also changed. My proposals for the coming year will ensure that all these changes are properly reflected in standing spending assessments.

Sir Anthony Grant (Cambridgeshire, South-West) : I am very glad to hear that my right hon. and learned Friend will take a flexible view in the forthcoming year. While I support entirely his tight control of local government expenditure, I have to say that the area cost adjustment factor is very unfair. This militates very much against certain counties, to the benefit of others. It is quite ridiculous that Cambridgeshire does not benefit, whereas Bedfordshire, Oxfordshire and Hertfordshire do. This creates great ill feeling. I do not believe that it can be

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rectified by the Association of County Councils, as all councils have vested interests ; the Government themselves will have to do something. Perhaps my right hon. and learned Friend will look at this grievance in the forthcoming year.

Mr. Howard : I understand very well the concern that my hon. Friend expresses. Indeed, it has been expressed to me very often by several of my hon. Friends. I understand the strength of feeling on this issue, and I can give my hon. Friend the undertaking for which he has asked. We shall certainly look very carefully indeed at this matter.

Mr. Anthony Coombs (Wyre Forest) : It appears that, over the past three years, the amount of grant allocated to the area cost adjustment has increased from £837 million to £1,314 million, despite the fact that the differential in cost increases--for instance, between Greater London, where the area cost adjustment has meant the standard spending assessment's having gone up most, and the west midlands, where the increase has been far smaller--has lessened continuously. The spending authority in Hereford and Worcester is very frugal. Indeed, its spending used to be under the standard spending assessment. It is wrong that its assessment should increase by only 2.5 per cent., whereas the figure for East Sussex is 7 per cent., and the one for Hampshire 5 per cent.

Mr. Howard : The point that my hon. Friend has made reinforces one that was made a few moments ago. I shall certainly look at those factors, amongst others, when I come to consider the way in which the standard spending assessments for next year are to be constructed.

Mr. John Wilkinson (Ruislip-Northwood) : I do not want to labour this point, but I have to say that there are other data of particular local significance, which my hon. Friends the Members for Uxbridge (Mr. Shersby) for Hayes and Harlington (Mr. Dicks) and I, as well as local authority representatives, have sought to bring to the Secretary of State's attention. I refer to the data concerning the inflow of refugee children to Heathrow airport, which is in our borough. It has been costing the borough about £1 million a year to look after these children, and the cost will probably be greater in the future. What help can my right hon. and learned Friend give us towards carrying this burden?

Mr. Howard : If my hon. Friend restrains himself for a few minutes, he will find that I have some comfort for him.

Mr. Giles Radice (Durham, North) : Will the right hon. and learned Gentleman give way?

Mr. Howard : The hon. Gentleman has just come into the House, so he will have to wait a while.

Many councils have come to me and my colleagues with arguments for further changes. I have considered everything they have said--often, I am bound to say, in direct opposition to one another--but, on balance, I have not been convinced that I should make any further changes for the coming year. Accordingly, the SSA methodology as set out in the local government finance report is unchanged from the proposals I made for consultation.

However, as a result of more recent data becoming available, there have been some changes since the start of consultation on the SSAs for individual authorities. I have placed copies of a set of tables, listing the SSAs for all

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authorities, in the Library and the Vote Office, alongside the settlement reports, and my Department has written to councils individually with full details of all the calculations in each case. I know--it has been made clear by some of today's interventions--that many hon. Members still regard the standard spending assessments with the deepest suspicion. Of course the formula is complicated--local government is complicated. It performs a wide range of functions against widely differing backgrounds and circumstances. We have to have a system which reflects those differences in the distribution of grant. I hope that all hon. Members will at least agree that some sort of formula-based distribution is inevitable. However, I know that many hon. Members feel keenly on behalf of their local authorities. I know that they will be keenly disappointed that I have decided not to make the changes which they have pressed me to make. I am acutely aware of their concerns. Over the next year, my Department will be working on the findings of the 1991 census and how best to incorporate them into the SSA formula. I intend to take that opportunity to look again at some of the more fundamental issues that have been raised with us this year, including the area cost adjustment, which was mentioned by some of my hon. Friends. Hon. Members and local authorities who have not been able to persuade me to their point of view this year will, I am sure, want to take advantage of the opportunity which this will give them to exercise their powers of persuasion again next year.

Mr. Robert Ainsworth (Coventry, North-East) : Does not the Secretary of State realise that, despite what he has said, the fact that he plans to revisit the formulas next year fills local authorities up and down the land with trepidation? The Government introduced the area cost adjustment in order to doctor the figures. What scheme will the Secretary of State come up with next to doctor the figures again? Does he realise that he has brought the entire system and Government into total disrepute?

Mr. Howard : The hon. Gentleman cannot have it both ways. If he does not want me to revisit those matters next year, it can only be because he is entirely satisfied with the money that Coventry has received this year. If he is prepared to say how thankful he is for the amount of money that we have been able to make available to Coventry this year, I shall be happy to give way to him again. If he is complaining about the amount of money that Coventry has received this year, I should have thought that he would be delighted that I intend to revisit those matters next year.

Mr. Stephen Byers (Wallsend) : Will the Secretary of State confirm that, in respect of the SSA and the relative poverty and deprivation of local authority districts, the Government still intend to use the all-ages social index? That index shows Cheltenham as poorer than Rotherham, Tunbridge Wells as poorer than Doncaster, Gloucester as poorer than North Tyneside, and Basildon as poorer than Bolsover. How can there be any confidence in a system of local government finance that is so fundamentally flawed?

Mr. Howard : I shall certainly not go into detail on the sort of settlement that we may see next year. The hon. Gentleman knows, from the reports, the basis on which we have reached our conclusions this year.

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I have sought this year to be as helpful as I can to local authorities on another matter. As in previous years, councils may be designated for capping if they increase their budgets by more than certain amounts and in doing so set budgets which exceed their SSAs. However, in a year when local authority functions are changing, and when a new system of local taxation is being introduced, it is not appropriate to use councils' actual budgets for 1992-93 as the starting- point for capping. Those budgets need to be adjusted so that the changes in functions, and in the local government finance system, can be allowed for in the capping calculations. The relevant notional amounts, which are set out in the report, are in effect adjusted budgets for individual councils.

These notional amounts relate directly to the real budgets set by authorities for the current year. Therefore, it is important to ensure that the authorities are fully involved in the process. When I announced my proposals for notional amounts last November, I also made it clear that we would listen carefully to the views of individual authorities on the figures that we had calculated for them, and on the methodology in general.

We have had many representations on both counts. I could not say that we have done exactly what every council wanted us to do. In particular, we have had to remain true to our original purpose, which was to adjust the budgets made by authorities when they set their community charges for the current year, and not to reflect changes that they may have made in the course of the year. But, as a result of our consultations, we have made changes both in the methodology and in the calculation of notional amounts for many individual councils.

As a result, the aggregate of notional amounts is now £250 million higher than we originally proposed, and for many councils the effect will be directly to permit a higher budget in 1993-94 without the fear of capping. I know that councils have welcomed our willingness to listen to them, and I hope that the House will today endorse that welcome.

Notional amounts are a demonstration of my commitment to use my capping powers in a way which is fair both to local authorities and to their local taxpayers. It was for that reason that, in my statement to the House last November, I set out the capping criteria that I had in mind to apply for the coming year.

I reaffirm that those are the criteria which I intend to apply. I shall not detain the House by reading them out in full, but I shall remind hon. Members of the broad principles : first, that budget increases--increases over the notional amount--may be subject to capping if the resulting budget exceeds the authority's standard spending assessment ; secondly, that a budget is excessive in absolute terms if it is more than 12.5 per cent. above the SSA ; and thirdly, that, notwithstanding the 12.5 per cent. criterion, an authority may not be designated if it sets a budget which represents a cash freeze or, in certain circumstances, a minimum cash reduction on the notional amount.

The significance of my announcement last November was that it gave authorities advance warning of what they had to do in order to avoid being designated for capping. I am pleased to say that the great majority of those who have written to us, or come to meet us, during the

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consultation process have accepted that discipline. I hope that, when they come to set their budgets in the next few weeks, they carry through their intention.

I do not want there to be any doubts on the issue. We want to be fair to councils, so we have listened to their views on notional amounts, but we must also hold faith with the local taxpayers, for whom capping is an important protection. I hope that all councils will act responsibly, and that I will not need to use my capping powers, but I will not hesitate to do so if necessary, in order to restrain excessive spending and hold down council tax levels. The third of the reports for which I am today seeking the approval of the House is the special grant report. In particular, I wish to draw the attention of the House to two of the items contained in the report : the special grants for population loss, and in respect of displaced persons from the former republic of Yugoslavia. A few minutes ago, I explained that SSAs this year need to reflect the availability of new data. In particular, we are now able to use population data from the 1991 census. That is a change from previous years, for which we have used 1981 census data, updated, each year by the Office of Population Censuses and Surveys. We are bound to use the more recent data, but for a few authorities, that means a significantly lower SSA--which means less grant-- than would have been the case if we had continued on the old basis.

It would be unreasonable to expect them to accommodate this reduction in a single year. I have therefore decided that, for those authorities whose SSA is more than 5 per cent. lower than it would have been if the old basis of estimating had continued, we should provide a special grant to compensate them in full for the excess over 5 per cent. Sixteen authorities will benefit, and a total of £3.5 million will be paid out under that scheme.

The special grant in respect of displaced persons from the former republic of Yugoslavia was announced by my hon. Friend the Minister for Housing and Planning on 16 November. The intention is to compensate authorities which face sudden unexpected additional expenditure as a result of the arrival in their area of the displaced persons. We have modelled the scheme on the more familiar Bellwin scheme, which applies to emergency expenditure following severe storms.

The principles are the same. Authorities can reasonably be expected to hold contingency reserves against minor emergencies, but in exceptional circumstances those reserves will simply not be enough to meet the case. Therefore, under the scheme, expenditure above a threshold qualifies for grant at a high rate--85 per cent. My Department invited authorities to submit estimates of expenditure on displaced persons from the former Yugoslavia. Three authorities have qualified, and will receive a total of £80,000 under the scheme.

Mr. Peter Shore (Bethnal Green and Stepney) : Personally, I welcome the principle and practice of allocating a special grant to those authorities with a substantial number of displaced persons--as, I am sure, do most hon. Members. We certainly have people from the former Yugoslavia very much in mind. However, has the Secretary of State thought about the case of displaced Somalis, a substantial number of whom have come to the United Kingdom during the past 12 months and more--and people from other communities? Is he prepared to

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