House of Commons Hansard Debates for 3 Feb 1994

Madam Deputy Speaker : Order. Could I be very boring and inquire how this relates to the financial reports that we are supposed to be debating?

Mr. Straw : I was challenging the sincerity with which the Secretary of State is recommending the new system when only four years ago he was supporting a completely different system--the poll tax--and when he also supported the 1988 White Paper, which set its face against capping.

In the list of councils that did best and worst in the provision of nursery education--

Ms Estelle Morris (Birmingham, Yardley) : Does my hon. Friend agree that the picture painted by the Conservatives of the difficult decisions taken by Birmingham city council with its limited finances is not

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accurate? Does he agree also that the Government's handling of the economy prevented the council developing the city centre and promoting housing, social services and education? It is only as a result of clever leadership that Birmingham has been the only city that has invested in its city centre and saved jobs. What Councillor Theresa Stewart means is that now we can turn our attention to meeting other pressing needs, and the needs of other parts of the city.

Does my hon. Friend agree about two matters? If the Government had taken--

Madam Deputy Speaker : Order. Interventions should be short and this sounds as though it is going to be a mini-speech.

Ms Morris : No, it will be a very short intervention, Madam Deputy Speaker.

Does my hon. Friend agree that if the Government had taken a lead from Birmingham city council and invested in industry, the nation would not be in the mess in which it is now? Does he also agree that there is no difference of opinion between councillors in Birmingham city council? We are tackling all our problems, but because of the way in which the Government give us finance we need to do things one by one instead of being able to do them all at the same time.

Mr. Straw : I agree. I congratulate Birmingham city council on its excellent record in economic and social development. On the issue of the so -called prestige projects, Councillor Theresa Stewart said in her budget speech :

"I want to say a word about the so-called prestige projects which I am supposed to love to hate. I believe we have safeguarded their position"

in the budget. She recognises their importance to economic development in that city.

In the list of councils that did best and worst for nursery education, to which I drew attention some minutes ago, the few Liberal Democrat councils that exist are at the bottom of the list, not the top. The Isle of Wight, where the Liberals have been in control since 1985, is 96th in the list of 107 local education authorities for nursery education. Only 7 per cent. of children in the Isle of Wight have the chance of a nursery education. By their deeds shall ye know them. The only appearance of a Liberal council anywhere near the top of the list--Tower Hamlets--reflects the investment of ILEA, not of that Liberal borough.

In the past few months, the country at large has seen the reality of Liberal Democrat control of councils--overtly racialist, unprofessional and literally out of the control and influence of the national policy. As the ombudsman said of Tower Hamlets, many of the problems of Tower Hamlets stem from the Liberal Democrats' decision to decentralise administration of seven neighbourhoods.

To try to salvage their fortunes, the Liberal Democrats in Tower Hamlets have now hired the services of the television reporter Mr. Vincent Hanna, not as a public relations adviser, but as acting chief executive, for a fee of almost £3,500 a week. Mr. Hanna is now earning--

Mr. Corbyn : He is not worth it.

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Mr. Straw : Mr. Hanna is now earning, I understand, almost as much as Mr. Ian Wright, Arsenal's excellent striker. I think I know who is better value, and it is not Mr. Hanna.

Only 12 months ago, the Prime Minister said that we must build a new accountability fit for the 21st century, a new accountability that goes directly from those who run public services to those who use them. The Prime Minister was correct, but I doubt whether he realised what he was saying, for contained in those words was a revealing admission that, 14 years after the Conservatives came to power, there is a crisis in the accountability of the public services. Indeed, far from having a system fit for the 21st century, we have one that is slipping back to the 18th century, in which graft, corruption and favour reign supreme.

That was the message of last week's Public Accounts Committee Report. It had nothing to do with denigrating loyal career public servants and everything to do with blowing the whistle on Ministers and their appointed cronies who fail to understand how vigilant they must be in maintaining the critical line between the public's interest and the interests of the Conservative party and its backers. Far from strengthening accountability, it has been weakened by Government policies. Responsibility for £24,000 million a year of public services has been removed from local government and a high degree of cynicism has been generated about the way in which some so-called flagship authorities have been favoured at the expense of the rest.

Everyone knows that, year after year, grant was stuffed the way of Westminster and Wandsworth. This year, 17 per cent. of the total of transitional relief is going to a single borough--Wandsworth. The arithmetic is plain for people to see. Everyone knows too that the trail from Westminster city hall and its appalling policies of social cleansing and political gerrymandering leads straight back to Conservative central office and to a number of hon. Members, in this House and in the other place.

Of course we accept that there should be due process, but that was not, by the way, what was accepted when it came to Labour councillors or other councillors who were being surcharged at the behest of Conservative objectives. We do not have to wait for the procedure to be through before we hear from Ministers about their view of the policy. After all, when those objections were made three years ago, Ministers in the other place were saying that the scheme of designated sales was a very good scheme which addressed a difficult problem for Westminster. Ministers have never been slow to criticise or condemn Labour councillors on the flimsiest evidence or none. When, then, will their trappist silence on Westminster end?

The hon. Member for Stratford-on-Avon, in the excellent article in The Guardian to which I referred, said :

"The superseding of local responsibility by centrally appointed bodies and individuals has gone too far and weakens the democratic political culture".

He is right.

We oppose the orders because they are the tangible representation of a centralised system of control, which denies people proper choice, which removes responsibility from elected local councillors and which has undermined the standards of the public service and the health of our democracy.

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6.5 pm

Mr. Barry Field (Isle of Wight) : I do not want to continue along the road down which the hon. Member for Blackburn (Mr. Straw) has led us, but I wonder whether he could help me. I do not know whether he is listening to me, but I wonder whether he can confirm that the Vincent Hanna whom he mentioned is the same Vincent Hanna who had such fame in the BBC exit poll in 1979 that was the subject of an inquiry in the BBC. Is he one and the same?

Mr. Straw indicated assent.

Mr. Field : I take it amiss when the hon. Gentleman tells us that Conservative Members are uninterested in local government or are somewhat opposed to it, because my family have served for five generations in local government and we have enjoyed our service immensely. I think that many of my hon. Friends would share that view. We think that local government is an honourable service and that to serve it is a way of putting something back into life in return for what we receive from our local community. I resent the assertion made by the hon. Member for Blackburn that Conservative Members do not value local government and the service that it provides.

The hon. Member for Blackburn took us from Joseph Stalin to Dashwood-Quick ; we went via Romania. He focused on the empty houses of my right hon. Friend the Secretary of State for the

Environment--all 13 of them. I have heard a de minimis argument maximised from time to time in the House, but never in such an extraordinary way. When he discussed capping and his usual antipathy to it and proved the way in which it encouraged everyone to spend, it seemed to me that he must have been thoroughly in favour of it, if that was the nature of his argument. It is well known, however, that his views about local government are about as up to date as a wicker shopping basket.

My hon. Friend the Member for Hertfordshire, West (Mr. Jones), Chairman of the Environment Select Committee, hopes to catch the Speaker's eye in Monday's debate about the aftermath of and the follow-up to the Rio conference. In his usual generous-hearted way, he asked if I would introduce the Environment Select Committee's report on standard spending assessments this evening, as a member of that Committee, rather than hope that he might catch the Speaker's eye on two separate occasions in a short time. I am happy to have that opportunity this evening.

My right hon. Friend the Secretary of State made some kind and courteous comments about the Select Committee's report, for which I thank him. He referred to Mr. Tony Travers, who was one of the witnesses who came before the Select Committee, and pointed out that a report by Mr. Travers said that the doom and gloom of last year's settlement had been very much overdone by Opposition Members. Indeed, if every one of us who has served in local government had a pound for every occasion when an initiative of the Government or some announcement or settlement was going to be the end of local government and bring it to a screeching halt, we would be richer than the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) and we would all be able to afford a council house in Westminster. The report makes more than 20 recommendations, which encompass a mixture of technical and procedural

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changes, as well as matters of presentation. The theme throughout the report is an acknowledgement of the genuine attempt that Ministers, officials and local authority associations have made to bring a better understanding and a greater transparency to what was a rather opaque process. Although that process hardly ignites the interest of the citizens of our nation, it certainly touches on each and every one of their daily lives in the cities, boroughs and districts in which they live.

There was a universal welcome for the openness of this year's standard spending assessment review, and our recommendations reflect the Committee's desire for that progress to be taken further and improved so that it is as transparent and open as possible. That could be done by improving the technical construction of SSAs and by reducing the pressure on the whole system by reconsidering their use for purposes other than grant distribution.

I know that many Opposition Members wish to speak, so I shall not take up the time of the House by going through all the Committee's recommendations. Instead, I shall highlight some of them. One recommendation, which is especially pertinent in view of a number of the interventions in the speech of my right hon. Friend the Secretary of State, concerns openness. That is a good place to start. Most, if not all, of the members of the Committee had had experience as councillors, either on our present local authorities or elsewhere in the country, so we appreciated the fact that there is a cake-cutting system. Sometimes--in fact, practically always--that system is seen as political. Our recommendations include a suggestion that it would be useful if Ministers highlighted where they had exercised judgments, spelt out those judgments and explained why they had been made. I see no reason why we should be shy of doing that. After all, politics is what we are here for, and Conservatives are here to form a Government and discharge our responsibilities. We should not be shy of setting out where Ministers have made those decisions.

Much time was taken up in the Committee by discussions on a subject that has already featured in our debate--the area cost adjustment. I believe that my right hon. Friend dealt effectively with that subject when he opened the debate, but I am certain that if we could see the way in which Ministers take decisions, and when and why they take them, we could begin to depoliticise the process, which would be helpful.

The Committee thought that the Department of the Environment could be more helpful to local authorities if it provided them with individual completed calculations to show the composition of their SSAs. I do not know whether my experience is typical--one cannot help drawing on one's own experience of the way in which matters are arranged by one's own local authority and of taking deputations to see Ministers--but it seems to me that hon. Members are often used by their local treasurers to see Ministers in order to explore the figures behind the decisions, and to get down to the formula, or the arrangements of figures, for their local authority.

An enormous amount of public money seems to be spent, and national resources wasted, by deputations coming to Marsham street from all over the country. It is a time-honoured craft. I am sure that some people come because they like shopping in Harrods and others because they like singing "The Red Flag" in the four-ale bars in the

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House. So there may be other agendas involved. In general, I believe that the deputations come in order to get down to the nitty gritty of the figures.

If, when they weigh that recommendation, my right hon. and hon. Friends in government believe that it would be expensive and onerous, I wonder whether they might consider making the data available, in disc form compatible with local authorities' computers, to each family of authorities--perhaps to a few authorities in each family, as an initial experiment, if they are not prepared to go the whole hog and dish out all the facts and figures, which I appreciate would be a pretty mammoth exercise. I believe that that could lead to considerable savings.

We agreed with all our witnesses that hypothecation should not feature in SSAs. I especially homed in on that thought, because we read reports that the Labour party is now flirting with the idea of hypothecation to overcome the great problem caused by the fact that it keeps telling us where it would spend money but never tells us where that money would come from. We also know that the Liberal Democrats fought the general election on the idea of a hypothecated tax.

In my view, that idea strikes at the core of democracy, because if we start hypothecating taxes we cause all sorts of problems. No doubt we should have to create a vast bureaucracy to ensure that all the money raised in that way was allocated and spent accordingly. The main reason why hypothecation should never be attempted in local government, which has been alluded to by hon. Members on both sides of the Chamber, is that it specifically undermines local democracy. Two principal divides take up much of the time spent on local government in the Chamber. The first is the quantum, and that subject will be with us for ever, whatever Government are in power. The other concerns the fact that local councils want the maximum freedom to make the choices that affect their local communities.

Mr. Robert B. Jones : While my hon. Friend is talking about democracy, and the Liberal Democrats, does he recall the right hon. Member for Berwick-upon-Tweed (Mr. Beith) leading a campaign to get rid of area cost adjustment? Does he think that that campaign will be revealed by Liberal Democrat candidates in the London boroughs, or might the Liberal Democrats say one thing in the north of England and something entirely different in the south of England?

Mr. Field : My hon. Friend contributes, as always, a reasonable and practical point. The Secretary of State dealt well with area cost adjustments in his opening speech. Although there is antipathy in some parts of the Labour party for area cost adjustments, clearly London would have a problem if they were abolished.

If my hon. Friend thinks it rare for Liberal Democrats to contradict themselves between the north of England and London, he ought to come and see what happens in the Isle of Wight, where they contradict themselves between one side of the island and the other. That is a much smaller area than the United Kingdom.

One rather interesting result of our report was an article that appeared on the front page of the Evening Standard last Tuesday, arising from recommendation 9, concerning responsiveness to local circumstances. I have taken some soundings from my London colleagues on that recommendation. The Committee received evidence that the SSAs for

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London skewed the national SSA analysis and distribution, so we recommend that London should be taken out of the system for the rest of the country--or at least, that the Department of the Environment should consider taking it out, and evaluate the pros and cons of doing so.

I have been an officer of the Back-Bench tourism committee for some years and nobody knows better than I the problems that tourism creates in London. The House itself is a magnet for international tourists, and we have to work our way through groups of evil little French children who seem to block our way during the summer months. I remember that our dear old friend the late Robert Adley was always on about the problems of coach parking in London and the difficulties and traffic congestion that tourists created.

I believe that most of my hon. Friends think that the recommendations of the Select Committee give us the opportunity to take London out of the system. Judging by the soundings that I took, they believe that if we get the formula right everything else flows from that. Indeed, when we look at this year's settlement and see the damping that has been put into a number of London boroughs, because of the way that the formulas work this year, we hope that our recommendation will commend itself to Ministers and officials. Nowhere in our recommendation did we have the temerity as a Committee to make the point about the quantum, which is on the front page of the Evening Standard . Other things may flow from our suggested reform, but we certainly did not go that far.

In opening the debate earlier, my right hon. Friend the Secretary of State has probably almost dealt with the point about the reform of local government. I hover over it, however, because I very much hope that the Isle of Wight will be the first unitary authority under the local government reorganisation in the United Kingdom. I must make the point that any reform of local government structure will create considerable turbulence in the SSA in the short term. My right hon. Friend mentioned that he has already announced arrangements for the costs of reorganisation. With the greatest respect, that is a differernt point from the one that we make in our report, on turbulence.

One of my concerns has always been that the merging of three local authorities into one--there will perhaps be greater combinations of that elsewhere where recommendations have been made--might lead the system to believe that the pruning of bits of the SSA for districts, when they go into counties, or vice versa, could take place. That is rather worrying.

We homed in on the use of data and the census information. A number of us found that our population projections had been overstated in the interim. Once the census has taken place, there is a fairly dramatic effect once a decade. Although it is true to some extent that local government has a bit of a vested interest in over-egging the cake in the interim, and gets a holiday out of it, in this day and age, with the use of computers, it must be possible to try to keep the information more up to date. We hope that our officials will take that point on board rather than have that precipice at the end of every 10 years.

The point was made about year-on-year change in SSAs. I listened carefully to my right hon. Friend, who said that he hoped to keep them much as they are, and with as

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few changes as possible in the future so that the system could settle down. The Committee was concerned about how the cost of delivering a standard level of service could change dramatically from one year to amother. I have already alluded to the damping that has been made available to some London boroughs. We hope that the Department will carry out more research into the real cost of service provision and the additional educational needs factor, which has been alluded to.

This has been my contribution to introducing the Select Committee's report on SSAs. It is a dull subject and hardly bedtime reading. I hope that I may now be forgiven for introducing my own constituency interest in the matter.

The Select Committee met my hon. Friend the Under-Secretary of State for the Environment on 13 January, following a meeting with my hon. Friend the Under-Secretary of State for Health, the hon. Member for Battersea (Mr. Bowis), on 12 December about community care funding. We had a difficulty because of the huge distributional difference that arose between 1993-94-- 50 per cent. was based on local income support cases and 50 per cent. on the then current SSA--and the revised basis of the SSA in 1994-95.

We appreciate the fact that local authorities knew that the distribution system would change in 1994-95, but the only information that we had was that contained in the 1993-94 SSA data. No one in the Department or in local authorities knew at that time what the revised SSA would be. Further, there was no prior suggestion to local authorities that all the resources for community care in SSA and special transitional grant would be distributed on a 1994-95 new SSA basis.

The national resource total has been preserved, but the distribution in different years has changed by factors from a multiplier of 5.537 in the City of London to one of 1.206 in Sefton, with the Isle of Wight in the penultimate position, a multiplier of 1.435, and a national total factor of 2.254.

The delegation to the Department of Health on 21 September sought to persuade the Department to reconsider the distribution at least to the extent of agreeing that the excessive swing above and below the national average increase should be dampened. I am still waiting to hear the outcome of that meeting from my hon. Friend, but I remain concerned about the effect that it will have on the SSA for 1995-96, because it seems that next year's figures will set that figure in the future.

Another concern is much longer running. I thank my hon. Friend the Under- Secretary, because when we met him with his officials on 13 January he said that we were the only local authority deputation he had seen who had raised with him the fire and civil defence SSA. He generously told us that he would take up the matter with the Home Office. I draw his attention to the fact that, on 24 May 1988, we took a deputation to the Home Office to meet the noble Lord Ferrers. There was a letter on 31 October 1991 to the Home Secretary from the chairman of the public protection committee about the problem. I wrote again on 23 January 1992. We received a reply on 18 February 1992 from Mr. Gilderoy at the Department of the Environment, which was referred to the Home Office.

We took another delegation on 5 March 1992 to meet the noble Lord Ferrers. We had a meeting on 5 March 1992 to discuss the matter and, on 6 December 1992, met my right hon. Friend the Secretary of State for Wales, who was then Minister at the Department of the Environment. On 4

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February, we took his excellency the lord lieutenant for the Isle of Wight to the Home Office. When I met my hon.Friend the other day in his Department, he said that he could see our frustrations at having gone backwards and forwards between the Home Office and the Department of the Environment. We had a problem with the Department's definition of the SSA as

"the appropriate amount of revenue expenditure which would allow the authority to provide a standard level of service, consistent with the Government's view of the appropriate amount of revenue expenditure for all local authorities".

That is significantly at variance with the appropriate amount for a standard level of service as determined by Her Majesty's inspectors of fire brigades. Thus, in the island's case, two separate assessments of need by the same Department of State produced two totally different answers. Clearly, both those answers cannot be right. I ask that my hon. Friends do all in their power to put that right. Our archaeological curator on the Isle of Wight, when we were discussing coastal erosion and sediment transportation, likened the Isle of Wight to a giant Alka Seltzer which was dissolving into the sea.

I have given the long litany of deputations and meetings, involving Ministers at the Home Office and at the Department of the Environment, about the fire service standard spending assessment for the Isle of Wight. We can hardly dial 999 and expect the adjoining fire brigade in Hampshire to catch the ferry to help us put out the fire. That gives us great cause for concern. If we are not an Alka Seltzer dissolving into the sea, we are in this respect a ping-pong ball which has gone backwards and forwards between the Department of the Environment and the Home Office. I look to my hon. Friend the Under-Secretary not only to ensure that there is fair play but to put the ball right out of court so that we can stop this administrative nonsense, which is quite unnecessary.

6.30 pm

Mr. Ron Leighton (Newham, North-East) : The London borough of Newham has more than its fair share of problems. Its economy was based on port- related activities in the docks and on the railways. All that has gone, leaving a great void. Newham's docks, the Royal docks, are still an eerily empty moonscape. The promised development associated with the London Docklands development corporation has just not happened. Newham has suffered greatly from the recession. It has more than double the national average rate of unemployment, with all the damaging and debilitating consequences. Few of Newham's school leavers get jobs.

Much of the borough's housing was built at the turn of the century, and is in bad condition. The council has a huge waiting list, and it has 3,000 people in temporary accommodation. The most recent survey, conducted by the Department of the Environment and Manchester university, shows that Newham is the most deprived local authority in England and Wales. I am not proud of that ; we want to get away from that. Many people in Newham are striving valiantly to improve things ; they want the Government's support, not their hindrance. One area in which progress is being made is education. There has been a big increase in good GCSE results in Newham. The one exception is Stratford school, where the results are abysmal and a scandal ; that school has opted out. The education service is working against great difficulties.

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I visited one comprehensive school and saw, in the reception area, a long list of more than 20 languages. When I inquired about it, I was told that it was a list of the home languages of pupils in that school. We have many refugees. I was told by the representative of one group that there were 7,000 Somalis in Newham. Not only are their children not fluent in English when they arrive, but, because of the war, they have not gone to school to learn to read and write their own language.

Some 50 per cent. of Newham's children have a home language other than English. Section 11 was a great help to us because section 11 grants paid for teachers to help with the teaching of English, but that money has now been cut. I led a deputation to the Home Office. The Minister of State listened to what we said, congratulated the deputation on its cases, and more or less said that he agreed with it. However, he then said that his budget had been cut.

Last year, Newham was aggrieved by its revenue support settlement, which allocated unfair standard spending assessments--the Government's estimate of what a local authority should spend to provide a standard level of service. The borough was short-changed by more than £22 million.

There were two main reasons. The first was that Newham's capital SSA was based not on the real amount that the council had borrowed over the years, with permission from the Government, to invest in houses and schools-- £208 million--but on a notional amount of £109 million. Under that ludicrous arrangement, Newham received a capital SSA of only £18.5 million, while it was committed to spend £29.75 million to service its capital debt. That left a shortage of £11.25 million, which had to be taken from somewhere else, robbing other areas of activity.

The second reason is that Newham has an acute homelessness problem. It has a statutory obligation to house homeless families in priority need, using temporary accommodation if necessary. Last year, Newham had to spend £11.25 million and there was no statutory provision--no SSA recognition--for that. Once again, other budgets had to be raided. With a shortfall of more than £11 million for capital and another shortfall of more than £11 million for homelessness, Newham was short-changed by more than £22 million.

Newham, a deprived inner-city borough with multiple problems, had to spend under its SSA less than the amount that even this Government think we should spend on services across the board, including education. It was a nightmarish situation, and all our problems were made worse.

Out of concern for the damage that was being done and for the unfairness of the settlement, local people got together to form the Newham Needs Campaign. It consists of the Churches, voluntary organisations, local trade unions, the borough council and the local newspaper, the Newham Recorder. It arranged a deputation to the Department of the Environment to see the Minister of State. It organised a conference at the town hall and a rally in Trafalgar square.

The campaign--this grouping of local people--rejoiced and had high hopes and expectations when it was learned that the SSA methodology which had so penalised Newham was to be reviewed and changed. It was felt that, at last, Newham's grievances would be remedied. Here was an opportunity to give the borough a fair settlement.

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The House can imagine the consternation, the dismay, the shock, the disbelief and the sense of betrayal when it was discovered that that new settlement and the new methodology were more damaging than the old, and that they gave Newham an even worse deal. Indeed, if the previous system had remained unchanged, Newham would have received £18.75 million more than it was allotted under the new arrangement. This year, a one-off reduction grant of £13 million is being paid to cushion the effect of that cut. Even that is guaranteed only for one year, and, if it is removed, things will be even worse in a bleak future.

The three Members of Parliament and the council leader came to see the Under-Secretary of State at the Department of the Environment. He told us that the settlement was formula-driven--that the formula was fed into a computer and that what came out was the settlement. It appeared that Ministers had no discretion : that we had government by computer. That proves to me that the straitjacket of a rigid formula does not meet the individual needs of each authority. The effect on Newham is perverse and appalling.

I can illustrate that point by comparing the borough with its neighbours. The SSA per head for Barking and Dagenham was increased by £42 compared with the figure for last year. For Tower Hamlets it was increased by £45 per head, and for Havering it was increased by £46 per head. For Greenwich it was increased by £73 a head, but for Newham there was a reduction of £31 per head. That is outrageous--it blights all our hopes, and sabotages all our efforts to improve life in the borough.

Do Ministers want a spirit of hopelessness to pervade the borough's affairs ? Are they proud of the fact that we cannot spend up to our SSA on education, and that our teachers are expected to struggle with less than even the Government think we should spend on education ? If our SSAs are reduced this year--we have had confirmation of that--will Ministers please tell us what else should be cut ? I should like them to give us guidance today. Perhaps they think that we should shut the borough's swimming pools, or close even more of our libraries. How many more staff are they asking us to sack ?

Ministers have a duty to tell us what ought to be cut. I want the Ministers to come to Newham to meet the people on the ground, to see the damage done by that settlement and to discuss with those people what should be done.

The Secretary of State, who is not present, came to a recent conference at Stratford town hall. He did not come to listen to any of the speeches that preceded his. He made his own speech and disappeared immediately, without any contact or discussion with anybody else. His theme was partnership.

After the financial stab in the back that we have just heard, a hollow laugh and much cynicism is likely to greet that theme. We feel let down by our partner, who is kicking us in the teeth. If any life is to be breathed back into that partnership, the Secretary of State should agree today that he will visit Newham to discuss on the spot in the borough how that settlement is to be implemented and what he thinks should be cut.

Mr. Spearing : My hon. Friend witnessed the exchanges that I had with the Secretary of State on that word "partnership". Does he agree that the Secretary of State and the Government must explain why we are being short-changed by £20 million-worth of expenditure

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through an SSA calculation which they claim to be fair, but which is clearly fraudulent? It is breaking down local government in London, while their quangos and partnerships are able to provide patronage, and will do even more in the coming financial year.

Mr. Leighton : It is fraudulent. We saw the Minister about the fact that we were short-changed on capital financing and homelessness last year, and he did not dispute the point. If the old SSA methodology had remained, we would have received £18.75 million more than we have been offered under the present settlement. That cannot be right. Whatever formula was fed into the computer, it must have been defective.

Let us consider the future. If the £13 million reduction grant which has been allocated to compensate for the loss of £18.75 million is removed next year, we shall certainly be looking into a big black hole. The only glimmer of hope on the horizon is contained in a letter from the Minister for Local Government and Planning, which I received on 27 January. That letter said of the representations that the Minister had received from local authorities :

"They raised many interesting issues, some of which we will want to look more closely at for future years."

I hope so. I also hope that the Minister and the officials in the Department of the Environment will carefully study the letter that they received from Drew Stephenson, the chief executive of Newham local authority, of 5 January.

There are four areas which I would like them to consider for the forthcoming year : capital financing, homelessness, the needs indices and the use of expenditure data. This year, there is a £10.7 million gap in capital financing in Newham. Perhaps the Under-Secretary of State will remember that he suggested that local authority associations supported what he had done.

I was able to point out that Price Waterhouse and Co. was supported by the Association of London Authorities and by the Association of Metropolitan Authorities when it proposed a different capital criterion, the non-housing credit ceiling for 1990, as opposed to the notional debt figures. We agreed. If that system was in operation, Newham would have had an extra £9 million in its capital SSA. This year, there is a £10.3 million shortfall between what the council will have to spend on homelessness this year and the SSA that it will receive. I hope that Ministers and officials will consider that there should be a separate sub- block for homelessness expenditure.

Mr. Tony Banks : Before my hon. Friend moves off the issue of homelessness in Newham, would he draw conclusions from the fact that, in 1981, the borough spent around £50,000 a year on homelessness, and it now spends £10 million a year?

One of the big problems in Newham is the number of refugees who are attracted to the area. We are not objecting to the Government allowing people who are fleeing from oppression to come to the country, but they should not wash their hands of their responsibility for those people at the port of entry. Refugees put great stress on the services of boroughs such as Newham, Haringey, Camden and Islington, without those boroughs receiving additional resources to deal with the problem.

Mr. Leighton : My hon. Friend is right, although he underestimates the situation. We spend more than £10 million, and receive only a little bit of that back in the new

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SSA. The gap is £10.3 million. My hon. Friend is right to say that, a few years ago, Newham spent virtually nothing on housing homeless families in temporary accommodation.

However, because the Government have prevented local authorities from building houses, the homelessness situation is worse. There is now a statutory duty on local authorities to house homeless families who are in priority need. Newham is obliged to spend that money, but it gets no recognition for it from the Government.

That money must be taken from somewhere else. It has to rob other budgets, such as the budget for education, to pay for homelessness, because the Government will not recognise the need. Only a small number of London authorities have that great problem of homelessness, and there should be a separate sub-block for homelessness in the SSA settlement.

Mr. Corbyn : Does my hon. Friend recall that the London group of Labour Members constantly pressed for a formula which would have enabled London boroughs to be properly recompensed for the legitimate needs of refugees in their communities, and to link it with the problems of severe homelessness, which are worst in the inner-London boroughs, of which Newham is one?

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