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Mr. Anthony Coombs (Wyre Forest): Like many other hon. Members, in particular those who have had some local government experience, I do not deny that it is a tough, tight settlement. Nevertheless, it is entirely defensible and entirely manageable. Indeed, it would be totally hypocritical if I argued with the Treasury that Government spending should be kept down, as I have

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done consistently, and then ignored £43.5 billion out of total Government expenditure of £262 billion at the first whiff of grapeshot. Indeed, I appreciate that the 1.5 per cent. increase for Hereford and Worcester overall is a tough settlement. The settlement for education is 2.3 per cent. Nevertheless, it is an increase, and 2.3 per cent. is only marginally less than the rate of inflation. It is entirely unjustified for somebody like Russ Clayton, the chairman of the county council, to try to scaremonger among parents in the county by arguing that there will be significant reductions in services before he knows how many pupils he will have to educate, before he knows what the teachers' pay settlement will be and before he even knows the final details of the SSA education settlement. We were talking about the distribution mechanism of SSA. I suppose that nothing is perfect, and everybody will have their own point of view on the matter. Nevertheless, it is worth saying that a recent study by Rita Hare of the Chartered Institute of Public Finance and Accountancy and Tony Travers of the London School of Economics stated that no overseas country appears to have a full grant system which goes so far in its attempt to achieve full equalisation. I was going to say--in an awful pun--that that means that what the hon. Member for Holborn and St. Pancras (Mr. Dobson) said was an absolute travesty. I believe that reforms are continuing to be made to the SSA mechanism, and it is as fair as we can get, although I have one or two things to say about matters which I believe should be reformed.

That there is room for economies in a service that nationally spends £43.5 billion is beyond doubt. For instance, my district council--I was happy to recommend that it was capped to protect local council tax payers from its profligacy--spends no less than £10.5 million; fully 25 per cent. above its SSA. If one bears in mind what neighbouring authorities of a similar type spend on their SSA, it shows the excessive expenditure of the council.

What is more, the council--despite the fact that it is spending £1 million more than its capping limit--has had to take money out of its reserves. No specific attempt has been made by the district council to cut back and make the long-term economies which would mean that services are protected and the council tax thereby reduced. It is significant that, from 1987 to 1993, non-manual costs of local government rose by 85 per cent. It is equally significant that the Audit Commission has suggested--the House should not forget that the vast majority of costs in local government are staff costs--that few authorities have a consistent or coherent approach to crucial questions such as how many staff they need, how much they should be paid and how they can get the best from their staff.

I have four points about the mechanism this year. First, although I was in favour of having my district council capped to protect local council tax payers, I do not believe that that is desirable in the long term. It is a matter of some regret that now only 20 per cent. of local expenditure is raised locally.

Mr. McLoughlin: Less than that.

Mr. Coombs: It may well be less. It is unfortunate because it breaks the link of accountability between the local electorate and the council. I know that a debate is going on within the Department at present, but I hope

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that the sins of the profligate should be visited upon the profligate. There is a case within the limits for either a relaxation of the existing capping limit or giving the Minister discretion. That should depend on the efforts of the capped authorities to order their affairs more sensibly.

In addition, I am concerned about the use of the social and economic index as it affects councils like mine, which have a significant amount of deprivation in towns with populations of less than 100,000, but which otherwise cover rural areas. The index also affects towns such as mine, which have a small ethnic minority population. The use of the social and economic index means that those towns are deprived of £1.04 million out of a £10 million budget. The Government should be looking at how those indices work.

My second concern relates to area cost adjustments. I do not regard it as acceptable that Hereford and Worcester county council should be given £104 less on primary and £139 less on secondary education than a county such as Oxfordshire. I defy anybody to believe that the costs of living in Oxfordshire are significantly greater than those of Hereford and Worcester. Those figures alone show that ACAs are in urgent need of review, and I hope that that is done as quickly as possible.

My third concern is the way in which councils use their own assets. Not enough councils have used private finance--purely for ideological reasons which they will later regret--particularly in housing, to introduce more capital into their coffers which they would then be able to spend to their tenants' advantage. The net receipt for my district council--I hope it will read the debate in Hansard --if it transferred its housing stock to housing associations would be no less than £51.2 million. At a stroke, the council would eliminate its debt, and would have about £12.8 million to spend on capital improvements for the benefit of the people of the area. That also takes into account what the council regards as the fixed part of its expenditure--some £4 million out of £10.5 million. A significant proportion of that is payments on debt charges for capital projects on which it has--possibly unwisely--embarked in the past. The Minister will see that there is significant potential for councils such as mine if they are prepared--with the acquiesence of their council tax payers --to effect large-scale transfers of their housing budgets. My final point concerns the teachers' pay review body. Obviously it is important that teachers are properly rewarded to attract good-quality people into the profession. We all agree with that. But equally, I happen to believe that pay determination is best done locally and according to local labour markets. From talking to teachers, I know that if the implication of them not taking an extra 1 per cent. or 2 per cent. in their wage packets was that they would be able to keep on staff who would otherwise be made voluntarily or compulsorily redundant, they would--on the basis of what was needed locally--be prepared to forgo that increase.

The fact is that, since 1990, teachers' pay has increased by 36 per cent. against a national average of 23 per cent. This year the teachers' pay review body may give an increase that is entirely unrealistic. I suggest that that be used merely as a guideline, so that teachers' pay is locally determined--

Madam Deputy Speaker (Dame Janet Fookes): Order.

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8.18 pm

Mr. Robert Ainsworth (Coventry, North-East): As I have only 10 minutes, I do not intend to accept interventions. The Secretary of State, having gone on for 70 minutes in a most blatant abuse of the House, effectively prevented other Members from making points. We clashed last year, during debates on what I called the "blatant fiddle" of the revenue support grant. I have seen nothing in this consultation, or in the final proposals, that causes me to modify my view. Past devices used to rig the grant have been maintained and, in some respects, added to.

My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) detailed many of those issues and exposed the fact that, under this settlement, council tax payers throughout the country, irrespective of the political complexion of their local authorities, will pay more for less.

I wish to discuss revenue support grant as it affects my authority, Coventry, and Westminster city council. Coventry councillors are angry and frustrated, having raised this year, as they have repeatedly raised before, legitimate issues of anomalies within the settlement only to find that those have not been dealt with. Moreover, the final formula contains new anomalies that have not been the subject of consultation with local authority associations. Coventry has asked for changes to the use of "homelessness" as an indicator, because it costs the city nearly £2 million per annum and is not a reliable indicator of need. It has asked for the type of tenure not to be used as a proxy for deprivation, as it punishes areas with higher-than-average home ownership. It continues to be appalled by the massive over-allowance being delivered to some authorities via the area cost adjustment. As usual, Coventry was listened to politely, but it discovered that, in the final settlement, changes were made without consulting the local authority sub-group. Those changes benefit some inner- London authorities and punish Coventry and other metropolitan boroughs. That has happened despite the fact that the Minister agreed with the findings of last year's Environment Select Committee report that transparency in decision making should be improved. One must conclude that that commitment paid no more than lip service to the report.

Over the next three years, cuts of £21 million will have to be made in Coventry, while this year tax levels will rise by 10.5 per cent.--3.2 per cent. as a result of the Budget in the autumn, and 7.3 per cent. as a result of Coventry losing grant to other authorities. We are left with the feeling that our lobbying on revenue support grant has been a failure, so we have looked at how other authorities lobby and, in that regard, at the workings of Westminster city council.

Westminster city council has lobbied and gained significant increases in its grant share over the years. It is well satisfied with this year's settlement, having received a 9.7 per cent. increase in standard spending assessment and the grants that flow from that. As a result of its success, and Coventry's lack of success, in lobbying for higher grant, massive anomalies have arisen. Spending per head of population in Westminster is 30 per cent. higher than in Coventry, but a 90 per cent. difference in grants turns that completely around at taxpayer level. The SSA for Westminster was 60 per cent. higher per head than for Coventry, which translates into grant pound for pound.

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In education, the SSA per pupil in Westminster is 52 per cent. higher than in Coventry. Much of that difference is due to area cost adjustments, which assume that it will cost 32 per cent. more to employ a teacher in inner London than it will in Coventry. That is absurd, as the London weighting premium on teachers' pay is less than 10 per cent.

I do not have time to discuss the massive anomalies that have arisen in social services. In SSA for the elderly, Westminster receives 2.49 times that of Coventry. That, too, is absurd. The proportion of elderly people on income support in Coventry is higher than in Westminster, but Westminster gains because elderly people on income support are not taken into account when calculating the SSA, while elderly people in rented accommodation are. That has little statistical justification and leads to the absurd anomaly whereby an elderly Member of Parliament living in rented accommodation in Westminster counts as having special needs, but a single pensioner living alone on income support in a small owner-occupied terrace house in Coventry is not classed as such.

Westminster's SSA for highway maintenance is 1.52 per cent. higher than Coventry's, which is ridiculous given the borough's special ability to generate car parking income. Coventry's highways budget of £9.1 million is offset by car parking income of £1.6 million. This year, Westminster is expected to collect a staggering £34 million for on- street parking and is struggling to spend that sum. It is now repairing Westminster bridge outside this place to try to get rid of the money that is sloshing around in its account. Effectively, it is doing so at the expense of taxpayers in Coventry, St. Helens and elsewhere. A Touche Ross report on Westminster city council shows that it has massive balances in its account which it simply does not know how to spend.

Westminster's SSA for "other district services" is 3.94 times that of Coventry and the highest per head of any council in England. That arises because Westminster's SSA population is almost doubled by commuters, overnight visitors and day visitors. Its SSA for tourists is about 60 per cent. of Coventry's SSA for the entire resident population. Most absurd is the fact that commuters and tourists in Westminster are assumed to have exactly the same social characteristics as the resident population. For example, 12 per cent. of tourists and commuters coming into Westminster are assumed to live in overcrowded accommodation; 24 per cent. are assumed to be from an ethnic minority; and 36 per cent. are assumed to live in purpose -built--mainly council--flats. The idea that people who have a job in Westminster and can afford to stay in a hotel, or who visit Westminster on a day trip, should be classed as deprived is utterly ridiculous.

How does Westminster council achieve those marvellous levels of grant support? Has it used the same lobbying methods as Coventry and other councils? No, it does not have to do that, and it never did. A note to Lady Porter on Westminster city council's lobbying methods and results has come into my possession through the digging activities of the district auditor. It details how individual members of the Government should be

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approached and targeted, and how blatant political considerations are used to get more money. With regard to the Secretary of State, the note says:

"John Gummer is the most alert of ministers to political nuances. He will be particularly conscious that with safety nets a number of high spending Labour London boroughs will appear to get `off the hook' with Community charges lower than Westminster."

The note then details the work done on behalf of the borough in bringing pressure to bear to get its grant increased at the expense of other local authorities.

That is how it is done. One does not lobby the Department of the Environment using solid analysis of the grant system; one lobbies the Tory party, stressing its electoral interests. That is the real reasoning behind many of the changes that have undermined the credibility of the grant system.

I am firmly of the opinion that we are dealing not just with a renegade local authority at Westminster, which has been buying electoral advantage by such mechanisms as "homes for votes" and free repairs for leaseholders at the expense of council tenants, but with a Government who are up to their eyeballs in this issue. We need an urgent decision on an extraordinary audit into Westminster city council. We need an end to the abuse of grant distribution which is punishing good, well-run authorities like Coventry. We need to restore credibility to the grant system because the people of Coventry and elsewhere are tired of paying other people's taxes, as they have constantly been forced to do through this disreputable system of grant distribution.

8.28 pm

Mr. Michael Trend (Windsor and Maidenhead): We have heard much about certain cases today. I shall return to the essential elements of the debate as outlined by my right hon. Friend the Secretary of State at the beginning.

Like most hon. Members, I receive a substantial postbag every day crammed with letters demanding extra spending on all the items that we are discussing today. As all hon. Members should, I point out to my correspondents that the Government have no money of their own but only the ability to tax people. However, none of my correspondents is enthusiastic about paying higher taxes to provide greater resources to meet their massive demands. That is the background against which the Secretary of State's settlement must be viewed.

In the present circumstances, I believe that the settlement is reasonable. The economy is growing steadily in a sustainable way--although I know that many people are still waiting to feel the effects of the recovery. We have had a tough spending round. Many Conservative Members argued that public spending should be held down and we are not ashamed of that view now.

Local government has an almost insatiable appetite for funds which must be held in check, especially when the national economy demands it. The Government are concerned about the size of the public spending borrowing requirement. It is not the only national economic factor of central importance, but local government cannot be immune from the PSBR. The country as a whole must reduce its borrowing. With underlying inflation at its lowest level in 27 years, I believe that this year's local authority finance settlement is fair. The Government believe that local authority revenue spending should increase by 2.2 per cent. in 1995-96, which is very close to the rate of inflation.

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Against that background, it is up to local authorities to stay within the public sector pay guidelines suggested by the Government. They must make sensible budgeting decisions and look for further efficiency savings. Such good advice is not confined to local authorities; we must all expect to make savings. Government Departments are being asked to do it and private business understands the necessity of cutting costs while producing high-quality goods and services.

When considering local government finance, the really important question is: what do council taxpayers want? The answer is simple--they want good, effective services at the most reasonable cost possible. We have heard today from the Audit Commission's report, "Paying the Piper", which clearly highlights areas where local authorities can make further efficiency savings. The Audit Commission saw scope for councils to target their resources more efficiently and to increase staff productivity. It also pointed to the benefits of local pay management. That should be a model for all boroughs. For some 15 years, I was an inhabitant and ratepayer of the London borough of Hackney. When it comes to Hackney, I know what I am talking about. I was part of a minority in Hackney: I was one of the few people who paid domestic rates. Since being elected as a Member of Parliament for the royal borough of Windsor and Maidenhead I have, very sensibly, taken up residence there.

However, the brief journey from east London to east Berkshire has been more than just a change of address; it has been an education in local government at its worst and at its best. It is highly relevant to the local government finance report because in both cases it is our money that is being spent.

When I saw Mr. McKinstry's article in The Spectator , it was like returning to Hackney. He said:

"The hallmarks for which Labour local authorities have become renowned"--


"accusations of racism, whining social workers, massive procedural delays, and rumours of corruption . . . Waste, bureaucracy and political correctness characterise too much of their work". Those are the words of a former Labour party supporter. Fortunately, that is not the case in Windsor and Maidenhead, where there is a long history of responsible management.

The royal borough of Windsor and Maidenhead is a tightly run ship. Therefore, it is perhaps no surprise that it has done reasonably well in this year's settlement. In the settlement just announced, the royal borough has been given a 2.83 per cent. increase on 1994-95 funding levels. I am grateful to my right hon. Friend the Secretary of State for what will be seen as a reasonable outcome.

The royal borough makes its case to the Department of the Environment with reasoned argument. Last year, the royal borough made a case to the Secretary of State about three main issues and I joined the council in pressing its case: first, it raised the matter of the all ages social index; secondly, we thought that the figures which were used in the standard spending assessment calculations understated the population; and, thirdly, we argued that it was unfair that there was no allowance for day tourism.

I am glad to say that some relief was given in respect of each of those three factors. First, the social index factor was split in two, which helped to a small degree;

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secondly, a more realistic population figure, based on the 1991 census, was used; and, thirdly, a new day tourist factor was included.

In this year's settlement, a further significant increase of slightly more than 1 per cent. has been applied in the population figure which is used to calculate SSA. That is good news for Windsor and Maidenhead. However, other changes made in the previous year continue to affect the royal borough.

The third factor recognises the impact that day tourism has upon towns which attract many day visitors and it applies to the town of Windsor in my constituency. In leading for the Opposition this afternoon, the hon. Member for Holborn and St. Pancras (Mr. Dobson) lumped Windsor with some very distinguished towns as though it were one of the very wealthy shire county towns. It is not.

If the hon. Gentleman had allowed me to intervene, I would have informed him that, not so long ago, Windsor had a Labour mayor. I am very distressed that the Labour party is no longer so well organised in Windsor, because I am keen to encourage a higher Labour vote there.

Windsor is not one of the super wealthy towns of the Thames valley, and Engels would have been familiar with many of its housing terraces. Its housing stock is not dissimilar to the old housing stock in Hackney. Many people who lived in Windsor when the houses were built in the last century worked at the castle and there is surprisingly little housing of a substantial size.

Windsor is a complex town. It is dominated by its magnificent castle, which was begun by William the Conqueror and is now known throughout the world. The castle gives Windsor a wealthy and cosmopolitan image, but that is not the reality.

Hon. Members may recall the disastrous fire which occurred in the castle a few years ago. I am pleased to report that considerable progress has been made in restoring the basic fabric of the affected part of the building and plans for the interior rebuilding and redesign were published last week. I am also pleased to say that the number of visitors to the town and to the castle has held up well. Some people feared that the fire would lead to such adverse publicity that tourists would stay away. Fortunately, that has not happened. That is a good thing, because many people in and around Windsor earn their living, one way or another, from the castle.

Away from the castle, down our main shopping street--

Mr. Olner: How much council tax is paid by the occupants of Windsor castle?

Mr. Trend: I make it a point of principle never to discuss the affairs of the people who live in the castle.

A little way down our main shopping street, Peascod street, there is a thriving town in its own right which, like all towns in the Thames valley, has had to fight hard to retain the loyalty of local shoppers. That is the Windsor which most of my constituents know and it does not sit easily beside the tourist town up the hill. My constituents know that, as council tax payers, they bear many of the costs associated with the daily influx of tourists. It is sometimes difficult to move along the pavements of the high street outside the castle in the high tourist season because of the procession of visitors. A mother with a pram may not be able to push her children down one of the main roads in the town because of the

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mass of tourists, some of whose associated costs she also meets. I was therefore very glad when the Government recognised in last year's settlement the problems that day tourism can cause.

8.38 pm

Mr. Paddy Tipping (Sherwood): In the hothouse atmosphere earlier this afternoon, it was difficult to follow what the Secretary of State was saying. Let me try to paraphrase it. This has been a tough and tight financial settlement. Public expenditure has to be kept control of, and local authorities must share the pain--and by the way, they have to be more efficient. That was the gist of what he said. A number of hon. Members have today attacked local authorities in a fairly vicious way. I would therefore like to record the fact that, in recent years, local authorities have worked hard to make efficiency savings. They have implemented information technology; they have slimmed down management. Resources have moved from county halls to schools. The hon. Member for Scarborough (Mr. Sykes) talked about land sales. Nottinghamshire county council aims to sell £8 million-worth of land each year to support its budget.

Local councils, I believe, are becoming ever more efficient. That is also the view of the Audit Commission. Its reports of seven years ago said that savings of £541 million could be made. Today they are being made by local authorities. They are taking stock, and they are making the necessary changes. Ultimately, efficiency savings run out; one day, the pips will really squeak. Such savings are not endless. We should also take a look at central Government, whose overall public spending has risen by 3.3 per cent. Next year, the Department for Education will have an increase of 4.1 per cent.; MAFF will have an increase of 13.5 per cent. So the pain is not being shared evenly.

What can be done to remedy the problem? We could look first at the hideous local government review. Fifty million pounds has been top-sliced off this settlement for that review. We do not know what its final costs will be. We are told that the transitional costs in Cleveland may be between £13 million and £18 million--that is what the Local Government Commission estimates. The bids coming in from councils in the area amount to about £30 million.

What will happen in the next financial year, 1996-97? How much will be top- sliced then: £150 million, or £200 million? No one knows, because the Department of the Environment has not taken the time to study what the costs of the review may turn out to be. It is a leap in the dark, and I predict that, by the end of the process, very few savings will emerge.

Secondly, we might look at capping. When it was introduced 10 years ago, it was designed to get the dirty dozen--the handful of difficult councils--but now it is universal; 85 per cent. of councils' grant now comes from central Government. The element of local discretion no longer exists.

I am astonished to find that Nottinghamshire county council has been given a capping increase of 0.5 per cent. The new police authorities are getting a capping increase of 4.9 per cent.; the inner London boroughs one of 3.2

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per cent. If it is good enough for people in Brixton, Lambeth and Westminster, the increase should be good enough for my people in Blidworth, Lowdham and Walesby. Why cannot the Government stand by one set of caps for the whole country?

As I said, the London boroughs are being given an increase of 3.2 per cent. Applied generally, that would release £600 million for local authorities, and some of the real problems that local councils face would disappear forthwith. There would be no cuts in social services and few in education.

We also need to focus on the area cost adjustment system, which other hon. Members have already highlighted. When I met the Minister of State earlier this year, I was pleased to hear him say that research into this matter would be carried out. I should like him to consult widely in the course of that research. I am not sure whether looking at travel-to-work areas will help. The research must focus on real costs, not notional costs. If councils do not pay more, they should not receive extra grant. The system should be fair and transparent.

Bills in Nottinghamshire are set to rise by £30, or 6 per cent. People there will pay more for less after 1 April. There will be real cuts in education. The county council intends to spend £373 million next year, against an SSA of £347 million--a spending above SSA of £26 million, or 7.5 per cent. But there are going to be cuts. As many as 300 teachers will lose their jobs.

Abbey Gates primary school in Nottinghamshire, an excellent school, is a case in point. The chairman of the governors wrote to me to say:

"We find ourselves unable to set a budget which is both legal and responsible, financially and educationally sound".

He is going to lose three teachers. The children will suffer, and class sizes will increase. That is what Ministers call a tight and tough settlement. In fact, it is a double whammy: people pay more for less.

This is an unjust settlement, and we must throw it out.

8.44 pm

Mr. Henry Bellingham (Norfolk, North-West): The hon. Member for Sherwood (Mr. Tipping) said that he did not agree with the settlement, but he and other Labour Members ought to look at the waste over which some Labour-controlled councils have presided for 10 years or so--debt, rent arrears, non-collection of council tax and so on. It is staggering to think that those authorities built up empires of extra staff and, at every turn, blamed the Government.

If Norfolk had behaved like them--overspending year in, year out--it would not, ironically, be suffering from some of its current difficulties, because it would have a higher spending base. There is something inherently unfair in a system that allows that to happen. One has to try to put this year's settlement into the wider context of the economy. My hon. Friend the Member for Windsor and Maidenhead (Mr. Trend) did exactly that. This settlement is very different from those of previous years, because of the Chancellor's decisions at the time of the public expenditure survey round. If he had not been tough on public expenditure, the successful and satisfactory course of the economy recently would not have been maintained.

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My right hon. and learned Friend would not have been able to sustain the confidence that has allowed businesses, especially in my part of the world, to say that they are more optimistic now than they have been for many years. That is because world markets have confidence in our Chancellor's economic management and fiscal and monetary policy.

I do not see how the Chancellor could possibly have ignored the sector that takes up one quarter of total public expenditure. Those who say that cuts in Government Departments must be made, and that some fat remains on various bones, cannot simultaneously claim that local government must be immune. So this is a tough settlement, and a difficult settlement for Norfolk, which will find life extremely hard over the next few months while implementing the cuts that will have to be made in some areas.

I did not agree with everything that my hon. Friend the Member for Great Yarmouth (Mr. Carttiss) said a moment ago, but it does seem strange that, while the overall settlement for local authorities has risen by 2.2 per cent., Norfolk's increase amounts to 0.5 per cent. I cannot see how that stacks up.

Many people in Norfolk are worried about the area cost adjustment, which the hon. Member for Sherwood discussed. Area cost adjustment bears down unfairly on shire counties such as Norfolk. Norfolk is an extremely pleasant place in which to teach in a school or to work, but, as a result, many of the staff working for the local education authority in particular are at the higher end of the age spectrum, and hence more expensive. As a result, we have lost about £10 million owing to the pernicious way in which the area cost adjustment works. Only a few days ago, the Minister met a delegation from Norfolk. I know that he gave its members a fair hearing, listened to everything they said and considered their points about the area cost adjustment. I hope that he will be able to revisit the subject. I do not want to leave him in any doubt about how difficult things are going to be for Norfolk.

At the same time, I believe that Norfolk county council will be able to get through the year. Like many of my hon. Friends, I have received many letters from constituents, schools, parish councils and voluntary organisations. Many different bodies are extremely concerned that the education committee will have to save £1.6 million.

The cost of the teachers' pay settlement will be well in excess of 0.5 per cent. The education committee will have to bridge the gap. It will do so to some extent by cutting planned spending on non-school budgets by £3.9 million and transferring £2 million directly to schools to help them to meet the cost of rising pupil numbers. The education committee will also reduce the planned nursery programme. There will not be a cut, but there will be a reduction in the committee's plans. There will have to be savings in the expenditure on school meals through contracting out and by increasing the charge by about 10 per cent., from £1.05 to £1.15.

These savings are sustainable and I can live with them. At the same time, however, the county council will have to rationalise bus routes, which will save about £100,000. That could have been done before, and it can be done now. There are proposed social services savings of £2.1 million. Quite a large part of those savings will have to come through higher charges, which will raise about £1.2

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million. My hon. Friend the Minister will be interested to know that nearly £500,000 will be saved by leasing vehicles.

There will be some growth within the social services budget. An increase of 2.5 per cent. in the spending on home care will amount to £120,000. An extra £25,000 will be made available for the cost of foster-care places. There will be other improvements in the social services plans for the county.

The proposed savings in respect of planning and transportation amount to about £2.4 million. A considerable sum will be saved in departmental running costs--about £70,000. I am sure that my hon. Friend the Minister will welcome that. About £240,000 will be saved in the transfer of the waste regulation function.

I have given examples of what Norfolk county council is doing. Its officers are working extremely hard to find savings. They have examined rationalisation and greater efficiency and produced sensible ideas. I am aware, however, that there will be difficulties for schools, social services and other organisations that are backed, to some extent, by the county council.

In the context of a tough public expenditure round, I think that Norfolk Members will grit their teeth and live with what is proposed, because they support the Government's wider economic policy. On the other hand, they look to the Minister and the Secretary of State to understand that Norfolk is making sacrifices because of economic conditions in the hope that its case will be listened to in future. We hope also that next year Ministers will realise that there will be nothing further to cut, because everything has already been cut to the bone. I leave the Minister with that thought. I hope that he will take on board everything that I and others have said.

8.52 pm

Mr. Tony Banks (Newham, North-West): I understand that I have seven minutes in which to speak.

It is a bit rich for the hon. Member for Norfolk, North-West (Mr. Bellingham), living in his Norfolk castle, surrounded by his servants and champagne and shooting small furry creatures, to lecture local authorities, especially in areas such as the one that I represent, about the need to secure further savings. He continues to lecture them on their inability to deliver services. The hon. Gentleman should experience the problems that we have in the east end of London. I can only say, having listened to his litany, that we dream of having problems like that in the east end.

One of the features of the debate throughout has been the way in which Tories have been running scared of Liberals in the west country. It has been quite a lesson. To paraphrase some great words of Winston Churchill, never before have so many underpants been filled so often by so many.

It seems that no one really understands local authority finances these days. The formulae are complicated, arcane and, at times, semi-lunatic. Unfortunately, the debate will be given little coverage on the television and in the media generally. That is because journalists, especially, do not regard debates on revenue support grant as sexy. They are wrong, of course, because of the significance of the debate for every man, woman and child. From nursery schools

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to residential homes for the elderly, everything is affected by the terms of the settlement that we are discussing. All that provision will be seriously affected.

There was a time when central Government exercised little touch and only light control on local government affairs. It is now a hands-on approach. Unfortunately, the hands are effectively on the throat of local government. There is far too much interference, even now, by central Government in local government affairs. I accept that ministerial attitudes have improved since the rabid days of some years back, but there is still too much of a tendency for Conservative Members to perceive local authorities as enemies of the state and of democracy.

Local democracy and accountability have been almost fatally undermined by the persistent actions of Conservative Governments. We must remove the shackles from local authorities and allow democratically elected councillors to get on with the job for which they were elected by local people, which is to run local services for local people. They should be accountable to local people through the ballot box.

We all have our own whinges, because this is a whingeing debate. I shall have my whinge on behalf of Newham, but I acknowledge--I always want to seem to be fair to Ministers--that Newham has received considerable additional funding over the past couple of years from the Government and the European Union. City challenge at Stratford has objective 2 status, we have assisted area status, and we have received considerable sums from the single regeneration budget. I am grateful, as are all my hon. Friends from Newham, who are in their places.

Newham deserves what it has received because it is an area of acute deprivation. It is top of the poverty league, which is one league from which I would like to see Newham relegated at the first possible opportunity. Despite the Government acknowledging that Newham has problems, they have said in the House that it stands to lose an additional £20 million over the next three years as a result of standard spending assessment and rate support grant settlement. A way out from Newham's point of view would be to include it as an inner London borough for financial purposes. Newham, Tower Hamlets and Hackney comprise the most deprived sub- region in the country. It is ridiculous that two of the boroughs are classified as inner London while Newham is outer London. That situation is based on historic administrative reasons, not on a financial regime.

As a group, led by my hon. Friend the Member for Newham, South (Mr. Spearing), I and my hon. Friend the Member for Newham, North-East (Mr. Timms), with council officers and others, have asked Ministers for inner London status for Newham. I hope that our case will be considered favourably. I know that there will be problems with some Labour inner London boroughs, and we shall have to face them ourselves. We shall do so by arguing our case, as my hon. Friend the Member for Newham, South has said, on the basis of merit. We are more than prepared to argue with our colleagues.

We are definitely disadvantaged in Newham by the needs indices in the SSA formula. Ministers should take that on board. Newham is ninth in the social index and in

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10th position in the new economic index. When it comes to the urban conditions index, Newham is in first place. That index should be included in the SSA formula. Specific consideration should be given to homelessness in Newham. It is an incredibly pressing problem. All hon. Members have said that we are faced with a tight settlement. More than that, it is a strangulation of a settlement. We are being pushed to the limits in Newham. The Government must recognise our case. The Minister should understand that the three Newham Members hunt in a pack. We shall be hunting at ministerial doors in the years to come.

8.59 pm

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