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with that. The important point is that the funds follow the areas of greatest need. They do that above all to the inner cities, and to the inner-city areas of London, most of which are Labour controlled.

Dame Elaine Kellett-Bowman: Three and a half minutes ago, my hon. Friend said that there were two options. That is not the case. The third option is that counties like Lancashire should become more efficient and shed the staff they should not have. Lancashire has one member of staff for every 17 teachers. That is manifestly excessive. That is the third option which no Labour-controlled councils choose to take.

Mr. Curry: I am grateful to my hon. Friend for pointing that out to me.

I wanted to explore the point a little further. If we consider the SSA per head in terms of political control, in inner London we find that the Conservatives receive £1,030 while Labour receives £1,189. In outer London, the Conservatives receive £663 and Labour receives £856, and in the shires, the Conservatives receive £87 while Labour receives £106.

Several hon. Members rose --

Mr. Curry: If that is fiddling, I have not done a very good job, and Labour councils are the ones that will benefit. I give way.

Mr. Deputy Speaker (Mr. Michael Morris): Order. I would be most grateful if the Minister would say to which hon. Member he is giving way.

Mr. Curry: With my customary generosity, I give way to the hon. Member for Coventry, North-East (Mr. Ainsworth), who is showing the most agitation.

Mr. Robert Ainsworth: The Minister selectively quoted the Audit Commission's evidence to the Select Committee. Does he recall that the Audit Commission actually proposed open ministerial decisions on the allocation of funds? It was questioned by Conservative Members, who asked, "Aren't you advocating a slush fund?" The reply was, "Is that not, in effect, what happens now?" Does the Minister recall that that evidence was given by the Audit Commission to the Select Committee?

Mr. Curry: Absolutely not. It is an open system. It is discussed with local authority associations. None of it is done by mad alchemists behind closed doors in the Department of the Environment. It is discussed fully and openly.

Several hon. Members rose --

Mr. Curry: I wish to make some important points.

I make my next point with particular emphasis so that the Opposition understand it. The characteristics in the method which give support to Westminster are precisely the same characteristics which benefit Camden, Lambeth, Hackney and the other inner-city Labour authorities. If the Labour party thinks that it will get hold of a system and try to distort it to disadvantage Westminster, the first to suffer will be inner-city Labour authorities with the same characteristics.

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I shall do something unusual and pay a mild tribute to Lambeth. It has at last freed itself from the scandal of Labour control and it is actually trying to make efforts to pull itself around. It recently appointed a new chief executive, Miss Rabbatts. She is paid more than the Prime Minister, but she will have to earn every penny of it. The Liberal Democrats have been running a campaign. The right hon. Member for Yeovil (Mr. Ashdown) was good enough to pop into the Chamber for a brief 15 seconds or so. He has been inviting all my hon. Friends to subscribe to a revolt of the west country. I have no doubt that the right hon. Gentleman's letter arrived on the desks of all the news editors before it arrived in my hon. Friends' postbags.

Mr. Mark Robinson: I confirm that the letter did arrive on the desks of news editors before it arrived on our desks. My hon. Friend is absolutely right.

Mr. Don Foster rose --

Mr. Curry: The hon. Member for Bath (Mr. Foster) does not know the difference between a slogan and an argument.

Mr. Don Foster: Conservative Members have made criticisms in the absence of my right hon. Friend the Member for Yeovil (Mr. Ashdown). The Minister and other hon. Members might wish to know that, in his capacity as leader of my party, my right hon. Friend has been involved in the developing situation in Northern Ireland, which has led to a ministerial statement, and the House has benefited from cross-party discussions on that matter.

Mr. Curry: The right hon. Member for Yeovil issued a call to arms in his letter, saying, "I hope that everybody will be there and vote on and discuss the issue." He has not done that. The Liberal Democrats wish to abolish capping--at least we know where they are coming from--and the area cost adjustment. I hope that they know what the consequences of that would be for some inner-city authorities, irrespective of what political control they are under, in terms of the impact on some of the most deprived people in the country. Two subjects are of great importance, and I wish to refer to them briefly. On capping, there is genuine debate about the balance between central and local government funding. I acknowledge that there should be such a debate. However, as the hon. Member for Stretford (Mr. Lloyd) said, local government spends 25 per cent. of public expenditure, and any Government must exercise ultimate control over that. A 1 per cent. relaxation of capping for education authorities would add £200 million to the public expenditure totals. Equally, I am sensitive to the arguments about local accountability and the wish of people to differentiate themselves financially in order to differentiate themselves at the ballot box. We are specifically addressing that matter, and we have put before local authorities a series of suggestions under the private finance initiative which would allow local authorities to use their capital receipts in a better way. We have invited them to establish joint companies with the private sector, and to do that within the compass of central financial controls. We are hoping also to extend that into housing. That is the way to target

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and mobilise all the community's resources to tackle problems, particularly deprivation, about which we are all concerned. Methodology is always central to debates such as this, and I should like to deal with the area cost adjustment. I have said in previous years that the system is robust. I said last year that we needed to improve the methodology in the south-east, and we have done so. I also said that I would investigate whether we could find something that gave us what we needed to know, better.

I have told local authority associations that we are exploring whether we can apply a travel-to-work test to the whole country. We are having discussions with the Department of Employment about the necessary data. We are tendering urgently for research projects which would help us to hammer out a methodology. The system would have to work, and it would have to deliver what we need.

I cannot promise--I shall not give an impression to the House which could mislead it--that the system would be as robust as the present one, but I guarantee that we will pursue it with great energy to see whether it delivers more effectively. If it does, it will become part of a methodology in which we have consistently incorporated improvements.

Mr. Olner: What the Minister has just said will give some local authorities comfort. May I press him a little further? Will he tell counties such as Warwickshire that he will increase the cap this year to allow them to get out of their difficulties? That would be well received.

Mr. Curry: I shall return to the issue of capping in a moment, but the hon. Gentleman will know that we are determined to control public expenditure. We have not reached conclusions on the capping limits for this year, and they are still provisional limits. The hon. Gentleman must appreciate the constraints on public expenditure.

Mr. McLoughlin: My hon. Friend's announcement will be well regarded in those areas which are looking for a change in the system. How long will the research take, and when will my hon. Friend be able to publish its conclusions?

Mr. Curry: My hon. Friend will know that the sub-group in the working party with local authorities on SSAs will get into the final stages of any new system at the beginning of the autumn. Therefore, we would need that work to be sufficiently completed and subject to analysis from local authorities and ourselves by the time the House came back after the summer recess. That is the sort of time scale at which we are looking.

Mr. Michael Alison (Selby): My hon. Friend the Minister has the great advantage of being one of the relatively few hon. Members who knows that the sparsity factor refers not to the scarcity of hair on the heads of Yorkshiremen but to the superabundance of acres in Yorkshire in relation to population--not least areas such as Skipton and Ripon. Is my hon. Friend aware that North Yorkshire is very worried that the sparsity factor is not given sufficient weight in the methodology, particularly in relation to the fire service and the police? Could he possibly press for improvements in the methodology relating to sparsity?

Mr. Curry: It is difficult to judge the right weighting for sparsity. Although local authority associations,

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particularly the Association of County Councils, complain about the existing weighting, they have not yet come up with a better idea. If they do, it will be examined rigorously and honestly.

This year, we shall continue work on the police SSA because we must move to a system that fully reflects the characteristics of each area rather than establishment numbers. We have additional work to do on fire SSAs, as I have always made clear. We have introduced a factor for the problems of coastal areas. [Interruption.] I am delighted to add my welcome to the enthusiasm which the right hon. Member for Yeovil has clearly evoked in the House.

We are also looking at how best to tackle the problem with regard to fire, because the pension scheme has a perverse incentive that, after 26 and a half years' service, people take early retirement through ill health and go immediately on to a full indexed pension. People recognise that that system creates problems. In the past, fire authorities may have been over- complacent--and complaisant--in conniving with that, and we must address the issue. We are trying to deal with it through the SSA methodology.

We shall look at the children's social services because we need better- quality information. The Department of Health expects to commission research to permit a reform, probably for two years from now, because it is a complex matter.

We shall also look at highways maintenance.

Mr. Richard Burden (Birmingham, Northfield): Will the Minister give way?

Mr. Curry: No, I have very little time and a lot more ground still to cover.

We are also looking at the homelessness indicator in the SSAs. That is relevant not merely to the SSAs but to capital financing of the housing programme. It is important to have a robust methodology relevant to both those considerations.

That is not an exclusive list. Local authorities will want us to discuss other matters, which we always try to do in agreement with them.

The settlement must be seen in context. The Government must take account of the fact that local authorities spend 25 per cent. of all public expenditure. Typical budgets are: £620 million in Devon; £920 million in Hampshire; and £940 million in Lancashire. For big cities like Birmingham a typical budget is about £900 million, while the budget for Manchester is £430 million and, for Leeds, £500 million. We do not tell local authorities how to spend that money. It is the heart of the system that it is not hypothecated; they make their own decisions and allocate priorities. Nothing in our settlement compels people to penalise teachers. It is entirely up to them to decide where to allocate priorities, which is what local democracy is about and what local councillors are elected to do. The efficient councils will cope, inefficient ones will blame the Government and middling ones will probably try both. That has been the pattern in the past. Councils can help themselves by looking at arrears in council tax collection and at whether they apply competitive tendering properly. They must put their own house in order. I acknowledge the fact that they have made progress. Many good authorities have come to grips

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with working properly and work in collaboration with the private sector to make life better for their communities. We must push that process much further.

We still need to know how much a Labour Government would spend, how much the council tax would go up, what would happen when they got rid of compulsory competitive tendering and what would happen when they put Unison back in control of the councils. All we have heard is the bizarre idea that we should send in the Audit Commission, not merely to go to high-spending councils but, according to the Opposition's remarkable new philosophy-- Dobson's dictum--to attack councils that set low council taxes, because that is now undesirable. I can think of nothing dafter than to send in the Audit Commission to check councils because they are spending less taxpayers' money rather than more--thou shalt not set a low council tax. That is a funny way to run local authorities.

We know who the high spenders and municipal malingerers are. They are all Labour party local authorities. It is the old, eternal list of councils that are not making an effort, and that list must be sorted out. Labour's inefficiency is a tax on deprivation, a tax on the poor and a tax on those who are in greatest need. A half-baked, uncosted, knee-jerk solution will be a disaster for ordinary people who most need the services that local government provides. I urge hon. Members to have no truck with the Labour party's policy and to support us in the Lobby tonight.

Question put :--

The House divided : Ayes 290, Noes 257.

Division No. 61] [10.00 pm


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Ainsworth, Peter (East Surrey)

Aitken, Rt Hon Jonathan

Alison, Rt Hon Michael (Selby)

Allason, Rupert (Torbay)

Amess, David

Ancram, Michael

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas (Hazel Grv)

Ashby, David

Aspinwall, Jack

Atkins, Robert

Atkinson, Peter (Hexham)

Baker, Rt Hon Kenneth (Mole V)

Baker, Nicholas (North Dorset)

Baldry, Tony

Banks, Matthew (Southport)

Banks, Robert (Harrogate)

Bates, Michael

Batiste, Spencer

Bellingham, Henry

Bendall, Vivian

Beresford, Sir Paul

Booth, Hartley

Boswell, Tim

Bottomley, Peter (Eltham)

Bottomley, Rt Hon Virginia

Bowis, John

Boyson, Rt Hon Sir Rhodes

Brandreth, Gyles

Brazier, Julian

Bright, Sir Graham

Brooke, Rt Hon Peter

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Brown, M (Brigg & Cl'thorpes)

Browning, Mrs Angela

Bruce, Ian (Dorset)

Burns, Simon

Burt, Alistair

Butcher, John

Butler, Peter

Butterfill, John

Carlisle, John (Luton North)

Carlisle, Sir Kenneth (Lincoln)

Carrington, Matthew

Cash, William

Channon, Rt Hon Paul

Churchill, Mr

Clappison, James

Clark, Dr Michael (Rochford)

Clarke, Rt Hon Kenneth (Ru'clif)

Clifton-Brown, Geoffrey

Coe, Sebastian

Colvin, Michael

Congdon, David

Conway, Derek

Coombs, Anthony (Wyre For'st)

Coombs, Simon (Swindon)

Cope, Rt Hon Sir John

Cormack, Sir Patrick

Couchman, James

Cran, James

Currie, Mrs Edwina (S D'by'ire)

Curry, David (Skipton & Ripon)

Davies, Quentin (Stamford)

Day, Stephen

Deva, Nirj Joseph

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