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Somerset. The difference is that the Somerset Tories were not prepared to wear it and in Devon the Tory Members saw the cap and put it on.What about cross-party co-operation in Devon? The offer was there--the hon. Member for Teignbridge (Mr. Nicholls) is back with us. Tory councillors had the offer of joining the process of setting the budget, but they came into the budget meeting at the very last minute with what I can describe only as a back-of-an-envelope calculation, saying that the council could cut £1 million here, £1 million there and £2 million elsewhere.
Mr. Nicholls: Will the hon. Gentleman give way?
Mr. Jamieson: I am not giving way to the hon. Gentleman. He has spoken already and we have just a few minutes. He said that money should be cut from highways, from social services and from the matching European money. If the money had been cut from the 5a and 5h funds, we would have lost a further £1 million from European funding. A cross-party delegation had a meeting with the Under-Secretary of State for the Environment. The hon. Member for North Devon (Mr. Tyler) was there, so were Liberal Democrat and Labour councillors, but no Tory councillors or Tory Members were present.
Mr. Nicholls rose --
Mr. Jamieson: Had the hon. Member for Teignbridge been there, he would have heard powerful arguments put by Geoff Rees of the Devon Association of Secondary Heads and Eric Howard of the Devon Association of Primary Teachers as to why the cap needed to be raised this year.
Mr. Nicholls rose --
Mr. Jamieson: What has been the response of the Tory Members and the hon. Member for Teignbridge, who is trying to intervene? It has been a catalogue of confusion, contradiction and misinformation, surpassed only by the Secretary of State for the Environment this evening.
In a debate earlier this year and earlier today, the hon. Member for Teignbridge said that Devon had taken on another 718 staff this year. He omitted to say, however, that most of that staff were taken on by schools because they had extra numbers to fill. Many of them were taken on to meet the statutory obligations that Devon has for care in the community. That is where the extra people came from. Tonight the matter is in the hands of Tory Members. Their vote could overthrow the cuts. A vote in the Lobby tonight could affect every budget in every school in the constituencies. Tory Members in Devon have been speaking in their own region in one way--
Madam Deputy Speaker (Dame Janet Fookes): Order. I am sorry but the hon. Gentleman has had his time.
6.30 pm
Mr. Clive Betts (Sheffield, Attercliffe): Last year in this Chamber, Sheffield was the only authority on which an order was placed and the Minister for Local Government, Housing and Urban Generation was at least partially helpful in raising the cap by £3 million. This year the city has had a lower cap set in real terms than last
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year and the Government have given us no leeway. When I challenged the Secretary of State for the Environment earlier, all he could say was that that was due to problems of financing, which were Sheffield's own problem and which were caused by the high cost of borrowing in the past. He knows, however, that for the building of our facilities in Sheffield, which are used by hundreds of thousands of people annually, we had a good financial deal in place and that was undermined by the Allerdale judgment--a court case that was in no way related to the local authority.Last year, we explained that position to Ministers and they accepted that the authority needed time until the court case was resolved to refinance those facilities. They therefore lifted the capping limit. I went to a meeting with the Minister for Local Government, Housing and Urban Regeneration along with colleagues from Sheffield city council a few weeks ago. The city treasurer explained to the Minister that as a result of the court case, he could not guarantee that the money from refinancing would be available for the authority to spend this year.
For the Secretary of State to say that the city would have £20 million extra this year, so it did not need to have its capping limit raised, was simply not correct. It is not what the city treasurer advised Ministers. It is not the case. For the Secretary of State to base a judgment on that fallacious information was extremely unfortunate. I hope that the Minister will correct it in his reply to the debate.
Sheffield is a low-spending authority. We have a standard spending assessment which is lower than the metropolitan average. We have expenditure of £747 per head. That is lower than the expenditure in cities of a similar size. We have a record of extremely good management in local government. That is the judgment of other people in local government, which I prefer to accept rather than that of Ministers.
In the early 1990s, in a poll of people in local government Sheffield came out as one of the best managed authorities. We have always had good reports from the district auditor. We invented and used cash limits before the Government had thought about them. We entered into partnership schemes with the private sector when Ministers were advising the private sector not to enter into them. We have always concentrated our expenditure on front-line services. That is why this year the council has done its best to protect education and social services. That protection will not be possible to sustain if the capping limit is not raised.
In the report "Paying the Piper" published by the Audit Commission, Sheffield came out second of all local authorities for the reductions that it had made in bureaucracy, administration and overheads, not merely in the past couple of years but since the mid-1980s. Indeed, since 1987 the city has cut 7,500 jobs. Some of those savings were beneficial in the sense that they brought about reductions in the costs of refuse collection. Yet we still have an excellent service. The cuts could be supported. I was not proud to be involved in other savings because they reduced local services to local people, contrary to the wishes of local electors expressed in local elections. Sheffield has particular problems. The hon. Member for Sheffield, Hallam (Sir I. Patnick) rightly referred to the cost of the supertram, which will also affect Barnsley, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) has explained. The funding of
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the supertram is absolute nonsense. The supertram is funded by central Government. The more that the Government spend, the less the council can spend on education and the lower the council tax is. That is crazy. I have to explain to people that their council tax goes down because of the funding of the tram that they can see running down the streets. That is a stupidity which even Ministers would find hard to explain to the electorate of Sheffield. I have certainly tried and failed. People look at me in blank amazement when I attempt to explain.Let us take Sheffield's SSA for highways. When the streets were being dug up for the supertram, the Government left the monitors which count traffic flow in the same position. Of course, the monitors could not count any traffic because there was not any. That has cost the city council £800,000 in grant this year. That is a stupidity and Ministers know it. I have written to them three times and they have refused to do anything about it. They should be ashamed of a system which enables that to happen.
It is equally stupid that we are here today in the Chamber arguing about traffic counting and the detail of the financing of the supertram in Sheffield. It is nonsense that in a debate of less than three hours hon. Members will second-guess the views of hundreds of elected local councils throughout the country and the thousands of electors who went out to vote for them and substitute their views for local people's views.
I agree with the comments that were made by the right hon. Member for Shropshire, North (Mr. Biffen) at the beginning of the debate. The capping orders are a nonsense. They fundamentally undermine the democratic systems of Britain; they undermine local democracy; they bring into question the validity of local elections; they discourage people of quality and ability from standing for local government and remaining in it. That is something we try to avoid.
We are not debating capping only of the authorities in the capping orders. Everyone knows that the majority of other councils have set their budget within 1 per cent. of the capping limit that they have been given. It is effectively blanket capping of every local authority that we are debating.
Conservative Members said that the Audit Commission had examined the SSA system and given it a clean bill of health. That was not correct. The Audit Commission expressed many doubts about the SSA system. It said firmly that the system was for distributing grant between authorities, not for restricting expenditure and imposing caps. The Audit Commission has been clear in its opposition to the use of the SSA system in that way.
Nor are we talking about central Government expenditure tonight. The cap does not reduce central Government expenditure. All that it does is prevent the people of Sheffield, Barnsley, Newcastle, Norwich, Shropshire, Devon and all the other authorities from saying that they want to spend a little more of their council tax on local services, which are of benefit to them. For those reasons, I feel resentful this evening that Members of Parliament who do not live in my city and do not represent it will vote to impose the order and impose cuts on my constituents and the people of my city, who will have to suffer those cuts even though they did
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not vote for them and do not want them. That is undemocratic. It is time that we got rid of this unjust and unfair system once and for all.6.45 pm
Mr. Eric Illsley (Barnsley, Central): This has been a pitifully short debate, given the importance of the order to local government and in particular to those who will lose their job as a result of the vote. The debate has served to highlight yet again the Government's absolute control over local authority spending and their denial of local accountability and democracy. That denial of local accountability was brought into sharp focus on 5 May when the Conservative party was overwhelmingly rejected in the local elections. Yet the Government still come here today with a capping order which is against the wishes of both the electorate and a majority of the Members of Parliament who have spoken this evening. The Government have no effective mandate for local government. Their policies have been rejected by an electorate who are sick and tired of cut after cut in local services and who are incensed at the cuts which are being imposed on education and social services, with the consequent sackings of teachers, increases in class sizes and closures of day centres and social services facilities. The Secretary of State has no support anywhere for his capping proposals, which are discredited, undemocratic and unacceptable.
The capping powers have been debated on several occasions. As I have been allowed only seven minutes to reply to the debate, I do not intend to rehearse the arguments today. I maintain that the capping powers are discredited and ridiculed. They create unaccountability time and time again. The Government have refused to allow democratically elected councils to put their budgets to the electorate. It is time that the Government lived up to the press speculation and announced the abolition of capping, which has been flagged up. As we know from the hon. Member for Rugby and Kenilworth (Mr. Pawsey), the aim of that might be to allow local authorities to increase their spending so that Conservative Members can say, "We told you so." The Government know that the reverse is the case. Most of the authorities that we are debating this evening are responsible, prudent authorities which have set responsible budgets.
Capping has increased the centralised control of local government finance. Now, 80 per cent. of local government funding is controlled by central Government. We have universal capping. We are debating only seven authorities this evening because most of the other authorities spent to the level of their cap. Most authorities now regard the capping level as the level to which they should spend. The capping proposals are unfair. They are based on SSAs. I have spoken many times in the House on SSAs. They are a distortion of the needs of any local authority. The indicators are approximate. They are based on out-of-date information. They are discredited. They simply do not reflect need.
Last year, Barnsley was given a 7 per cent. increase in SSA, but then held at a spending level by capping. Even today, its capping level is only 0.5 per cent. above its SSA. The same problem applies to Newcastle. Its SSA gave it an extra £19 million of spending last year. It can spend only about £11 million of that. That is ridiculous.
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The financial settlement this year has been extremely harsh. Local authorities were capped at 0.5 per cent. above their 1994-95 base budget. We can compare that to previous years. Hon. Members have referred to capping proposals of 12.5 per cent. above the SSA. There is a significant difference now in that SSAs and the capping regime are being used simply to cut services from local government. Hon. Members from all parties have raised issues in relation to their own local authorities. I would like to emphasise one or two of the points that have been made and to make particular reference to the problems of the Supertram system, which affects Barnsley, my local authority, and Sheffield. Supertram displaces £1.3 million worth of Barnsley council services for a tram system which operates 20 miles away. How can that be fair? Barnsley has used up all its balances so it has reassessed its insurance cover and taken £700,000 from its insurance premiums to fund this year's settlement. The problems are not going to go away. Supertram will be there next year, as will the £10 million funding charges. Problems will recur and next year Barnsley will not be able to use balances or re-determine its insurance.Hon. Members who represent Gloucestershire have referred to problems experienced by their council. We have heard, however, that the council tax could have been set at the same level as last year if the Gloucestershire budget had been approved. We have heard that Gloucestershire will be subject to a judicial review as a consequence of the cuts that it has had to make in funding for community care. Again, Gloucestershire, like Barnsley and Sheffield, has been required to make millions of pounds worth of cuts in previous years. For this year, Gloucestershire has had to made budget reductions of £22 million, yet the demand for community care has increased by 40 per cent.--all at a time when the authority is being referred to the courts.
In Newcastle, education and social services will be affected. Yet, under the budget which was proposed by the Newcastle authority, the council tax could have been reduced by £43. There will be cuts in the number of teachers employed by Newcastle. The library service will be affected and there will be cuts in the youth service and the money available for special educational needs.
Why has Devon been capped as opposed to Somerset--because Somerset had a better case than Devon in the Minister's office? Is that a consequence of all-party support? Should Conservative Members who represent Devon have accompanied Labour Members who represent Devon to have achieved a relaxation of their capping criteria? Is that why Somerset was preferred to Devon? The implications for Devon were well set out by my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson). He referred to problems in education, teachers' jobs and increased class sizes. He pointed out that administration costs in Devon were quite low. Devon has been treated unfairly.
The points made about Shropshire by the right hon. Member for Shropshire, North (Mr. Biffen) were relevant. It has had £6 million cut from its budget. Sheffield has problems because of the funding of Supertram and faces an absolutely ludicrous traffic situation. My hon. Friend the Member for Norwich, South (Mr. Garrett) made the point that a large day-time population causes particular problems for that authority.
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I have made quite a rushed speech, but the main point, which, if anything, the Government should take on board, is that capping must be abolished.6.53 pm
The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): Obviously, in such a short time, I cannot answerthe detailed points raised in the debate, but I wish to answer some of the fundamental questions that have been asked. I shall start with the point that the hon. Member for Barnsley, Central (Mr. Illsley) has just made, which was also raised by my right hon. Friend the Member for Shropshire, North (Mr. Biffen), by my hon. Friends the Members for Ludlow (Mr. Gill) and for Rugby and Kenilworth (Mr. Pawsey) and by many other hon. Members: capping.
My right hon. Friend the Member for Shropshire, North said that it was at the heart of the debate, and he was right. We must be careful that we do not have that debate in too simplistic terms. There is sometimes a danger that the solution is seen as being a simple option. There is quite clearly an issue of the relationship between central and local government and the requirement of local decision-making; what one might call subsidiarity in its broader sense. My right hon. Friend mentioned Mr. Delors. If I may go a little further back, he would have been a Girondin rather than a Jacobin and I have no particular desire to play the Robespierre. There is also a second question--
Mr. Dobson: He was decapitated. He was guillotined. [Laughter.]
Mr. Curry: The hon. Gentleman forgets what he did before all that happened. That is what counts in politics, is it not? There is a second issue which we must address [Hon. Members:-- "He was capped."] No, that was de-capping, I believe. We must address a second issue seriously.
Any Government will always want to have in mind the economic consequences of expenditure which constitutes 25 per cent. of all public expenditure. It is quite legitimate to say, "Well, that does not matter. We can leave that entirely to local determination." If people want to say that, at least it is honest and reasonable, but I wonder whether Governments of any hue would not wish to have some mechanism by which, when economic circumstances required a particular form of management, they were able to bring that expenditure within their view. The argument must take place and we must be sure, when we have that argument, that we are confident that we want local decisions to take place.
Let me talk about a slightly perverse point. Opposition Members said that perhaps we could make local democracy function more effectively by introducing elections by thirds. Local government already has the ability to seek elections by thirds. The choice is with it. Do we, as part of a campaign to hand more responsibility to local government, impose on local government a particular mechanism of elections? There is a certain conundrum at the heart of that, which must be addressed. There is no point in doing something which is illiberal and, dirigiste, in the interests of a system that we regard as moving towards something which is more liberal.
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I have addressed that issue because it is at the heart of the debate. There is another issue at the heart of the debate- - Mr. Rendel indicated dissent .Mr. Curry: It is no good the hon. Gentleman shaking his head. It is at the heart of the debate.
If local authorities say, "The present situation is unacceptable because we are capped and cannot raise our money locally," they must be confident that if the circumstances change and they can raise what they need locally--we can argue about the way in which local consent could be obtained for that-- they do not immediately start using the Government as an alibi and say, "Of course, all this is happening not because it is what we positively want but because we have not been getting enough grant." There is no point in pretending. Those issues will arise, and there should be a mature and reflective debate on the whole subject.
Of course the area cost adjustment is a difficult issue, but it is not good enough simply to say, "Abolish it." There are differentials in the total cost of employing people, which have to be addressed across the spectrum of local government. The simple abolition of the adjustment would lead to utterly unmanageable changes in grant allocation throughout the system, not least in many of the local authorities run by the Opposition parties.
I believe that the hon. Member for Holborn and St. Pancras (Mr. Dobson) is being shortsighted and foolish in his constant derogatory commentary about the methods of distribution of Government grant. Whether he likes it or not, the method that delivers grant to Westminster is identical with that which delivers grant to many other local authorities, including Tower Hamlets and Hackney, which get more per capita than Westminster.
If the hon. Gentleman seeks to re-engineer that system specifically to do Westminster down, he will find himself in treacherous waters, defending to his leaders the consequences of the changes for some inner-city authorities. If he wants to take the charges for on-street parking away from Westminster, will he take from Bristol, Coventry and Plymouth the substantial revenues from their investments in city-centre property? There may be an argument for doing that, but he must be consistent and explain how he would do it. That, too, is at the heart of the debate.
Shropshire's standard spending assessment is £573 per head, and I must tell my hon. Friend the Member for Ludlow that 20 counties have lower SSAs, including Hampshire, Surrey, Oxfordshire, East Sussex and West Sussex, all of which receive the area cost adjustment. So there is a complexity in the system, and one must be careful not to make too rapid a judgment on it.
I recall that we had the same passage of arms with the hon. Member for Sheffield, Attercliffe (Mr. Betts) last year, and I must tell him that the figure of £20 million that we specified for refinancing is in the budget because Sheffield told us that it was sufficiently likely for the arrangement to be incorporated in its budget. We had to operate on the budget that Sheffield put before us.
The settlement is tough; we do not deny that. I hope that, in this rapid winding-up, I have acknowledged that it raises fundamental issues. The debate on it must take
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place, but I appeal to the House to recognise that the settlement cannot be debated in simplistic terms, and that wider issues connected with the management of the economy, as well as with local democracy, are involved. If we address those, we shall do a service to our electors.It being Seven o'clock, the Deputy Speker put the Question, pursuant to Order [9 June].
The House divided: Ayes 270, Noes 242.
Division No. 164] [7.00 pm
AYES
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Ainsworth, Peter (East Surrey)Aitken, Rt Hon Jonathan
Alexander, Richard
Alison, Rt Hon Michael (Selby)
Allason, Rupert (Torby)
Amess, David
Arbuthnot, James
Arnold, Jacques (Gravesham)
Arnold, Sir Thomas (Hazel Grv)
Ashby, David
Atkins, Robert
Atkinson, David (Bour'mouth E)
Atkinson, Peter (Hexham)
Baker, Nicholas (North Dorset)
Baldry, Tony
Banks, Matthew (Southport)
Bates, Michael
Batiste, Spencer
Bellingham, Henry
Bendall, Vivian
Beresford, Sir Paul
Bonsor, Sir Nicholas
Booth, Hartley
Boswell, Tim
Bottomley, Peter (Eltham)
Bottomley, Rt Hon Virginia
Bowden, Sir Andrew
Bowis, John
Boyson, Rt Hon Sir Rhodes
Brandreth, Gyles
Bright, Sir Graham
Brooke, Rt Hon Peter
Brown, M (Brigg & Cl'thorpes)
Browning, Mrs Angela
Bruce, Ian (Dorset)
Budgen, Nicholas
Burns, Simon
Burt, Alistair
Butcher, John
Butterfill, John
Carlisle, John (Luton North)
Carlisle, Sir Kenneth (Lincoln)
Carrington, Matthew
Carttiss, Michael
Cash, William
Churchill, Mr
Clappison, James
Clark, Dr Michael (Rochford)
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
Cran, James
Currie, Mrs Edwina (S D'by'ire)
Curry, David (Skipton & Ripon)
Davies, Quentin (Stamford)
Davis, David (Boothferry)
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