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Regulation of Funding of Political Parties

Mr. John Spellar accordingly presented a Bill to regulate the funding of political parties: And the same was read the First time; and ordered to be read a Second time upon Friday 19 April and to be printed. [Bill 51.]

Mr. David Winnick (Walsall, North): On a point of order, Madam Speaker. In view of the substantial majority

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in favour of my hon. Friend the Member for Warley, West (Mr. Spellar) being given permission to bring in the Bill and bearing in mind the importance of the subject--which we have been debating on and off for the past 12 to 18 months--can the Nolan Committee be notified of the House's decision? It is an important point and I see no reason why the views of the House, as expressed just now, should not be relayed formally to the Nolan Committee by the Clerks.

Madam Speaker: The Nolan Committee has its own terms of reference to which it works, as I am sure the hon. Member for Walsall, North (Mr. Winnick) is aware.

Dame Elaine Kellett-Bowman (Lancaster): Further to that point of order, Madam Speaker. May I point out to the House that the Division figures are unbalanced by the fact that parliamentary private secretaries cannot vote?

Madam Speaker: Order. I am not in the habit of allowing one point of order to run on and become a debate. I can accept another point of order only if it is on a different matter. It is a waste of the House's time, if they are not points of order.

Mr. Bruce Grocott (The Wrekin) rose--

Madam Speaker: Does the hon. Member for The Wrekin have a point of order on another matter?

Mr. Grocott: My point of order is about the credibility of the Division figures.

Madam Speaker: We do not need to know about the credibility of the figures: they are there for all to see. A majority of one constitutes a win in our democracy, and that is the end of the matter.

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Orders of the Day

Local Government Finance

4.5 pm

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

I understand that with this, it will be convenient to discuss the following motions:

    That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1996-97 (House of Commons Paper No. 166), which was laid before this House on 29th January, be approved.

    That the Special Grant Report (No. 16) (House of Commons Paper No. 165), which was laid before this House on 29th January, be approved.

On 30 November, I issued my settlement proposals for consultation. They included the total provision for local authority spending, the level of central support for that expenditure, and my proposals for calculating standard spending assessments--the SSAs. I also announced provisional capping criteria. My right hon. and learned Friend the Home Secretary also announced his proposals for police specific grant on 30 November.

Since then, my colleagues and I have received written representations from 250 local authorities, and have met delegations from 84. We have carefully considered all the points that were raised with us during consultation. Our final decisions in respect of grants and notional amounts are embodied in the reports before the House today. I will also remind the House today of my provisional capping criteria.

Mr. Jeff Rooker (Birmingham, Perry Barr): The Secretary of State has made great play of the enormous consultation process that he has undertaken, and I do not criticise him for that. However, I must raise two points in relation to the city of Birmingham. The first concerns the extra population from Frankley Beeches and fact that the deprivation index for the county of Worcester and Hereford rather than that for Frankley Beeches was used, which has cost Birmingham £1.6 million.

My second point concerns the way in which capital financing is examined in the standard spending assessment. A notional amount rather the actual capital debt of an authority is taken, which has apparently cost Birmingham city council £30 million. Those points were raised with the Secretary of State during the consultation process. Why did he not take them on board?

Mr. Gummer: There have been three delegations from Birmingham, and I had the pleasure of meeting the leader of Birmingham city council and talking through the matters. The point about the estate that was transferred from Hereford and Worcester to Birmingham was raised with me. However, in later discussions, it was discovered that the figures were not as the hon. Member for cited, and in fact Birmingham felt that our suggestion was the better answer.

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I do not think that it would be sensible for the hon. Gentleman to press the matter, as the figures were based on something that did not proceed. The transfer arrangements are agreed between the Government and the local authority association, so the hon. Gentleman would find it difficult to pursue the matter.

I told Birmingham that, if it wanted to continue, and if it could persuade the local authorities to propose a change, I would not be averse to altering the system. The system is agreed between local authorities because it is about the transference of amounts between local authorities and not about the total amount, as the hon. Gentleman would agree. I made that offer to Birmingham, but in retrospect the council decided that it would not be better.

Mr. Roy Thomason (Bromsgrove) rose--

Mr. John Greenway (Ryedale) rose--

Mr. Gummer: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) has asked me two serious questions with which I wish to deal. I should be grateful if my hon. Friends could wait a minute.

We have been discussing notional amounts for some time. I am sure that the hon. Member for Perry Barr understands that, if one local authority--I cast no aspersions--spends a great deal and has built up a huge debt in the past, and another has been extremely careful and prudent, it would be unfair if the system meant that the first authority, however much it continued to spend, was bound to do better than the prudent authority, irrespective of need. That is why we fix notional amounts. That is the only fair way to cope with that genuine difficulty. We cannot have a situation in which the provident always find themselves at a disadvantage to the improvident.

The hon. Member for Perry Barr said that a local authority had lost some money. That was a curious use of the word "lost", because the authority never had that money. Birmingham council--I shall be direct--has a long record of spending much more money than it is able to finance. It is asking all the other local authorities to pay for that, but that is not fair, and there must be an intervening system.

Mr. Thomason: The area of Frankley, to which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) referred, is in my constituency. It is the Frankley estate, not Frankley Beeches.

Hereford and Worcester, the area from which Frankley has now been removed, has been left with no plus factors in the standard spending assessment calculations, except for a small sparsity factor in Herefordshire. The area is not untypical, compared with other authorities.

I do not disagree with my right hon. Friend's proposed figures, but the calculation bears hard on those areas of the country that do not have any deprivation factors which add to the distribution of grant. Those areas are left with relatively small sums, and they feel that they have missed out in the overall distribution.

Can my right hon. Friend confirm that the Department of the Environment intends to review the formulae and the mechanisms for distribution of grant every year on the basis of the evidence that it receives?

Mr. Gummer: My hon. Friend is right. Hon. Members' attitudes, irrespective of party, to the division

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of grant are always affected by how it hits their areas. The deprivation factors are important, and I am sure that my hon. Friend would not want us to have a system that did not take deprivation into account.

I will confirm that, every year, we reconsider the system with the local authorities. When my hon. Friend the Minister for Local Government, Housing and Urban Regeneration sums up, he will describe in detail our next step. We have also agreed to have an independent review of the way in which we deal with some of the extra costs. I will cover that myself.

Several hon. Members rose--

Mr. Gummer: I have managed so far to read only the titles of the reports and two paragraphs, so I shall continue for a moment before giving way.

As I made clear when announcing the provisional settlement, all public expenditure programmes have to be rigorously examined each year. Local government spending is no exception. Within the objectives for the economy as a whole, I have looked very hard both at the pressures on local government spending and at the scope for greater efficiency and effectiveness within authorities. As in previous years, I am grateful for the practical help that the local authority associations have given in setting out and discussing issues.

I announced on 30 November 1995 a proposed total standard spending--TSS--for England for 1996-97 of £44.92 billion. In the light of consultation, we have now adjusted that figure slightly to reflect developments in the first phase of nursery vouchers and in the balance of police grant between England and Wales. The result is that the final TSS figure for England for 1996-97 will be £44.93 billion.

It is worth remembering just how much money that is. It represents a significant amount of public expenditure, and it cannot be ignored, considering the amount that the Government and local government spend from individuals' pockets. All parties are now committed--at least in words--to the restraint of public expenditure, so that amount has to be considered in the same way as any other major amount. It is, apart from central Government expenditure, the largest part of expenditure.

Local government will, of course, be able to spend more than that, because its spending accounts for a quarter of all public expenditure. Councils can spend above the TSS, up to their capping limits, and can, of course, make use of income from fees and charges and can spend from reserves.

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