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Mr. Richard Burden (Birmingham, Northfield) rose--

Mr. Gummer: I must continue for a while.

As part of the consultation exercise, we asked local authorities for their views on the need to address, through a special grant rather than through SSAs and RSG, the localised pressure on a few authorities' social services budgets arising from the provision of care for unaccompanied asylum-seeking children. The hon. Member for North-West Durham should pay attention; I am sure that she would like to know about unaccompanied asylum-seeking children.

Such children will need particular help in certain areas, so we accepted the strong representations making a case for a special grant, and the fact that no one wanted the money to be paid through the RSG. My right hon. Friend the Secretary of State for Health will therefore lay before the House in due course a special grant report for that purpose. The grant will be cash-limited to £3 million in 1996-97, and will provide a better distribution to meet the needs of the authorities concerned than would have been possible within the RSG. The resources remain within TSS.

The total of aggregate external finance--AEF--for England will be £35.65 billion. The revenue support grant element of that total will be £18.02 billion. That is slightly

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higher than the figure announced in the provisional settlement, as a result of changes to police grant, and the changes in total standard spending and RSG that I mentioned earlier.

The increase in AEF over 1995-96 is 2.8 per cent.--less than the increase in TSS--because we take the view, which I believe the Opposition share, that council tax payers should properly fund a slightly larger proportion of the costs of their local services. But the level of council tax is a decision for each authority, and will depend upon the level of service that it chooses to provide, the improvements that it can make to efficiency and effectiveness, and how well it collects what it is owed. When the taxes are set, local people will be in a position to judge the performance of their councils.

Before all that was set up, I received many requests for a relaxation in the capping limits. I was told that, if that happened, great responsibility would be shown, which would prove to us that all such limits are unnecessary. Authority after authority told me that it would be extremely responsible.

However, I am afraid that, immediately the limits were announced, the leader of the metropolitan authorities went on the radio to say that councils would use the whole lot up--no question. I hope that local councils recognise what that means. If it happens, no Government will have any alternative but to keep that very large amount of Government spending within controls. That is a particularly disappointing attitude, and I hope that it will not be copied throughout the country.

Mr. Burden: Will the Secretary of State give way?

Ms Joan Walley (Stoke-on-Trent, North): Will the Secretary of State give way?

Mr. Gummer: In a moment.

We have listened to the case put to us for more resources for education and social services, and we have allowed more. We were told that these were the top priorities, and there was something of an orchestrated campaign to that effect. There is some sign, however, that that will not be the case, and it is unlikely that education and social services will be the priorities that we know they should be in some authorities. The Government and local people must look carefully at whether the money ends up in the schools--and not education generally--because that is where people believe the money ought to go.

Sir Dudley Smith (Warwick and Leamington): My right hon. Friend has mentioned a huge amount of money today that is part of the settlement. Does he agree that all local authorities throughout the country should, more or less, try to match their spending with the level of inflation? If they did that, they would be able to regulate their affairs much better. That is a lesson that could be learnt by the Labour and Liberal Democrat councils up and down the country, including the teacher-led Warwickshire county council. They cannot spend more money than is available, but there is more than enough money available.

Mr. Gummer: One can go further, and say that, unless there is an inflationary society, no business can possibly proceed by spending more on overheads and putting up the price of its goods every year.

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In a society where inflation is under control or is falling, local authorities must do better than match inflation. They must find ways in which they can provide the same services while getting better value for money. If they do not do so, they are not helping people to get jobs, they are not helping the nation to become more wealthy, and they are not helping businesses to expand. Local authorities must do that as part of their economic regeneration contribution. We must press county councils such as Warwickshire to take that step.

I shall be happy to place in the Library a letter that I received from Hertfordshire, which starts off by stating that inflation does not count with that authority because its rate of inflation is higher than the national rate, so inflation is bound to be higher there. I believe that no local authority should approach the job in that way.

Several hon. Members rose--

Mr. Gummer: I shall give way in a moment.

It is necessary for parents, school governors and those concerned with care in the community to insist that their share of the extra available resources comes to them. It will be necessary, therefore, to make savings elsewhere, and to continue to improve efficiency.

Here, I must point out to the House that the idea that one ever finishes making oneself more efficient or finding new ways of getting better value is totally foreign to every organisation outside the public service. We all know that councils must find new ways of making the money go further every year if they wish to take on other responsibilities or improve some of the services they provide.

I should like to refer to the distribution of grant.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): Will my right hon. Friend give way?

Mr. Gummer: I should like to move on, and then I shall give way to my hon. Friend.

We have worked closely with the local authority associations to achieve a distribution methodology that is simple enough to be understood, robust enough to be able to cope with the changes, and complex enough to reflect the real differences in need. Local government knows, and the Government know, that we can never iron out every local wrinkle, but the system is open to scrutiny, and it is clearly objective.

I know that councillors and hon. Members are concerned about the resources of their local authorities, and I must stress that the Government do not look with favour or disfavour upon any individual authority, as the system makes that absolutely impossible. The previous system allowed one to do that, but now the Government can only alter the distribution by classes of authority, and not by individual ones.

Mr. Burden: Will the Secretary of State give way?

Mr. Clifton-Brown: Will my right hon. Friend give way?

Mr. Gummer: I will give way to my hon. Friend, and then later to the hon. Gentleman.

Mr. Clifton-Brown: Does my right hon. Friend recall that he gave the Liberal-dominated Gloucestershire

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county council one of the highest increases in education SSA--some 5.3 per cent., amounting to more than£9 million? Was not the council's immediate response that it needed £24 million to spend this year? Does my right hon. Friend recall that Gloucester cut the individual school budgets last year by between 4 and 7 per cent.? Will it not be a disgrace if the bulk of that money this year does not go to the individual school budgets?

Mr. Gummer: It would be a disgrace, but then it is always difficult to know what a Liberal Democrat council will do, because there is no connection between what such councils say in public and what they actually do.

I am aware that that embarrasses the hon. Member for Newbury (Mr. Rendel), who no doubt will speak later.I note, however, that not many Liberals are present to stand up for their county councils. I think that that is because they know just how bad Liberal Democrat-dominated councils are, and how few of them plan to hand the money on to schools. We shall watch them very carefully, and, if they do not hand the money on, we shall know that their words and their deeds do not coincide.

Mr. Burden: I listened with interest to the Secretary of State's reports of his discussions with various local authorities, including Birmingham city council. I was particularly interested in the issue of Frankley, and the right hon. Gentleman's statement that the city council had accepted that the deprivation indices used for Hereford and Worcester were appropriate for that area.

Further investigations have been made in the light of the right hon. Gentleman's answer to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). It is clear that Birmingham still objects to the use of those indices for an inner-city area of Birmingham that suffers from extreme deprivation and high unemployment, and has many needs. May I ask the right hon. Gentleman to return to the answer that he gave my hon. Friend, and reconsider the issue of Frankley? If he does not, Birmingham will probably be short by about £1.5 million, the capping limit will be wrong, and the people who will suffer are the people of Frankley.

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