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The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): Thehon. Gentleman has said that he will return the business rate to local communities. That must mean that some will win. Those with a large business infrastructure will presumably gain; others will lose. In places such as Liverpool, where will the strain be taken: on the council tax or on increased Government grant? How will he deal with that redistribution problem?

Mr. Dobson: As the hon. Gentleman knows--so he should not be getting up and asking daft questions--when the business rate was in the hands of local councils, various schemes existed to equalise it between different regions. Those schemes, or fairer variations on them, would obviously be necessary. He, too, is one of the authors of the settlement. If he ensured that the local council that he represents--Craven district council--received from the settlement the same amount of help per head of population as Westminster city council, his council would not need to levy any council tax. It would be able to pay a £528 rebate to everyone. He then asks me about the consequences of our promises.

Mr. Gummer: I should genuinely like to help the hon. Gentleman. Does he accept that his comments on the settlement would be a great deal more credible if he told us his alternative to our proposal? Does he not understand that, by merely saying that sometime, some place, somewhere, he might tell us, he removes his right to make any comment about the settlement? Therefore, I ask him again: what would he do?

Mr. Dobson: The Secretary of State has taken the best part--no, the worst part--of an hour and a bit to try and explain his position, and we are going to analyse what he said and what is in the settlement. If he does not like it, he will just have to lump it. After all, he receives a Secretary of State's salary and a chauffeur-driven car for the privilege of listening to us. I might add that he is responsible for the settlement and that, if his local council, Suffolk Coastal, received from the settlement as much help per head of population as Westminster council, his electors would receive a rebate of £591. If Suffolk county council received the same help per pupil as Westminster council from the settlement, it would be able to take on an extra 2,700 teachers without increasing the council tax.

This year's local government spending level set by the Government does not make full allowance for inflation and for pay increases, such as those needed to attract teachers to inner-city schools. Nor does it allow fully for the cost of educating an estimated 86,000 more schoolchildren; extra contributions that are needed for pensions, police and firefighters; and meeting the costs of new laws on the environment and, rightly, requiring the installation of seat belts on school transport--a measure for which my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) worked so hard and successfully.

The spending level does not meet the cost of local councils having to pay to central Government the landfill tax, which will cost them more than £70 million. Nor does

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it meet adequately the cost of meeting other environmental requirements that have been placed on local councils.

The level that the Government have set for the coming year is £1 billion lower than the amount councils are spending this year, before taking into account inflation. The Government assume that councils will make up the difference partly by using their balances and their reserves, but many councils have been drawing down heavily on balances for some years. In some cases--for example, Hounslow, Newcastle, Tower Hamlets and the Merseyside police authority--the district auditor has warned that their balances are too low. Councillors there and in many other places will be faced with the dilemma of cutting services or facing the wrath of the auditor and possibly the courts.

In his Budget, the Chancellor of the Exchequer gave the impression that the Government were increasing their grant for education over and above the amount councils were already spending on schools. That misleading impression has been repeated by other Ministers, including the Prime Minister, and Tory Members have written to school governors and head teachers in an effort to give even wider currency to that myth.

Local education authorities would like nothing better than to have more money to spend on schools. That is why, between them, they are already spending more on schools this year than the Government target for their spending on schools next year. Local council education spending on schools this year is £872 million higher than the Government's target for their spending. If those authorities were to spend next year the amount that the Government want them to spend, their spending on schools would not increase. They would have to cut it by a figure that works out at a reduction of £40 per pupil--so much for the extra money that is available for education.

Publicly, the Government speak about increasing spending on schools--while Tory Members of Parliament write letters to school governors--while furtively setting targets that are lower than current spending. That might be described as saying one thing and doing another.

Local education authorities will do their best to meet the hopes of parents and the expectations that the Government have falsely raised, but it will not be cost-free. Extra spending must come from somewhere. It is likely to result in cuts in other services for children; in price increases for school meals, for meals on wheels and for home helps; and in cuts or price increases for services for elderly and handicapped people, such as those who use day centres or luncheon clubs.

Education authorities must cope with the needs of an extra 86,000 schoolchildren, with the cost of installing seat belts and with the need to provide more money for children with special educational needs.

In many parts of the country, another vital service will be placed in difficulty as a result of the settlement--the fire service. That service is under pressure. Cuts have been made in services almost everywhere, but especially in London and the other metropolitan areas, where fire brigades are run by separate authorities. Those are under even greater pressure. Cuts will be made of more than£4 million in the West Midlands brigade, £2 million in the Tyne and Wear brigade and more than £9 million in the London fire brigade.

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For years, those fire brigades have been cutting staff and postponing the renewal and updating of equipment; now they are expected to do it again. They also have difficulty in funding pensions, which take an increasing share of their budget. The trend cannot continue without weakening the service to the public and endangering firefighters by reducing the number of firefighters available to fight each fire and allowing equipment to deteriorate.

In London, the process may lead to the closure of four fire stations, the reduction of 22 fire engines at other fire stations and massive cuts in control room staff. The response times of fire brigades throughout the country may be lengthened--surely something that no one could seriously contemplate, but that the Government apparently do.

Special problems have arisen this year for some of the less urban new unitary authorities that have resulted from the break-up of the counties of Cleveland, Avon and Humberside. Higher-than-average increases in council tax may be needed to maintain anything resembling the present service. That refers to those unitary councils that have already been established, and that take over the running of services this year.

Equally significantly, the settlement fails to provide money to meet the costs of the change to unitary status by the new unitary districts approved by the Secretary of State or recently recommended for that status by the Local Government Commission. Failure to push through those changes in time for elections to the new authorities in May 1996 will increase the costs and uncertainties of staff and of people living in the area. Such delays will almost certainly lead to council tax increases and to cuts in services in years to come, which might have been avoided by finding the extra money now.

Mr. Pickles: The hon. Gentleman's colleagues in local government, Labour leaders of councils, have suggested that the settlement is inadequate to the tune of £3 billion. Does the hon. Gentleman endorse that figure?

Mr. Dobson: I do not endorse anyone's numbers but my own, and the hon. Gentleman is not getting one from me. [Hon. Members: "Oh!"] I explained that earlier. In case the Conservative simpletons did not notice, that was what one of my earlier responses meant.

Mr. Paddy Tipping (Sherwood): My hon. Friend mentioned the move towards unitary authorities. Have not some orders yet to be laid, and do not shadow authorities that should start in May 1997 need elections in May 1996? Is there not a suspicion that the Government are cherry picking which orders will come through? Why has no commitment been made that the order in respect of Nottingham will be laid before the end of February?

Mr. Dobson: In fairness to the Secretary of State--it strains my good nature--I should point out that Nottingham was held back because the newly reconstituted Local Government Commission was considering the proposed unitary status of other districts in Nottinghamshire, so it was considered reasonable to hold Nottingham back until that issue had been resolved.

As the commission has recommended that there should be no further unitary districts in Nottinghamshire, however, Nottinghamshire should go ahead, as should

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Devon, where both Torbay and Plymouth have long been recommended and no further additions are proposed, along with Leicester and Rutland, to which the Minister has already made a commitment. I hope that he will respond to that, but not necessarily today.

The way in which the central Government grant is allocated is as important as its overall size. The Government claim that the allocation is the inexorable product of impeccably objective criteria. That claim is plainly false; no one believes it. The allocation of grant is a racket, designed to secure the Government's political objectives. I have no objection to a Government trying to secure their political objectives; I simply wish that they would accept that that is what they are doing.

One of the basic building bricks of the grant system is the Government's assessment of deprivation, which is not made independently but is carried out by officials at the direction of Ministers. It is a racket that favours a few areas at the expense of most others. Nothing better demonstrates the scale and nature of that racket than the Government's treatment of Westminster city council.

According to the Government's fantasy finance, Westminster is the fourth most deprived place in Britain, while Barnsley, after a score of pit closures, lurks in 313th place. According to the Government, only three places in England are worse off than Westminster--Hackney, Tower Hamlets and Islington. Everywhere else in England is less deprived than Westminster.

As the Duke of Wellington said:

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