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9.8 pm

Mr. Clive Betts (Sheffield, Attercliffe): Last year, the Government got themselves into an awful political mess over the settlement, because ultimately everyone--not only politicians at national and local level but governors, parents and schools throughout the country--believed that the Government were not giving schools a fair deal. People saw the prospect of cuts affecting their children's education, and they reacted and voted accordingly at the local elections.

This year, the Government have from the outset tried to put a spin on the settlement, in an attempt to convince people that somehow, there is extra money for education. The Government tried to spell that out in a series of letters from Tory Members to schools in their constituencies. For local authorities that have education as a function, the education SSA has risen on average by 4.4 per cent., while the actual spending attached to that has risen by about 3 per cent. In total, the SSA for those authorities has risen by only 2.1 per cent., and the extra funding for the authorities has risen by 1.2 per cent.

When the Chief Secretary to the Treasury came to the Treasury Select Committee, he was unable to explain how education authorities would be able to pay for the increase in inflation, the teacher's pay settlement that will be coming soon--which the Government expect the schools to find--and the thousands of extra school children in the next financial year with a funding increase of 3 per cent. Those sums do not add up to 3 per cent.--they add up to an awful lot more.

Even if local authorities tried to spend all the extra money that the Government claim is available for education, they would then have to admit--as the Chief

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Secretary admitted in the Select Committee--that there will be no extra funding for other important services. During this debate, it has become apparent that no Conservative Member regards any other service as important. Social services, housing, planning, libraries and environmental health are important services that need money, but the Government are not offering that money.

Mr. Pickles: Would the hon. Gentleman, who has vast experience in local government, care to tell us by how much the settlement is inadequate? Is it £3 billion, or£4 billion? Will he set a figure on what local government needs?

Mr. Betts: If Labour had been in power for the past 16 years, we would not have wasted money as the Government have done on schemes such as the poll tax. That money could have been applied properly to local services that would have benefited local people.

The extra funding for my local authority, Sheffield, next year will be 0.8 per cent. That is a nonsensical figure, as can be seen when one looks at the needs of schools. The Tory argument is that funding should be given to the schools, and not to the central administration of education. Sheffield undertook an independent study of its schools, however, and they came back and said that they wanted no more delegation. Many of them realised--particularly the small primary schools--that having some services, such as psychological support services, funded centrally gave them better value for money.

The reality is that even if the local authority directed every extra penny given to it to education, every one of the schools in my constituency next year will face a cut in funding and a cut in the services that they can provide. Conservative Members do not understand that, in the past few years--when circumstances have been slightly better--schools have been putting away a bit of money for a rainy day. In the past two years, that rainy day has come, and schools are now spending their reserves to keep teachers employed and to buy books and equipment for the children.

Every one of the schools in my constituency is now saying that those reserves are coming to end and--in most cases--have done so already. They will not be replaced next year. Irrespective of what the local authority does, those schools will have a gap in their resources. There will be a cut in services because the reserves that they have will no longer be able to provide services to the children in the form of the employment of teachers, spending on books and equipment and repairs to schools. That is what headteachers and school governors are telling me and, frankly, I am prepared to believe what they say more than I believe the Government's assurances.

On top of that, parents will see their council tax bills drop through the door next month. They must not blame Labour or Liberal Democrat authorities for what will happen. Buckinghamshire--one of the few Tory councils around--estimates that it will have a 9 per cent. increase in council tax. The Chief Secretary admitted that his estimate from the Government's own figures of the increase in council tax is 8 per cent. for the next financial year.

As it is the Government's intention to switch the amounts of money funded locally to provide services from 21 per cent. of the total to 26 per cent. in the next three

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years, there will be not only an 8 per cent. increase in council tax--on the Government's estimates--in the next financial year, but an 8 per cent. increase in each of the following two years. On the calculations and estimates used by the Chief Secretary, the total increase in council tax will be 25 per cent. cumulatively over a three-year period. Will the Minister answer whether that is the case? There will be a 25 per cent. increase in council tax in the three years, while people get poorer services. Thank goodness the Government will not be in power in the two subsequent years to carry that into effect.

Ministers say that, whatever arguments may be advanced about the amount of money involved, the methodology is all right: it has all been agreed. I challenge that on three grounds. First, there is the issue of capital financing, which I mentioned earlier in an intervention. In a study requested by the Audit Commission, Price Waterhouse concluded that it was wrong to fund capital financing through SSAs and to make use of notional debt. It suggested a different method, involving adjustments to the credit approval levels given to local authorities in the past. Why do the Government not take up that suggestion, which was approved by the Audit Commission--a neutral body, looking objectively at ways of funding local authority services? Is it because some of the biggest gainers would be authorities such as Birmingham and Sheffield?

Secondly, there is area cost adjustment. I welcome the study that is currently in progress. Ernst and Young has already carried out a study for the metropolitan authorities, which effectively demolished the area cost adjustment figures as they stand. An area cost adjustment should be precisely that: it should take into account the difference in the costs of different areas, and accordingly adjust the resources that councils receive from central Government. In fact, however, authorities that bear exactly the same costs receive different amounts of help.

The Minister has commissioned a study, and I welcome that, but, like my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson), I am a little cynical. I fear that nothing will be done as a result of the survey if action would be inconvenient in terms of a general election. I hope that the Minister will assure us that that is not the case.

Thirdly, there is the issue of the shared accommodation figures. They affect the social index, and, in turn, the allocation of money for adult services within the social services budget and for the "other services" block. They also affect funding for children's services. That is an anachronism. Shared accommodation is such a relatively small part of total accommodation that it no longer provides an accurate measure of deprivation in communities. It is not surprising that Westminster ranks so high in the Government's deprivation league tables, given that they are using a measure that has been discredited by every objective observer of their method of calculating SSAs.

My local authority contains two nonsensical features. First, there is the question of Supertram. I support the scheme: I think it important for us to encourage and develop light railway systems, which are environmentally friendly and give people an incentive to use public transport and leave their cars at home. I welcome the funds that the Government have provided. Nevertheless,

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it strikes me as stupid for the Government to fund Supertram partly through the local authority revenue support grant, in such a way that--although it costs the authority nothing--that spending displaces other spending within the capping limits.

I have to explain to constituents not that their council tax is rising because of the Supertram capital expenditure, but that it will fall for that reason because less money can be spent on education, social services and other important matters. That has always been a reason for grievance, not only in Sheffield but in Rotherham, Doncaster and Barnsley, whose services are being cut although they do not benefit from the tram.

Secondly, the Government calculate the highways SSA on the basis of the number of vehicles that travel down particular roads. Absurdly, they have worked out Sheffield's SSA, and its grant, on the basis of censuses relating to vehicle movements on roads that were dug up so that Supertram could be built. No vehicles could go down those roads. The Government have accepted that that is the case, but they will not accept that Sheffield has lost £900,000 a year--which affects all our services--as a result of that ridiculous way of calculating the highways SSA. Other roads should have been used in the calculation. Sheffield has been particularly badly affected because of the disruption caused by the Supertram works.

Finally, we must also consider the nonsensical way in which fire authorities are funded. It is ridiculous that such authorities can be given a lower capping figure than that required by the chief fire officer to deliver the standard of service required by Home Office regulations. That is a classic case of two Government Departments, each not knowing what the other is doing.

Last year, the Government had to raise the capping level for the fire authority in South Yorkshire because the Home Office accepted the chief fire officer's recommendation that he could not provide a legal fire service within that level. Yet, this year, a fire station in the village of Mosborough in my constituency--one of the largest housing developments in the Sheffield area--will be shut down. That is wrong, and the Minister ought to do something about it.

The settlement does not give any extra resources for education and will mean cuts across the board, not merely in education but in other important services. It will mean large council tax increases of around 8 per cent., according to the Government's own estimates. The grant is not distributed fairly and, in the case of my city, there are clear nonsenses, which I hope that the Minister will consider. Ultimately, if he has no sympathy for the people of Sheffield or for my constituents, he might at least have some for the four remaining Tory councillors on Sheffield city council, who will almost certainly lose their seats at the local elections in May.

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