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Mr. Gummer: That is nonsense; the last point was absolutely untrue. We are considering the area cost adjustments and we have said that an independent inquiry is being held, which will report to allow us to make changes, if we think that right, in future years, but I am quite sure--I need not even ask him--that my hon. Friend the Minister for Local Government, Housing and Urban Regeneration never gave any such indication, because it was impossible for any such indication to be given. One does not know, until the thing is properly examined, what, if any, effect there might be. I also represent part of a county that is affected in a deleterious way. Last time we considered the matter, we found that it was much more difficult than I had expected and there were very good grounds for supporting the present system. We are assessing it again, and we are trying to do it as independently as possible, but I am quite sure that my hon. Friend did not say anything of the sort.
Sir Anthony Grant (South-West Cambridgeshire): No one has been a bigger opponent of the area cost adjustment than I have for at least 10 years. I have mentioned it repeatedly in the House. I have tackled umpteen Ministers--the last one was my hon. Friend the Minister for Local Government, Housing and Urban Regeneration, who was very reasonable in listening to the case put, but certainly never gave any assurance other than that the matter would be very carefully reviewed. There is no delusion about this matter.
Mr. Gummer: I believe that my hon. Friend will agree, first, that the reason for the further investigation into this matter is precisely as he puts it--because he and other of my right hon. and hon. Friends have pressed for it. I am considering the matter independently and as carefully as I possibly can. I think that my hon. Friend will also agree that for a local authority to decide that it will fix its spending arrangements on the basis of a hope that something might turn up in the following year seems to betoken--
Sir Anthony Grant: Micawberism.
Mr. Gummer: I should not like to go as far as that, but the hon. Member for Cambridge (Mrs. Campbell) does the Liberal and Labour parties that run Cambridgeshire county council no favours by suggesting that the reason why they got this wrong was that they hoped that some money might turn up. If we all ran our private finances on that basis, we would suffer from serious problems. I hope that the hon. Member for Cambridge does not run
her finances in that way, or she will find herself in difficulties and need counselling, which clearly, in her terms, Cambridgeshire does.
Cambridgeshire had significant extra resources, and those resources could be applied, and have been applied, in such a way as to allow it to keep to a budget below cap. That is what it has done, and I do not think that the authority would criticise the figure that I quoted.
Oxfordshire argues that, since 1991-92, it has reduced total spending by £45 million and that scope for further savings is severely limited. It also argues that, even at its proposed level, the budget represents £5.5 million less than the sum that would be required to keep services running at the same level as in 1995-96.
Nevertheless, on balance, I do not consider Oxfordshire's position to be sufficiently different from other LEAs to justify a relaxation in its capping limit. All the other counties limited to a 3 per cent. permitted increase have managed to set budgets within their provisional cap. The same is true of the inner and outer London LEAs, which were limited to 1.5 per cent. and2 per cent. increases respectively. Although Oxfordshire's reserves are not large, they are by no means the lowest, as a percentage of budget requirement, among the counties.
I therefore propose that there should be no relaxation in Oxfordshire's original cap, which I consider to be reasonable, appropriate and achievable in all the circumstances of the authority. If the draft order is agreed by the House, it will result in a reduction of council tax in Oxfordshire of £34.90 for a two-adult band D household.
Before I conclude, I remind the House that ordinary people pay these bills. It is all very well talking about this or that standard of service or this and that demand, but ordinary people have to pay the bills, and £34.90 is a sum of importance, not something that must be cast aside.
Mr. Andrew Smith (Oxford, East):
I had not intended to intervene at this point, but as the Secretary of State has not referred to it, I should like him to confirm for the record that he has written to Oxfordshire, offering an extra borrowing facility in recognition of the county's difficulties. As he appeared to dismiss those difficulties, will he explain why he is offering the borrowing facility and give an idea of how much it might be?
Mr. Gummer:
If the hon. Gentleman had waited, I was going to cover that in my next comment. I think it important to point out, however, that there is no basic difficulty.
Oxfordshire could do what we have asked it to do, and other counties in more straitened circumstances, in the sense that they have had only a 1.5 per cent. or 2 per cent. increase, have managed to solve their problems, but there is a specific short-term problem, which might mean that Oxfordshire would have to make teachers redundant this year, only to have to employ them again in a year or two's time. That is a result of specific problems in the Oxfordshire profile.
Precisely because that is likely to be a short-term problem, a relaxation in the cap would not be the right approach, as that would give Oxfordshire a permanent increase in its spending power, which could be done only at the behest of other counties. It would put Oxfordshire out of line with other counties.
I am therefore prepared to offer Oxfordshire a supplementary credit approval and a capitalisation direction, which will enable it to capitalise revenue expenditure, to help with its short-term problems. That will, in effect, give the authority another year to get its budget into line with our assessment of an appropriate level of expenditure. I understand that Oxfordshire will make a proposal for an SCA and a capitalisation direction, and I await that proposal.
If the order is approved, we shall serve a statutory notice on both authorities formally setting their cap. They will have 21 days to reduce their budget in line with their cap and set new lower council taxes. In Oxfordshire's case, the reduction can, to some extent, be offset by using the offer of a capitalisation direction and SCA to free up resources. Those resources can then be used to support its existing spending plans. I am sure that hon. Members would expect it to do that to support its education spending plans, for which it has been given the money.
Ms Hilary Armstrong (North-West Durham):
This is the first time that this debate has been held since I have been a member of the environment team. I read with interest what was said in previous years. I have also reflected on the recent comments of the Secretary of State, on the methodology that he has used and on the ways in which he has approached these issues. Once again, I have found that the words used one year are not followed up in succeeding years--and I shall come back to that.
The Labour party has been consistent in the belief that the formulations of the standard spending assessment retain problems. Every time that this is raised, the Secretary of State tells me that it is nonsense and that I have said that it cannot be adjusted quickly. I have said that: it needs proper investigation. Grave concern has been expressed throughout the country about the unfair way in which standard spending assessments are calculated. I will not go through the figures on Westminster tonight. Ministers will not let me have the calculations that they say show that our protestations are wrong. I want to know how the Government calculated the difference between now and 1979, as no one else has been able to do so.
Given the rigidity of the actions of Ministers and the Government tonight, the unfairness and unhappiness throughout the country--apart from Westminster--about the formula used to calculate the standard spending assessment means that we have to return to it. If the Government were interested in working to the agenda of people outside the House, they would be pushing much harder. Last year, the right hon. Member for North Shropshire (Mr. Biffen) said:
I think that the Secretary of State knows that he is using draconian powers that go far beyond commitments that were made when the system was established and during the passage of the legislation that gave the Government the powers. At that time, the then Secretary of State, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), made commitments and said that this would be used only as a reserve measure. He said:
"I hope that hon. Members will reflect upon the fact that we cannot return to this situation year after year because it will worsen year after year. We must now begin to think of a more flexible and acceptable arrangement."--[Official Report, 15 June 1995; Vol. 262, c. 921.]
22 May 1996 : Column 356
I could not agree more. However, this year the Government have not been flexible, nor have they attempted to address the individual needs of the councils involved. It is significant that today the Secretary of State made a substantially shorter speech than he did last year--although the beginning of his speech was almost the same as his speech last year. He seems to have learnt nothing from last year and he has not defended his actions.
"It is not a measure to be used as a matter of course.
The Government have wandered far and wide from that commitment and it is not being upheld in the order that we are considering tonight.
The people of an area certainly will be able to vote for a relatively high-spending authority if they so choose.
It is important that there should be such a reserve power--rarely, if ever used we hope--to protect the charge payers of an area against extreme cases of extravagant and irresponsible local authorities."--[Official Report, 25 April 1988; Vol. 132, c. 51.]
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