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8.25 pm
Mr. Robert Jackson (Wantage): I thank my hon. Friend the Minister for the courtesy and objectivity with which he received the two delegations from Oxfordshire county council that I brought to see him this year to express the council's concern about the level of its revenue settlement grant and the level of its cap. I welcome the Government's decision to allow Oxfordshire a supplementary credit approval, and I hope that, in subsequent discussions with the county council, Ministers will continue to be helpful in agreeing the amount of approval. On that basis, and in that expectation, I shall be joining my right hon. and hon. Friends in the Lobby after tonight's debate.
Nevertheless, while the effects of the cap will be mitigated by the new credit approval, I do not share the assessment of my right hon. and hon. Friends that the cap on Oxfordshire's budget is "reasonable, appropriate and achievable". I continue to be concerned about its effects in the current financial year and about the implications for next year's finances.
In taking that view, I stress that I agree with my Conservative colleagues on Oxfordshire county council, who also do not consider that Oxfordshire has sufficient resources to finance its services. At the time of the teachers' pay settlement last year, the Conservative group pressed for the difference between the SSA assumption for teachers' pay and the level of the actual settlement to be funded either by the Government or by an increase in
the cap. I supported them in that campaign, but it failed, leaving a shortfall of £1.8 million, which of course carries on into this year.
I also supported the Conservative group in its bid in January for an additional £1.9 million above the cap ceiling to cover the costs of the landfill tax and changes in pension fund regulations. I reckon that taking those together amounts to a minimum definition of a shortfall in the current year of at least £3.7 million.
Those have been the views of the Oxfordshire Tories, but at the same time, I have felt obliged to make my own independent judgment of the appropriateness of the limits being placed on Oxfordshire's spending. Last year, I was especially concerned about the level of funding for education that was envisaged in the 1995-96 local government settlement. That concern led me in the end to refuse to support the Government in the final vote on the question. I feel that my judgment has since been vindicated by the Government's decision in this year's settlement to accord special priority to education, with a national increase of 4.5 per cent. in the total standard spending assessment for schools.
In spite of that overall increase in the national level of funding for education this year, I remain of the view that the resources allowed to Oxfordshire are insufficient. That is partly a consequence of the overhang from last year's admittedly over-tight settlement. One of its consequences was that many schools in Oxfordshire drew down their balances, as the Secretary of State for Education and Employment urged them to do. To mitigate the cuts in 1995-96, the schools spent some £5 million from balances that cannot be spent again this year. That is why there is an overhang, for which the Government are at least partially compensating with the new credit approval, which was announced on Monday.
Behind these problems, there lies a deeper problem--that of the SSA system as it affects Oxfordshire. This is the critical issue, as it is the SSA calculations that determine both the level of the Government's grant to the county and the level of the cap that they place on the council tax. The Government are currently reviewing the SSA formula, and it is essential that all parties on Oxfordshire county council come together to agree a common position on the changes needed.
I fully understand that, in any distribution around an average, some are bound to be below the average and some above it. The problem is that Oxfordshire's SSA places us below the average to an extent that plainly does not reflect the reality of the county's financial requirements. For Oxfordshire county council, the national changes in SSAs, including the 4.5 per cent. allowed for education, have this year translated into only a 2.4 per cent. SSA increase, below that of all except seven of the other 34 shire counties.
I find it hard to understand why Oxfordshire has such a low-ranking SSA increase, when it faces above-average increases in the size of the key population groups: nought to four years, 11 to 15, 65 to 75 and over 75. The county has estimated that, together with inflation at 2.9 per cent. and the effects of new legislation at 0.75 per cent., these demographic factors at 1.15 per cent. have generated a5.5 per cent. increase in the need to spend at a constant level of service. Yet Oxfordshire's SSA allows only for a 2.4 per cent. increase, rising to 3 per cent. under the cap ceiling.
It is a fair observation that, after Oxfordshire became a hung council in 1985, its expenditure rose too fast. But, in the light of a £45 million cut from the county's budget in the past five years, and in the light of the Audit Commission's comparison of the performance of local authorities, I do not think that it can be argued that nowadays Oxfordshire county council is relatively inefficient. On the contrary, the county council is a comparatively low spender, and the Audit Commission acknowledges that it is one of the more efficient counties.
Nevertheless, I have to say to the county that there is scope for further savings, which the continuing financial squeeze will require it to face up to. Councillors were wrong to reject the advice of the county's officers that Oxfordshire's old people's homes should be "externalised". I believe that the question of the schools structure and the number of schools in Oxford city should be reopened urgently. I also believe that the Government should be more supportive of the proposed changes than they were only a few years ago, when they turned down the county's previous proposals for rationalisation.
I have spoken at length about Oxfordshire's SSA, putting down markers for the review to which the Government are committed and which will, I hope, proceed urgently. I now want to generalise from the situation I have described.
I believe that the Government have become dangerously over-reliant on the principle of formula funding for public services. SSAs were invented to distribute central Government grant amounting to about half local authority funding. There has always been an element of rough justice in the SSA system, but it was a justice that all could understand, and, when needs were understated, the consequences could be mitigated by the local determination of business and domestic rates.
The business rate has now been taken out of the hands of local government and put on a formula basis, while council tax increases have been subject to caps, which in turn are based on SSAs. To borrow an analogy from another area of debate, the Government are trying to play golf with only one club, or--worse--they are forcing local government to play its game with only a single club on a course that is more than ever scattered with bunkers and surrounded by increasingly rough grass.
The Government must recognise the real dangers to locally delivered public services which that trend represents. More than 66 different changes in the methodology by which SSA is distributed were considered for 1996-97. Compared with the previous method of calculation, if all the seven best options had been chosen, Oxfordshire would have had £4 million more SSA than it actually got. If the worst six options had been chosen, Oxfordshire would have been given£9 million less SSA than it actually got.
Over the whole process hangs a promise of improbably large gains and the real spectre of disastrous losses. Meanwhile, the imposition of caps, also based on SSAs, in effect deprives local authorities of the means of coping with these statistical vagaries.
Mr. Andrew Smith (Oxford, East):
I am grateful to the hon. Member for Wantage (Mr. Jackson) for curtailing his speech to enable me to make this contribution. I will not embarrass him too much by praising the large part of it with which I agreed. It is a great shame that his vote will not follow the logic of his argument.
The hon. Gentleman's speech was a damning indictment of the argument by the right hon. Member for Witney (Mr. Hurd). I have no desire to get into a slanging match with the right hon. Gentleman, who has given distinguished service to this country. However, he has done no service to our county this evening in describing as threadbare the arguments put forward locally by people of all parties and none. I remind him that there were Conservative members on the delegation that originally challenged the SSA. There is no doubt that the balance of opinion, as well as argument, within the county reflects the points made by his hon. Friend the Member for Wantage.
I too rise to speak in defence of essential services in Oxfordshire and the quality of provision, which will be severely damaged if the order is passed; there is no doubt about that. I want to give voice to the widespread and intense anger felt in the county as a result of what the Conservative party is doing to our services.
This debate is not about extra central Government spending. As my hon. Friends know, I would be the last person, as shadow Chief Secretary to the Treasury, to argue for more or to pledge more. However, as hon. Members know, in the matter of local authority finances, there is quite properly a choice to be made locally--the trade-off between the level of council tax and the level of local services.
As my hon. Friend the Member for North-West Durham (Ms Armstrong) said, except in the most exceptional circumstances, it should be up to local people to make that decision, and councillors should be accountable through the local electoral process. The order denies that choice to the people of Oxfordshire, just as it denies it to the people of Cambridgeshire.
Conservative Members should be under no illusions. Passing the order this evening will mean larger classes, poorer delivery of the national curriculum, an inability to cope with the pressure on residential home provision, cuts in family support services and care in the community, damage to library services and more accidents on even more poorly maintained roads. Up to 50 more teachers will lose their jobs on top of the 110 teachers in Oxfordshire who will lose their jobs even with the budget that the county council wants.
The damage that the order will impose is opposed by the overwhelming majority of Oxfordshire people. I pay tribute to the energetic and well-argued campaign waged locally by people of all parties and none, and to the public-spirited crusade that the Oxford Mail has run in support of local services. Local Members of Parliament
have been inundated with petitions, letters, faxes and telephone calls from tens of thousands of Oxfordshire residents, 99 per cent. of whom have pleaded with them to oppose the cap and the cuts that will result.
Conservative Members should understand that, in voting for the order tonight, they are giving the strongest possible message to the people of Oxfordshire, the people of Cambridgeshire and the people of the country as a whole that today's Conservative party does not listen, does not care and is not fit to have ultimate control over people's education, social services, libraries and other local provisions.
The Government will argue, as they have before, that they have provided some extra flexibility by encouraging an application for extra borrowing approval in Oxfordshire. That will, indeed, help a little, but no figure has been given, so such an application can only ease some of the short-term transitional problems of implementing the capped budget, such as teacher redundancies. What is more, the Government's argument exposes their bankrupt logic. They will encourage extra borrowing to allow teachers to be sacked. What sort of system is that?
Like the hon. Member for Wantage, I thank the Minister of State for the courteous and seemingly open-minded hearing he gave our representations. However, I do not believe that he has listened enough, or that he has taken full account of the unfair damage that the cap will do to Oxfordshire's services. But, of course, he faced the problem that local Conservative councillors--who had supported our initial representations on the SSA--did not join us in opposing the cap and the damage that it would inflict. If he was receiving advice from such hon. Members as the right hon. Member for Witney, I am not surprised that Oxfordshire has come out of this as badly as it has.
I have no doubt that, if all Oxfordshire Members of Parliament had spoken up for their constituents' interests, and if Conservative councillors had joined us in this campaign, Oxfordshire could and would have extracted a better deal, even from this Government. As it is, the damage will be great. People in Oxfordshire are and will remain very angry.
No one has been able to answer one very simple question. Oxfordshire is not one of the councils that annually knocks on the Minister's door to object to capping and to plead special difficulties. The council supports, as do I, the drive for value for money in public services.
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