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9.46 pm
The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): It is perhaps worth recalling the background to this settlement. Interestingly, Opposition Members spoke almost exclusively about redistribution; they did not address the amount available for local government in the public expenditure round. In previous years, the Opposition call was "Spend, spend, spend". Suddenly, the tune has changed: it is now all about redistribution.
The background to the change is that we live in a competitive world marketplace in which no one owes us a favour. Sensible people recognise increasingly that
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This is a tough settlement, but it is necessarily tough. It is less tough than the settlements that many Government Departments have had to accept. It is the end of the first stage of a process. Local authorities may set their budgets and, if they do so above the prescribed cap, they may put their case to the Government. We have shown that we will listen to local authority representations when there is an inescapable need to exceed that figure.
Several hon. Members mentioned the area cost adjustment, so let me be clear about it from the start. The Government and the local authority associations have tried for some years to find a way of assessing real labour costs--the total costs of employment--throughout the country. That is an extremely difficult exercise, and it is not easy to translate it into a workable mechanism. The latest Elliott report has provided much additional information, and we shall work with local authorities to try to arrive at a sensible, comprehensible mechanism that will command wide support, which we shall include as soon as possible.
The hon. Member for Wentworth (Mr. Hardy), who got in for a quickie at the end--he is now engaged in conversation--asked about the use of regeneration receipts. Perhaps someone should prod him to get his attention. It is possible for local authorities to use capital receipts specifically in the regeneration process. Speaking from memory, there are four wards in Rotherham that apply themselves to that approach. It is possible to use regeneration receipts alongside private sector money in the process of regeneration.
Mr. Curry:
It is not capped. It is not revenue support grant money but money that is realised for investment in regeneration. I hope that the hon. Gentleman will urge his local authority to do that, as I hope that he will urge it to transfer housing stock and to understand that local authorities should be in the business of service, not ownership. The authority should explore the full use of the private finance initiative. Local authorities that are imaginative and want to improve services have a great opportunity to do so if they get out of the old mindset of what they think local government is in place to do.
The hon. Member for Holborn and St. Pancras inevitably asked more questions than answers. Off hand, I cannot think of any question that he answered. He said that Labour would follow the expenditure pattern set this year by the Government. But he does not need to do that. If he wanted to, he could get rid of capping overnight. Legislative change is not needed. The capping orders that the House may consider when local authorities set their
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What would be the position in year two? If the hon. Members for Holborn and St. Pancras and for Durham, North-West (Ms Armstrong) are attacking the Government figures on council taxes in the Red Book, and if a Labour Government would maintain the Conservative Government's public expenditure control, the incoming Labour Government will have to agree to an increase in council taxes or cut the revenue support grant, which would cut public funding to local authorities from the centre. What would the Labour Government do? It is an important question. Opposition Members cannot have it both ways. Either a Labour Government will observe the expenditure constraints that have been set or they will throw them overboard. We need to know what the Opposition intend to do.
If the hon. Member for Holborn and St. Pancras is to use capping only as a reserve power--I use the words that he used--where is the saving to come from? If councils are not capped, there will be an increase in expenditure. Of course, the hon. Gentleman must find savings, because if we are to believe the right hon. Member for Dunfermline, East (Mr. Brown) the overall total will not change. The hon. Gentleman said that the distribution "will change". He said that he would see changes in the way in which the money will be allocated. He did not say anything about consulting anybody about the changes. Apparently that is not the same as changing the formula. I did not understand where the hon. Gentleman drew his distinction.
If distribution changes, those authorities whose provision increases will be able to spend more. That is a logical necessity. Authorities whose standard spending assessment reduces will still be able to spend at the same level, however, unless they are spending vastly over their SSA. So capping cannot force budget reductions. The effect of a major forced change in grant distribution can mean only an increase in public expenditure, which the right hon. Member for Dunfermline, East has said he will not tolerate. If capping is loosened, there will be an even greater increase in expenditure, which the right hon. Gentleman has said he will not tolerate.
We need to know where Labour stands. Is it a theoretical constraint or a practical constraint? Does it apply to the hon. Member for Holborn and St. Pancras or is it just for the birds? Where does this leave the Opposition in their claims about public expenditure?
We have heard the litany about Westminster, which is the Opposition's favourite council. We have heard notably about day visitors. Let us say that Westminster receives a grant of about £25 million for day visitors, which is 0.1 per cent. of RSG. What would happen if we opted for a great redistribution of that money? Let us suppose that we opted for County Durham, or the Durham authorities, as recipients of this munificence. It would amount to about £100,000 to be shared between County Durham, which is the county council, the seven districts, Darlington unitary authority and the police authority. It is worth noting who the big winners would be. Let us take Sedgefield, for example? Will it be £1 million or £2 million, £100,000 or £200,000? What will it be? It comes to a little over £20,000. Derwent Water would get £9,000, and Durham city would lose £34,000, because it receives a lot of money from the day visitor calculations.
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That is what would happen if the hon. Gentleman did nothing to damp the changes. If he damped the changes, the net benefit would be the square root of tuppence ha'penny. That shows how poverty stricken the Labour party's central proposition is.
The hon. Gentleman referred to the index. Let me tell him what is in the index that he so derides. It is about the proportion of households living in housing that is not self-contained or permanent, the proportion of households in overcrowded accommodation, the proportion living in rented accommodation, the proportion likely to be from ethnic minorities--born outside Britain, Ireland, the European Union, the old Commonwealth or the United States--or the proportion of households in priority need of housing. Those are the indicators of need that we use, and which are so roundly ridiculed and condemned by the Opposition.
Mr. Dennis Turner (Wolverhampton, South-East):
Will the Minister give way?
Mr. Curry:
The hon. Gentleman was not present for the whole debate, so I shall not give way to him now.
Mr. Turner:
On a point of order, Madam Speaker. The Minister said--as he did in the previous debate on local government--that I was not in my place during the debate. I was present during the speech of my hon. Friend the Member for North-West Durham (Ms Armstrong) and during the Minister's winding-up speech, and I wanted him to give way so as to hear about Wolverhampton.
Madam Speaker:
I think that that was a point of frustration rather than a point of order.
Mr. Curry:
We had the maiden voyage of Labour's new flagship local authority, which appears to be Harlow. In 1996-97, Harlow budgeted 40 per cent. above SSA, and this year it will budget at 43 per cent. above SSA if it is at its cap. Its council tax collection costs per household are £26.79 against a family average of £16.90. Its number of staff per thousand population is 17.5 against a family average of 8.7. Harlow is to efficient local government what J. Paul Getty is to beachcombing. If that is Labour's flagship, heaven help the flotilla and God save the admiral in charge of the fleet.
Hon. Members raised a great many points on the details of the settlements, a number of which related to the new unitary authorities. They will be looking for the efficiencies that we expect will come from bringing services together under one roof. A further tranche of credits will be released later in the year to deal with matters such as redundancy, because local authorities have asked for that.
My hon. Friend the Member for South-West Bedfordshire (Sir D. Madel) and others referred to transitional grant for council tax. I have noted the points that were made. Of course we will consider the needs of
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The hon. Member for Hemsworth (Mr. Trickett)--who can be sensible when he does not think about it--said that the formula should take account of mine closures. The formula takes account of the number of short-term and long-term unemployed, and of the number of people who receive housing benefit and income support. He made a serious point about weightings for children, but he will know that the idea that everyone should receive the same value is nonsense. How would he weight the needs of a city such as Bradford, which has a high immigrant population, and some areas in South Yorkshire, which have a small immigrant population? It is a question of judgment and detail, and not of fundamental principle.
It must be recognised that the supertram is a fundamentally misconceived project. If Sheffield had accepted some of the offers from the bus operators to carry out a joint ticketing operation at the start, it might have worked rather better. It seems that to go from where no one lives to where no one wants to go is an interminable journey--but there is still a problem to be solved, and I shall be meeting people shortly in that connection.
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