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Mr. Robert Jackson: The Minister rightly says that she is obliged to consider the specific case of each authority, but that completely destroys her argument that she is simply implementing the previous Government's policies. Last year, the previous Government agreed to additional resources for Oxfordshire. They were prepared to consider the case and they met it. This year, the Minister--given the same opportunity to consider the local arguments and circumstances--has turned Oxfordshire down.
Ms Armstrong: Oxfordshire put a specific case this year and I considered it. I shall deal in a moment with the specifics of the case.
During the debate, I am sure that we shall hear many examples of the efficiency of each authority. I have made it clear before that it is important that authorities pursue efficiency gains, as that will enable them to provide the best services at value for money for local people. I look for that continuing improvement in authorities. Capping, however, is not about whether an authority is efficient: it is about whether the cap proposed for that authority is reasonable, achievable and appropriate. The fact that an authority claims to be efficient is not of itself a justification for it to take a larger slice of the cake of general Government expenditure. The demands of individual authorities have to be examined in the context of the needs of the economy as a whole.
Mr. Bill O'Brien (Normanton):
I accept that the limit set by the Government is within the confines of the
Mr. Mike Hancock (Portsmouth, South):
Will the Minister give way, on the same point?
Ms Armstrong:
I must deal with one intervention at a time, and I am sure that you, Mr. Deputy Speaker, will ensure that I do.
I accept the point made by my hon. Friend the Member for Normanton (Mr. O'Brien) that there is a feeling abroad, especially in his local authority and in many nearby, that the formula has not been fair. He will know--if he did not, I hope that he will ensure that his authority immediately takes advantage of the knowledge--that working parties involving the Local Government Association and officials from my Department are already examining the criteria, and the case that authorities such as his have made.
I hope that we shall be able to come up with a fairer system. We shall not be able to do everything that we would want to do, because that will need action such as revaluations and more research. None the less, we are determined to make things much fairer, and to ensure that local authorities at least know that they are part of determining the system, as well as having it imposed on them.
Mr. Hancock:
The Chancellor of the Exchequer had a short period--less than 10 weeks--to prepare a Budget and present it to Parliament. So does the Minister not believe that her Department had ample time to prepare a change in legislation that could have been agreed, and would have allowed a fair system to operate in local government? Does she think it fair that a Labour Government are ordering local authorities to sack teachers and to deprive the elderly of domiciliary care that they desperately need and deserve?
Ms Armstrong:
I am not certain exactly what legislation the hon. Gentleman would have expected us to put through the House in that time. We are not asking authorities to sack teachers; we are asking them to order their priorities within the organisation so as to deal with the priorities of their own areas.
Oxfordshire has set a budget of £345.530 million--£6 million above its proposed cap. It argues, as its representatives did when they came to see me, that since 1991-92 it has reduced spending by £60 million, so the scope for further savings is severely limited. It also argues that many of the spending pressures are outside its control, and that it has no significant reserves that it could use to support its revenue spending.
I do not dispute the fact that Oxfordshire has reduced its spending in recent years. I would point out, however--for it is not always made as clear as it might be--that we
are talking about reductions against plans and projections, not about cash cuts. In fact, since 1991-92, Oxfordshire's budget has increased, on an adjusted basis, by 17 per cent. in cash terms. Furthermore, all authorities have had to make significant reductions in recent years.
Oxfordshire challenged its cap last year and as a result was granted a supplementary credit approval for £3.5 million. It was made perfectly clear at the time that that was meant as a one-off measure, to give the authority time to tackle its budgetary problem. As the right hon. Member for Suffolk, Coastal (Mr. Gummer), the previous Secretary of State, said in last year's debate, the SCA was intended to give Oxfordshire
Mr. Ken Livingstone (Brent, East)
rose--
Ms Armstrong:
I think I have already given way enough--
Mr. Livingstone:
The Minister is misleading the House.
Ms Armstrong:
It is now even less likely that I shall give way.
Mr. Deputy Speaker (Mr. Michael J. Martin):
Order. The hon. Lady is not misleading the House; neither is she giving way.
Mr. Livingstone:
On a point of order, Mr. Deputy Speaker. Most hon. Members have received a briefing that clearly states that Oxfordshire is the lowest-spending English county--whereas the Minister is making it sound as if Derek Hatton runs the damn place.
Mr. Deputy Speaker:
Order. Briefings that may be circulating have nothing whatever to do with the Chair, who is concerned only with the business before the House.
Ms Armstrong:
I have not put out any briefing, and I am going on to deal with the very point that the hon. Member has just raised. I am not saying that I will not give way at all, but I do think Members should listen to what I have to say about Oxfordshire before I give way again.
We accept that Oxfordshire has no significant useable reserves, although it is by no means the only authority in that position. Furthermore, that of itself is not sufficient reason to agree to a concession. If it were, it would be a perverse incentive for authorities to be profligate with their reserves so as to get a capping concession. That would hardly be a sensible signal to give local authorities.
We have carefully considered all the relevant aspects of Oxfordshire's case. We do not consider its position different enough from that of other LEAs to justify a relaxation in its capping limit. Its permitted increase of 2.2 per cent. was the average for the counties and more than the average for other LEAs, such as metropolitan districts, which received 1.8 per cent.--yet all of them managed to set budgets within their provisional cap. It was difficult and painful, but they did it. We therefore propose that the original cap should be enforced. If the draft order is agreed to, that will result in a council tax reduction of almost £28 for a two-adult, band D household in Oxfordshire.
I understand that Oxfordshire is taking steps to put its financial house in order; it discussed that with me at a meeting. Councillors told me that they are in the process of adopting an action plan, which will involve short-term reviews, medium-term planning, target setting and zero-based reviews. I hope that those measures will bring real benefits to the authority through efficiency gains and improved service delivery.
To answer my hon. Friend the Member for Brent, East (Mr. Livingstone), we do not think that spending per head is the best measure of need to spend. Making allowance for the differing circumstances of each authority, Oxfordshire spends more than 13 other county councils do, compared with SSA. I did not therefore have sufficient grounds to treat Oxfordshire as a special case and raise its cap.
Dr. Evan Harris (Oxford, West and Abingdon):
The hon. Lady has said that the £3.5 million supplementary credit approval is sufficient this year to solve Oxfordshire's problems, yet in last year's debate she agreed with other hon. Members that it would be no more than a temporary measure to solve the acute problems at that time. Do not Oxfordshire's problems this year result solely from that temporary measure? Interest has to be repaid on the loan--
"another year to get its budget into line with our assessment of an appropriate level of expenditure."--[Official Report, 22 May 1996; Vol. 278, c. 355.]
There is nothing--and there was nothing either in its presentation to me or in the answers to the questions that I asked--to suggest that Oxfordshire used the time provided by that one-off support to bring its expenditure more into line with its cap this year. On the contrary, the SCA was used solely to support revenue expenditure at a level that clearly would not be sustainable this year.
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