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Mr. Andrew Stunell (Hazel Grove): Will the Minister give way?
Mr. Raynsford: I cannot give way, because this is a time-limited debate. As the hon. Gentleman will understand, I have to reply to my hon. Friend the Member for Wentworth and other hon. Members who spoke in the debate.
From late autumn onwards, key outputs from the review will consist of a short sequence of consultation papers on specific aspects of the system, followed in the spring by proposals for change contained in a White Paper on local government. The White Paper will cover both finance and other, non-financial changes, including best value and democratic innovation.
I shall now deal with the work that we have been doing this year to ensure a fairer grant distribution. SSAs form the basis for the distribution of revenue support grant and are based on measures of spending need that apply to all local authorities. SSA calculation is discussed with representatives of local government. Having said that, we
realise that there are ways in which SSA distribution might be improved to enable a fairer distribution of Government grant between local authorities.
My officials, together with those in other Departments, have covered a great deal of ground this year in discussing with local government, in the SSA sub-group, possible changes to SSA formulae for 1998-99. We are currently considering the options that are on the table, and our provisional decisions will be announced later in the autumn.
Among the issues that have been considered this year are several about which my hon. Friend the Member for Wentworth and, indeed, Rotherham council and other SIGOMA authorities have expressed concern. We have reviewed the social and economic indices in the all other services SSA. This review involved the scrutiny of more than 100 possible indicators and led to agreement with local government on a set of ground rules to be applied in the statistical process involved. As with all investigation of changes to SSA methodology, the work has been carried out in the open.
With colleagues in the Department of Health, we have examined most of the elements of the personal social services SSA this year. This includes a review of the other social services index in the other social services SSA, which followed the same approach as the review of the social and economic indices.
Together with researchers at York university, to whom we have already alluded, we have done some more work on a new formula to reflect the need to spend on children's social services following the implementation of the Children Act 1989. Many local authorities consider it a clear improvement on the present formula, but others believe that some important issues have yet to be resolved. One such issue is the extent to which variations in fostering costs are reflected, and another is whether there should be an indicator of ethnicity.
In a similar vein, we have taken forward the work done last year by Kent university in deriving a formula for elderly residential social services which takes account of the community care changes of 1993. This has also had a mixed reception. Some authorities believe that it should be implemented because they think it is a clear improvement on the present formula; others would like further investigation of some of the data before a change is adopted.
The way in which visitors and commuters are treated in the all other services SSA formula has also been the subject of investigation. The fact that the present formula implicitly assumes that visitors and commuters are as deprived as the people who live in the area to which they travel has often been criticised.
There are several options for changing this aspect of the formula for 1998-99. The available options cover a range of different assumptions as to how the costs relating to visitors
and commuters in areas of high population density or sparsity should be applied. We shall need to decide whether any of the options represents a clear improvement on the present formula.
The area cost adjustment allows for higher costs in London and the rest of the south-east. It is another element of SSAs which is often subject to criticism. More work on this has been done this year to build on the findings of the 1996 Elliott review. Although those options remain available for consideration, we have recently announced that we intend to commission further research to examine the specific cost approach to calculating the ACA. The research is expected to be concluded in May next year.
Metropolitan authorities have this year been involved in discussions about the capital financing SSA, the other issue raised by my hon. Friend. An option using figures for actual, rather than notional, levels of debt in 1990 has been proposed, and several more technical adjustments have been suggested. We recognise that a move to the use of actual debt has many advocates, including my hon. Friend, but it also has many opponents. Although some see it as a more accurate way of reflecting authorities' need for spending, others suggest that it would unfairly penalise authorities which have chosen to pay off their debts.
I have outlined just some of the aspects of SSA methodology which have been considered this year. They highlight the difficulty of trying to achieve a balance and fairness. We are clear that any system we adopt must be lasting and must command the confidence of local government. We will not rush into changes.
For that reason, I have to disappoint my hon. Friend the Member for St. Helens, North, who called for radical changes this year. As my hon. Friend the Member for Wentworth rightly recognised, we have to be very careful about making changes that will have a dramatic effect on local authority budgets. My hon. Friend the Member for Barnsley, East and Mexborough made that very point.
My hon. Friend the Member for Doncaster, Central mentioned the collection fund. Sums raised in one year in excess of the anticipated yield of council tax must rightly be applied to the following year's budget; otherwise, there could be a perverse incentive for authorities to collect more than the council needed to meet its budget.
This has been an interesting debate on an important subject, and I am grateful to my hon. Friend the Member for Wentworth for giving us the opportunity. I hope that I have been able to show the Government's real concern to ensure a move towards a fairer system of support for local authority spending. I hope that, as and when my hon. Friend sees the results of our discussions later this autumn, he will feel that his confidence that we are making progress is fully justified.
Question put and agreed to.
Adjourned accordingly at six minutes to Seven o'clock.
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