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Mr. Brady: I am sure that the hon. Lady is well aware that, over the years, many factors have resulted in certain changes in local authority control. One of the principal factors in recent years was that the Conservative Government had become unpopular. There is no question about that, and we are well aware of it. Even though that happened, the borough of Trafford remained under Conservative control from 1974, when it was set up, until 1995. The Labour party has only a very tenuous grip on it, and should wisely consider some of the specific examples that I quoted.

Ms Keeble: That was a speech, not an intervention. The reason why people supported Labour-controlled local authorities in the 1980s and the 1990s when, I admit, some of us made mistakes, was that we were overwhelmingly seen to be supporting the communities that we represented. People supported us because we had that link. As leader of an inner-London authority, I had to grapple with supporting and protecting communities against the appalling scandals of Tory economic policy and the impact that it had.

During all the Tory years, male unemployment in the ward that I represented was about 35 per cent., and unemployment among women was so high that I think that it would have been virtually impossible to calculate. Local shops closed down not because of lack of trade but because people in the community did not have enough money in their pockets to be able to buy enough tokeep the shops open. There was low income and unemployment. Whole communities were discarded by the Tory Government as being unworthy of, for example, job creation schemes. Disadvantages were not tackled. Such communities were deemed unworthy of programmes that could deal with disadvantages of race, sex and disability.

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Labour councils had to pick up the tab for protecting the communities that Tory central Government had discarded. In Southwark, we used to call the Tory Government the "shower across the water". It was apparent what was happening. In examining our management of local finances, we had to bear certain things in mind. My council was much criticised by the shower across the water--I was going to say "you lot", but I thought that I might get into trouble.

Most local councils look to maximise spending on local services, because they are the only services that people will get. Labour councils offered the only lifeline out of poverty and unemployment. By reorganising their operations, most Labour councils sought to maximise spending on services and not on bureaucracy.

Mr. Tim Yeo (South Suffolk): The hon. Lady is obviously concerned that Southwark should have enough money to spend on services. Does she share the concern expressed by my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) about the effects of the change to the capital financing adjustment? In Southwark, the standard spending assessment for next year will be reduced by £860,000 as a direct result of that change. Does the hon. Lady believe that that will help the voters about whom she is so concerned?

Ms Keeble: I do not represent any of the Southwark constituencies, so it is difficult to comment on the details of those figures. I am talking about the council's history and how we have arrived at our present position. In that context, I am explaining why the Government are taking the right decisions. The council sought to maximise expenditure on services, which meant that the money spent--be it revenue or capital--was geared directly to ensuring maximum service provision.

Mr. Tony Colman (Putney): Does my hon. Friend agree that all debt entered into during the 18 years of Tory central control was approved by the then Department of the Environment? Local authorities could not go it alone: their debt was always fully approved by the Tory Government of the day.

Ms Keeble: Exactly. I thank my hon. Friend for that comment, which brings me to my next point--and if the hon. Member for Altrincham and Sale, West objects, I shall certainly give way.

Southwark council was aware that, despite opposition to Conservative policies on local government finance, we had an obligation to operate within the law and to ensure that we made sound financial arrangements for local services upon which the community relied. That is why we adopted both capital and revenue spending regimes that were not always incredibly helpful: we had to live within them in order to ensure that services were not disrupted by intervention from central Government via the Department of the Environment. That is why my hon. Friend's point is so important.

Mr. Brady: I am keen to reply to that specific point. It takes no account of the case that I made regarding some of the creative accounting techniques used. A key problem in the 1980s was not the levels of debt authorised by the Department of the Environment, but the mechanisms that local authorities sometimes used to avoid those controls.

Ms Keeble: I am sure that those creative accounting techniques have no bearing on the changes that we are

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discussing today. The most scandalous accounting--I shall not call it creative accounting--was practised by Westminster council. Southwark council examined the local government spending rules and worked out how we could use those rules--completely within the law and approved by the Department of the Environment, as my hon. Friend the Member for Putney (Mr. Colman) said--to maximise spending on the local services on which our community relied.

That brings me to a matter which I am sure that my hon. Friend the Minister will mention. The experience of those years left me--and probably most my colleagues--in absolutely no doubt that the rules for local government spending were abstruse and chaotic and urgently needed reform. Both the revenue and capital rules should match closely the needs of the area, so that SSA calculations are not based on the nonsense of hotel nights, and so on. Capital should reflect expenditure. It should be calculated in such a way that money allocated may be spent on capital projects, such as schools, and is not allocated to different forms of notional spending that would ultimately skew the way in which the money is spent.

I had to wrestle with those problems for eight years, and for three years as leader of Southwark council. I am extremely pleased that the Government are considering ways of changing both revenue spending and capital spending to ensure that they provide a good, sound basis for service provision. I am absolutely delighted that, through some other departmental and job creation programmes, the Government are addressing some of the employment issues that were such a problem for the council. That will automatically ease the serious pressures on council revenue spending with which I and many of my colleagues have wrestled in the past.

9.56 am

Mr. Laurence Robertson (Tewkesbury): I congratulate my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) on the way in which he introduced the debate. He put his finger on a complicated matter which has a great effect across the country, particularly in councils such as Trafford and Tewkesbury. I thank my hon. Friend for bringing the issue to the attention of the House.

The information that I shall use in my brief contribution was provided by the Under-Secretary of State, the hon. Member for Greenwich and Woolwich (Mr. Raynsford), a short time ago by way of a written answer. I am grateful for his assistance. When I examined the settlement in Tewkesbury, I found that the council faces a 5.1 per cent. reduction in its standard spending assessment. I found that quite odd, so I examined the situation more closely--the Minister was kind enough to provide the details--and I discovered that, if national totals had been taken into account, Tewkesbury would have received an increase of 0.8 per cent. If demographic changes in Tewkesbury had been taken into account, it would have had an increase of a further 0.6 per cent. However, the method of distribution would have meant a loss of 6.5 per cent.

Because of the changes, the net reduction in Tewkesbury is 5.1 per cent. I am told that changes in the composition of the indices in the all other services block and changes in the treatment of debt are responsible for that. That seems rather unfair. Tewkesbury does not have any debt, and that seems to have cost it dearly. My office contacted Tewkesbury's finance section yesterday, which

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agreed that the settlement was unfair. The council said that it might not have paid off its debts if it had known that the new system would be introduced. I am sure that many councils will be encouraged to take on more debt, in the knowledge that the Government will bail them out. The Government seem to have created a rather odd system that will encourage debt, which must lead to a reduction in council services throughout the country.

Mr. Colman: Will the hon. Gentleman join me, as a Member of Parliament with a Tory-controlled council--Wandsworth--which has reduced its services, in condemning Tory Wandsworth for sitting on more than £30 million of balances and refusing to pass a Labour group proposal for a lower council tax of £295, when it has been affected in a similar way to the hon. Gentleman's council?

Mr. Robertson: I will certainly not join the hon. Gentleman in condemning any council. I am not making that point, and I do not have the knowledge to speak about Wandsworth, although I understand that it has held a responsible level of council tax, community charge or rates for many years.

If a council increases its debt, the voters in the area should, unfortunately, have to pay for it until the next opportunity to kick out that council. I do not see why people in Tewkesbury, which has incurred no debt, should have their grant reduced simply to pay for the sort of councils that my hon. Friend the Member for Altrincham and Sale, West discussed.

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