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Mr. Prescott: We have made clear what the standard spending assessments are, what the services are and what money will be provided for them. The local authority can make a judgment about how the money is spent and what it considers to be its front-line services. We cannot hypothecate or ring-fence, as we said before about education. We sincerely hope that local authorities will use their good judgment to spend on those services, based on the SSAs. If they have any doubt, they can talk to my hon. Friend the Minister for Local Government and Housing, who will be going through the consultation procedures on the matter. With regard to the extra burdens that will be placed on my hon. Friend's Pendle authority, they will be taken into account, but the judgments will ultimately be made by the local authority.

Mr. Edward Davey (Kingston and Surbiton): Last year, the Deputy Prime Minister referred to Kingston as a "leafy borough" and went on to announce one of the worst settlements for our borough for many years, resulting in cuts across the board. If this is indeed one of the most generous settlements in the past seven years, does he realise that the others have been really mean? Does he realise that there are pockets of genuine need and deprivation in boroughs such as Kingston and other boroughs in London? Will he confirm that as his SSA changes are phased in over the next few years, London boroughs such as Kingston will lose out?

Mr. Prescott: I still think that the settlement is generous. My reference to leafy Kingston recalls the time when I fought my first election as a candidate in Hull, which was Kingston-upon-Hull, against the representative of Kingston-upon-Thames, who later became the Chancellor and then Lord Lamont. I can tell the hon. Gentleman that compared to Hull, Kingston-upon-Thames looks rather leafy.

We want fair criteria for the distribution of resources. The settlement for Kingston is a 4.8 per cent. increase, with £2.5 million for education. That is not chickenfeed, by any measure. The changes in the SSA, some of which we have already introduced, as I told the House, are required for a fairer distribution, whether to meet educational needs or the area cost adjustment. We are working on that, and I have told the House what I intend to do.

Mr. Andrew Dismore (Hendon): I welcome my right hon. Friend's decision not to change the additional education needs formula for this year. In London, we recognise that there are anomalies in the formula, but we have special problems--for example, in my local authority, Barnet, a substantial number of children have English as a second language. I assure my right hon. Friend that in London we are committed to working towards a consensus to sort out that difficult issue.

Mr. Prescott: My memory did not serve me well when I was trying to think of all the local authorities and extract the information on Barnet.

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Educational needs, like area cost adjustments, create difficulties in assessing the differences between various parts of the country, which are often identified as London and the rest, or as north and south. We will take into account the need for a fairer settlement. As my hon. Friend knows, the present settlement is 4.2 per cent. and almost £7 million more for education. I believe that he will welcome that. We must await the final results of the work that we are doing on the new assessments for educational needs.

Mr. James Gray (North Wiltshire): Salary costs in Chippenham, which is in my constituency and which does not benefit from the area cost adjustment, are precisely the same as salary costs in Newbury, just over the border in Berkshire, which does so benefit. Does the right hon. Gentleman not realise that, owing to the very nature of the area cost adjustment, he will never achieve consensus? Those close to London will want to keep it, while those away from London will want to do away with it.

Does the right hon. Gentleman recognise that a tax is being imposed on areas such as mine? Is not the only clear way to deal with the area cost adjustment to get rid of it once and for all?

Mr. Prescott: That may well be a consideration. I do not necessarily agree with it, but such suggestions have been made by various parties that approach the matter from different angles. They all have solutions that favour them, but do not necessarily favour the other areas affected by the criterion.

Last year, my hon. Friend the Member for Cambridge (Mrs. Campbell) made a similar point about the need to recognise the difference between boundaries, and the effects of what is done. It is a real problem, which I cannot ignore, and we shall take it into account. Once we begin to draw lines in relation to different criteria, there is always an interface; but there is always an interface between the rich and the poor. We must make a judgment.

Wiltshire county council is receiving an extra 6 per cent. this year. I am glad that the hon. Gentleman did not criticise that amount, because I need not go on to say that, in the last year of their Administration, the Tories provided only 3 per cent.

Dr. George Turner (North-West Norfolk): I congratulate my right hon. Friend on the poker face that he managed to maintain when he came to Norfolk last week to announce the publication of a White Paper on the issue, and on the pleasant and straightforward way in which he and his colleague heard the many representations from the county.

My right hon. Friend has already given the figures for Norfolk. As the former chairman of the education committee who had to implement the last grant settlement under the last Government, I know how much better the present chairman will feel when he sees those figures tonight.

What my right hon. Friend has said is evidence of new Labour's willingness to look afresh at issues that have plagued Norfolk for 18 years. However, although this may be a good settlement for the three years to come, I join those who agree with my right hon. Friend that we need

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to consider the establishment of a more comprehensive system, which is seen to be fair. I hope that the three years will be used for that purpose.

Mr. Prescott: I thank my hon. Friend for what he has said--especially his reference to Friday's meeting in Norfolk, which involved Members of Parliament on both sides of the House. It was an excellent meeting, attended by members of local authorities and representatives of the agriculture industry. I announced the Government's intention to publish a rural White Paper to examine the problems. As I have said, I thought that the meeting was excellent, and I believe that everyone left it with the same impression.

My hon. Friend has raised an important point, which was borne in on me again in Norfolk. The county made clear its feeling that it had suffered under the previous Administration, because more money went to the shire districts than to the county. To be fair, I must add that more was still going to the county, but it was distributed differently owing to the different formulae used for the districts and the county. The changes that I have announced will reverse that, to the extent that more will go to the county, because of the definition of the services and the sparsity criteria that we have accepted. In any event, whether the money goes to the county or the districts--I know that different services are involved--there will be more and better resources than ever before, however they are distributed.

Mr. Nicholas Winterton (Macclesfield) rose--

Madam Speaker: Order. I did not see the hon. Gentleman in the Chamber at 3.30 pm. Has he been present throughout the statement and the subsequent exchanges?

Mr. Winterton: I am afraid not. I had another engagement in the building. I was going to apologise, if you called me, Madam Speaker, for being absent for part of the statement.

Madam Speaker: I do not call any Member who has been absent for any part of a statement. I have been making that clear for some time.

Mr. Barry Gardiner (Brent, North): I thank my right hon. Friend and his colleagues for the care with which they have listened to representations over the past few months, and in particular, for their response in regard to additional educational needs and the arguments for retaining ethnicity criteria.

As my right hon. Friend knows, in the borough that I represent 106 languages are spoken, and in our schools English is the second language for 61 per cent. of children. That makes my right hon. Friend's proposals particularly welcome. Will he consider the ethnicity criteria changes in personal social services? I believe that they will have an extremely deleterious effect on my borough of Brent, and a number of others. I should be grateful if my right hon. Friend and his colleagues agreed to meet representatives from my local authority, and others who are affected, to consider the matter further.

Mr. Prescott: I am grateful to my hon. Friend for the way in which he raises this matter, because it reminds

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hon. Members on both sides of the House that different authorities will be affected if the criteria are changed. There is a legitimate complaint and concern here; however fair we have been in finding that formula, there will be legitimate grievances against the conclusions that we have drawn.

Brent is certainly one of those authorities--the SSA increase is 3 per cent., and my hon. Friend has explained the reasons why. I tried to explain them to a number of northern councillors at a recent meeting. They all think that this is a north-south business, but we have to point out that poverty, whether in leafy Kingston or wherever, is in all our areas. We all have areas of poverty and deprivation, which the House will want to try to help.

My hon. Friend has a very good point, and I am well aware of it. Although there will be better settlements in respect of capital receipts--his area will benefit--that does not mitigate his central point. When we make changes in these criteria, we cannot always assume that there will be proper distribution, in the way that we want. The criteria can work effectively against what we intend. I think that that has happened in Brent, and I should be delighted to meet my hon. Friend to talk about the conclusions of this.

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