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Mr. Sanders: Surely, given the fact that the head count is 18 months out of date, if a local authority has falling pupil rolls, it is quids in. It is when it has rising pupil numbers that it has the problem because there is a delay in the money reaching the schools.

Mr. Marshall: I do not really understand the point that the hon. Gentleman seeks to make, but, if he studied the relevant factors, he would know that the numbers are always 18 months to two years out of date. As a consequence, nearly all local authorities receive more educational expenditure than they would if the actual figures were known. Leicester is losing £1.7 million as a result of falling pupil rolls.

The two major changes that I have described, together with other changes that the Government have announced, mean that, this year, Leicester again faces substantial cuts: we have to seek to reduce the budget by some £5.5 million.

My understanding is that the controlling Labour group is meeting this evening to consider a package of cuts totalling about £5.5 million. I understand that it has pledged that that will not affect the level of front-line services, but, inevitably, with that order of cuts, non-front-line services will be severely adversely affected. It is also clear that jobs will inevitably be at risk. Assistance to the voluntary sector will be severely restricted. I understand that the amount of money that the city council gives to the Haymarket and Phoenix theatres in Leicester is likely to be reduced in the coming financial year, which will affect theatre lovers and theatre goers in Leicester. The Minister may argue that the proposed cuts do not affect front-line services, but, as a package, it will severely affect the overall services that Leicester is able provide.

To sum up, this settlement means another abysmal year for Leicester. Although I welcome the additional funding provided by the Government, I remind the House and the Minister that the extra £1.7 million is a one-off figure.

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Unless the Government find some additional means of providing assistance for Leicester in the next 12 months, the situation we will face next year will be just as difficult as that we are facing this year.

I have a final plea for my hon. Friend the Minister. When my hon. Friend is looking at the specific grants, particularly for social services, I accept that she must be fair to all local authorities, but I hope that she will bend over backwards to be ultra fair to Leicester.

5.26 pm

Mr. Paul Burstow (Sutton and Cheam): Local government settlements always bring out a touch of the showman--perhaps I should say the magician--in the Secretary of State. This settlement is no different from any previous settlement in that there is smoke and mirrors and plenty of spin.

Mrs. Louise Ellman (Liverpool, Riverside): Will the hon. Gentleman give way?

Mr. Burstow: I think I should make a little more progress before taking interventions. I will be happy to take the hon. Lady's intervention later.

This year we are told that council tax need rise by only 4.5 per cent. and that this is the most generous settlement for seven years. Neither claim should be taken at face value. Both are based on the pseudo-science of standard spending assessments and I accept the Secretary of State's comment that it is important to have a thorough review in that respect.

Mr. Sanders : Will my hon. Friend give way? [Interruption.]

Mr. Burstow: I will give way to my hon. Friend and then to the hon. Member for Liverpool, Riverside (Mrs. Ellman)

Mr. Sanders: The review is important. If we analyse the areas which have done well and those which have done badly, some common themes will emerge. It is clear that the areas that have done badly this year tend to have large numbers of elderly people in care and rising pupil numbers and, demographically, those areas tend to be in the south and south-west. Those two factors must be looked at.

Mr. Burstow: That is a good point and I hope that the Minister is listening. I hope that such points will be taken into account in the review that she is undertaking.

Mrs. Ellman: Is the hon. Gentleman aware that, including the increase in SSA for social services of11.3 per cent., this settlement means that Liverpool city council could freeze council tax very shortly if it wished to do so? Does he intend to advise the Liberal Democrats currently running Liverpool to congratulate the Labour Government on this settlement and the opportunity that it affords them?

Mr. Burstow: I am grateful to the hon. Lady for her intervention because it enables me to say that, unlike the Labour party, we do not believe in prescribing from

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the centre. I shall certainly not be telling my colleagues on Liverpool city council what to do, which is in stark contrast to the Labour party's approach.

Mr. Barry Gardiner (Brent, North): Will the hon. Gentleman give way?

Mr. Burstow: I should utter a few more sentences and then I will give way.

It is important to examine a little more closely the idea that there will be a low level of council tax increase and a generous settlement. Last year, the Local Government Association surveyed local authorities to get a picture of the real pressures on budgets and services, some of which we have heard from Labour Members already. The association found that local authorities need a total of £3,188 million of additional revenue just to sustain current levels of service. Taking into account the Government's generous settlement, local government is still left staring into a £1.7 million black hole.

Mr. Gardiner: The hon. Gentleman was talking about the distribution of grant and the patterns that can be seen. Is the hon. Gentleman aware that 50 per cent. of all the losses sustained in children's personal social services in London have been sustained by councils with very high multi-ethnicity? That includes, Brent, Camden, Haringey, Hackney and Lambeth. Tower Hamlets is one of the exceptions because of the large number of tower blocks in the area. Over 50 per cent. of the ethnic population in those boroughs has borne 75 per cent. of all the losses in London.

Mr. Burstow: The hon. Gentleman makes a very fair point--with which the Minister will not agree, although it is borne out in our constituencies, where services are undoubtedly under severe pressure because of decisions made by the Secretary of State and his Ministers about how they will carve up the money available this year to local government.

The funding gap will be bridged in much the same way as it has been for years and years--by increased and new charges, tighter eligibility criteria, higher council tax increases and, of course, service cuts.

So how will this year's settlement be different? Crude and universal capping will remain. The Secretary of State told the House that last year would be the last year in which crude capping would operate. Closer examination of the figures reveals that there is still serious pressure on key services. Moreover, capping will not only remain but have two new added twists.

First, budget setting will become a game of Russian roulette, as the Secretary of State refuses to declare his capping principles in advance.

Secondly, council tax benefit limitation will add belt and braces to the capping system, leaving some of the poorest communities footing the bill for the poorest of their neighbours. I very much welcome the comments of the hon. Member for Normanton (Mr. O'Brien). I hope that Ministers will meet him and other Labour Members, listen to their arguments and decide to abandon that unacceptable and dishonest policy.

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When in opposition, Labour Members condemned the previous Government's introduction of the same principle, in proposals to claw back housing benefit. Indeed, 98 Labour Members signed an early-day motion condemning the previous Government on clawing back housing benefit. They should condemn also the proposed council tax benefit clawback.

The problem is that hon. Members will not be able to debate the clawback on the Floor of the House, as it will be dealt with in Committee, as secondary legislation. Legislation passed by the previous Government will therefore enable the current Government to introduce a regime of council tax benefit clawback.

We believe that there should have been a proper debate on the proposal on the Floor of the House, so that it could be amended and debated properly. Instead, the proposal will be rushed through in Committee by a few hon. Members and will not receive proper parliamentary scrutiny. The Government should be condemned for that. They should include the proposal in a local government Bill, so that we may have a proper debate on it.

Closer inspection of the figures provided by the Library reveals that the social services standard spending assessment for England will rise by 1.3 per cent., after adjusting for the current year's special transitional grant for community care. Even on the Government's own figures, that will leave a £100 million gap simply to meet inflation in social services.

A lower than inflation increase for social services will make cuts in current services inevitable. Moreover, the 1.3 per cent. increase disguises considerable variations between classes of authority. Undermining current services by underfunding makes no sense at a time when the Government are setting targets and directing a whole host of specific grants at social services to secure change and improvement. Ultimately, it will be self-defeating.

In a report to Worcestershire's social services committee, the department's director, in describing the effect of the loss of grant for community care, said:

He went on to say:

    "The likelihood therefore is new spend on new initiatives in some cases, and at the same time deep cuts in other parts of the service."

The problem is that the Government are focused on delivering a change agenda, but are blind to the need to maintain existing core services. Consequently, for example, Leicestershire faces the prospect of rationing admissions to homes for elderly people so that it might bridge the funding gap. Although such rationing is not allowed in law, authorities are working out ways of trying to achieve it. It is another savage cut that will impact on the lives of elderly people.

The same pressures apply to education. We have learnt that Ministers are saying that education funding in the settlement is sufficient to fund the pay award in full. Yet the Secretary of State for Education is writing letters left, right and centre--to governors, head teachers and

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everyone else--to promise that that money will be given to schools to fund class-size reductions and all of the Government's other initiatives.

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