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Mr. David Heath (Somerton and Frome): I should like to draw to my hon. Friend's attention the remarks of the Minister for School Standards in last night's Adjournment debate. She said:

Somerset county council--

    "is receiving less SSA than he and his constituents have a right to expect"--[Official Report, 3 February 1999; Vol. 324, c. 1055.]

If that is the case, why are the Government not doing something about it?

Mr. Burstow: That is one reason why we shall vote against this inadequate settlement. Last night's Adjournment debate showed that the Government accept that it is inadequate for Somerset.

Where will the £68 million needed to meet the teachers' pay award come from? It will come from the budget for classroom books and materials and from cuts to other services. My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) tells me that, according to the Government's standard spending assessment figures, Northumberland county council is expected to spend only £2,807 per pupil, compared with a figure of £4,553 for Kensington and Chelsea. There may well be differences between those areas. That is not under dispute. However, it is impossible for a council such as Northumberland to maintain the same education standards when the gap is so wide. We learn today that there is to be a 10 per cent. increase in council tax in Northumberland as a consequence of the settlement that the Government are dishing out.

I have heard recently from my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) that North Yorkshire has lost a further £500,000 from its funding this week. On Wednesday, the council agreed to passport all £12.9 million of the education SSA through to education, but that does not meet the extra costs of the standards fund, transport and special educational needs, so it has had to write to tell the head teachers to expect a 1.5 per cent. cut in their budgets and be prepared to sack teachers and support workers.

Jackie Ballard (Taunton): My hon. Friend will be aware that many councils will have large council tax rises and service cuts. Does he agree that the system of local government finance is so opaque that electors do not know whether they have an inefficient council or a mean Government?

Mr. Burstow: The pseudo-science of SSAs and the capping regime, under which councils do not know on what basis they are to be capped, mean that accountability is blurred and it is difficult for people to know whether they should write an angry letter to the Minister or try to vote their county councillor out of office.

North Yorkshire estimates that its council tax will have to rise by 9.7 per cent. Try explaining to people there why their council tax is going up by 9.7 per cent. while services are being cut and teachers are being sacked.

Dr. Alan Whitehead (Southampton, Test): Does not the hon. Gentleman's argument mean that he should

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support the Government's moratorium on changes for three years while a more equitable system is worked out and agreed by all concerned?

Mr. Burstow: Part of my argument is that the settlement and the distribution methodology are still unsound. That is why we shall vote against the settlement. Stability in an unsound distribution system is not stability for those councils that will have to make cuts. Many hon. Members on both sides have clearly shown today that they face serious cuts to local services. However, Ministers say that there will be no cuts to front-line services. That is demonstrably untrue. Ministers must come out of the fantasy world of their fantasy figures and come into the real world, where cuts are being made to local services.

Mr. Gardiner: Will the hon. Gentleman give way?

Mr. Burstow: I am sorry, but I have already given way and I must make progress.

Ministers spent settlement day last December promising that council taxes would rise by just 4.5 per cent. That estimate was based on the national control totals rather than on local reality. Ministers tell us that they have to take an interest in controlling local spending because it is part of Government expenditure. As Lord Hunt's committee on relations between central and local government said, that is a Humpty Dumpty argument. International experience shows that the control of local government's self-financed expenditure is not critical to the success of the economy. Even in the UK, self-financed expenditure has been in and out of the control totals. As long as it remains part of the control totals, Whitehall will be calling the shots rather than the town hall, at the expense of local democracy.

As hon. Members have said, this year's settlement cannot be considered in isolation. The cumulative effect of years of inadequate settlement have taken their toll. In education, for example, the settlement announced in December 1997 left a £562 million funding gap between what had been passported to education and the cash provided by the Government. That left many councils struggling to balance their books and as a result, instead of falling, primary class sizes continued to increase.

The pressure to spend all the money that had been passported to education on education increased pressures on other services, so social services were in the front line for further cuts. It has been estimated that in the current financial year each social services department faced an average of £2.1 million in cuts. Nearly two out of three authorities increased charges, raising an additional £45 million and new charges were introduced raising a further £17 million. That money came out of the pockets of people who could not afford to pay, but as they needed the care, they had no choice. No Government ever acknowledge the cumulative effect of cuts, but it needs to be addressed otherwise core services will continue to be damaged.

It is not a good settlement for local government and nor is it a generous one, as Ministers would have us believe. It leaves community care for the elderly and disabled underfunded. It leaves councils to raid school budgets to fund the teachers' pay award. It leaves council tax payers bemused with bigger bills and poorer services and that is why we shall vote against it tonight.

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5.41 pm

Mr. David Watts (St. Helens, North): I congratulate my right hon. Friend the Secretary of State for the Environment, Transport and the Regions and my hon. Friend the Minister for Local Government and Housing on securing what is undoubtedly an excellent settlement for local government expenditure. I did not expect Opposition Members to support it. We all know that local elections are pending and we can all envisage the manifestos being rehearsed in today's speeches. However, I recognise that there are problems. Certainly 18 years of Tory Government have left local authorities with reduced powers, little financial self-control and low morale. Local authorities are now unable to respond to local community needs and as a result the number of people taking part in local elections has declined. This year's settlement will maintain services, will allow for some slight increases in expenditure on key services and will lead to some improvements.

On the crucial issue of fairness I do not believe that the settlement makes much progress on changing the grant system to make it fairer on local authorities such as St. Helens. However, before Opposition Members support that sentiment, I would point out that the Government inherited the present inadequate grant system from the previous Administration. It is very unfair and has undoubtedly reduced the powers and independence of local government. It has increased central control over council budgets and has massively increased local council taxes so it is hardly surprising that the Government face major problems in dealing with the legacy of 18 years of Tory Government.

The present system crammed more council resources into areas such as Westminster. There is no doubt about that. After two years, no Opposition Member has yet come to the Dispatch Box and apologised to the House and to the country for the corruption in Westminster council.

I am sad that we have not made more progress on fairness. The decision to kick the issue into the long grass for three years is most disturbing. I had honestly hoped that we could have made more progress and I am disappointed, as is my local authority. However, I am aware of the difficulties. I watched my hon. Friend the Minister for Local Government and Housing on television recently. First she was criticised for not making enough changes to the system and then she was told that the changes that she had made were too severe. I understand that it is difficult to make changes. Obviously, people are concerned about the effects of this year's settlement on their local councils.

Many people in areas such as Barnsley and St. Helens want the Government to recognise that the unfairness has lasted, not for one year, but for 18 years. The massive differences in grant between authorities must be dealt with.

Moreover, the London lobby has been very strong. The Evening Standard has mounted a massive campaign about proposed changes to the education standard spending assessments. There is growing discontent in the north-west and Yorkshire about the weight thrown by the London press behind the lobby to maintain the status quo. The Government must understand that many people want and expect substantial changes to be made in the near future.

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My local council in St. Helens is run well. It is praised by the district auditor, has fewer chief officers than most local authorities, and is an efficient and effective organisation. However, its council tax is high and there is a shortage of resources. That is not due to the way in which the council is run but to the grant system with which we have to live.

The Government want local government to make efficiency savings of 2 per cent. That will be exceedingly difficult for authorities such as St. Helens and Barnsley. It will not be so difficult for areas such as Westminster: I would rather make annual cuts of 10 per cent. in Westminster's expenditure than of 2 per cent. inSt. Helens. Certain councils are awash with money, while others have very limited resources.

It is unfair to assert that, under the present grants system, each local authority should be treated the same. It will be virtually impossible for areas such as Barnsley to achieve the Government target. We have heard already that, despite this year's good settlement, there is likely to be an increase of 10 per cent. in Barnsley's council tax, and further cuts in provision are also probable. Given Barnsley council's massive efficiency savings over the past few years, that is not appropriate.

I shall briefly describe the problems that we face. How can it be fair for Westminster to be considered to be in greater need than Liverpool? How can Wandsworth be in greater need than Barnsley? How can Westminster get £1,000 more per child than St. Helens for the provision of education, and £150 per person more for cultural events? How can leafy Kensington and Chelsea get £150 more than St. Helens in SSAs?

The facts speak for themselves. The present system is corrupt and needs to be radically reviewed. Local government spending should be based first on the standard cost of service provision, then on the spending needs of each local authority. For example, if a school has lots of pupils who speak languages other than English, the amount of money devoted to that school should be based on the actual costs incurred, rather than on some theory put together by the Department of the Environment, Transport and the Regions.

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