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Mr. Patrick McLoughlin (West Derbyshire): As far as Derbyshire is concerned, today's debate is held against a background of the capping imposed on Derbyshire county council earlier this year. The Government make great play of their getting rid of what they call crude and universal capping, but they are replacing crude and universal capping with a system that they are not prepared to define. The new system is to be fairer, nicer, lovey-dovey and more feely--no doubt, it will also be more understanding. However, they are the very Government who this year imposed the smallest cap ever on a local authority:£1 million off a budget of £470 million. The new Labour Government put that cap on Derbyshire.

So small is the cap that, for some authorities, rebilling cost almost as much again as the reduction set on those local authorities. In Amber Valley, rebilling council tax cost £85,000, whereas the reduction secured by that process was a mere £175,000. Those figures were confirmed to me today by the chief executive. In Derbyshire Dales, rebilling cost £29,000, whereas the overall reduction was £130,000. That is the background against which I see the Government's latest settlement.

I see the hon. Member for North-East Derbyshire (Mr. Barnes) in his place. He was unable to participate in the capping debate because of illness, so I am glad to see him back here today. At the last general election, numerous Labour Members of Parliament and candidates went up and down the county saying how different everything would be under a Labour Government. The area cost adjustment would be sorted out--evened out--so that there was fairness across the land. No more was the money to go to areas that benefited from the area cost adjustment and were supposedly being feather-bedded by the Tories.

It is interesting to look at what has happened in respect of the area cost adjustment, especially in primary schools. It is no good Labour Members blaming everything on the previous Conservative Government. I know they find it hard to understand, but I well understand that we have had a Labour Government for two years now, and the figures we are discussing are not Conservative figures. The figures are not the Conservatives' recommendations, but new Labour's recommendations to the House, which they will no doubt force through the House tonight.

In 1997-98, in Hertfordshire the SSA was £2,135 per pupil, whereas in Derbyshire it was £1,952: a difference--one that is largely owed to the area cost adjustment--of £183 per pupil. What do the latest figures show? Do they show that figure going down, or the area cost adjustment going down so that there is more equal distribution across the country? No. They reveal that the area cost adjustment is rising.

For several years, Derbyshire county council issued leaflets with its rates bills saying how awfully it was treated by the previous Conservative Government, how terrible was the difference in area cost adjustment and how the world would change when new Labour came into

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office: the universe would be nicer; the Derwent would flow with milk and honey and we would all go around smiling.

Mr. David Taylor (North-West Leicestershire): Not you.

Mr. McLoughlin: The hon. Gentleman is quite right--I am not smiling. That is because my constituents have been sold a false prospectus and they do not think that the Derwent flows with milk and honey because the area cost adjustment has increased instead of decreased.

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

Mr. McLoughlin: No, I will not because of the 10-minute rule on speeches. Under the previous Government, there was a full day's debate on the local government finance motion, and I should have liked such a debate today.

When the Conservative Government were responsible for primary schools, the area cost adjustment was £183 per pupil and now it is £197. That increase has nothing to do with the previous Government and everything to do with the new Labour Government. The same is true for the area cost adjustment for secondary schools because in the last year for which the Conservatives were responsible for that, Hertfordshire's advantage over Derbyshire amounted to £224 per pupil. The latest figure, for 1999-2000, is £234 per pupil.

I am not the only person who feels disappointed about that. I received a letter that the headmaster of Queen Elizabeth's grammar school in Ashbourne sent to parents. [Hon. Members: "Grammar school?"] Yes, a grammar school. I suggest that hon. Members come to Ashbourne because they would find that Queen Elizabeth's is a grammar school in name because of its foundation, but that it is a comprehensive school that takes pupils from every background. I dislike the way in which the words "grammar school" are regarded by Labour Members as swear words. It is true that the school is not in a catchment area to which the Prime Minister could send his children.

The headmaster said:

It is estimated that if that school was funded on the same basis as schools in Hertfordshire, it would receive £278,000 more than it does at present. That is why I am annoyed and I cannot accept the proposals before the House today.

The Government tried to build up expectations and there is no point in anyone saying that they did not. I shall wait with great interest to read the leaflet issued with Derbyshire county council's rates demand to find out whether it will point out, as it did under the previous Government, how unfairly Derbyshire is being treated by the Government, although that would require the council to be consistent.

There has been a disturbing admission by the Deputy Prime Minister and the Minister for Local Government and Housing--the hon. Lady has not yet made a speech,

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but she did intervene earlier--that no meetings would be held this year because the Government had no intention of changing the methodology. She is nodding.

Ms Armstrong: I announced that in December.

Mr. McLoughlin: I want to be absolutely clear on this. Perhaps the Minister can help me. Does that mean that we will see no change over the next three years in the area cost adjustment? That is a very important question, to which we all want an answer.

Ms Armstrong rose--

Mr. McLoughlin: I cannot give way due to time.

For many years, Derbyshire county council has blamed Conservative Governments for school financing problems. I have always maintained--and still maintain--that school funding is much more complicated than that. It is far too complex and opaque. The result, which everybody can see, is that schools and parents are caught in a web of statistics, on which everyone involved puts their own interpretation. I urge the Government to do something about that.

6.16 pm

Mr. Derek Twigg (Halton): I have a somewhat different perspective on this debate, which I shall elucidate.

We must recognise the importance of local government and the crucial, pivotal role that it plays in delivering many of our election pledges. Local authorities' important role in bringing about the improvements that we want--a better society and better local government--cannot be underestimated.

My council, Halton, is one of the new unitary authorities, which are very much in the front line for raising standards in schools and providing better services for young and old alike. Like many councils, Halton plays a pivotal role in other issues, such as introducing the new deal and the partnership within it. Many demands are therefore placed on its time and resources. It has responded positively, flexibly and innovatively to initiatives that the Government have launched. I want to explain why the local government grant settlement is a good one, and show by way of the example of Halton how the Government's approach to local government finance is making a positive difference in my constituency.

My authority is one of the 50 most socially deprived local authority areas in England and Wales. The need to provide better services, especially by raising educational standards and helping children via social services, is vital. My right hon. Friend the Deputy Prime Minister said that this is one of the most generous local government settlements since the introduction of the council tax. I have no hesitation in supporting the Government's view. The settlement was good for Halton this year, and will be good for it in the coming year, too. We cannot separate the two.

The approach to local government finance, certainly for Halton, has been good. There is clear and tangible evidence that the Government are making a positive difference to the lives of my constituents. More resources have been--and are being--made available. There is clear

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water between the previous Government's negative approach and the positive approach of this Government. For instance, under the previous Government, the settlement increased in 1995-96 by only 0.5 per cent. But for 1999-2000, the increase will be 5.5 per cent. The message from this settlement is that the Government want to support local government in improving the quality of services.

In Halton, we have seen an increase in standard spending assessment of 5.9 per cent. It will be spending above its SSA on education--spending £2 million extra on schools. School budgets will be increased and youth services will be better funded, as will adult education. That cannot be separated from other Government initiatives on education. My authority has received more than £2 million in successful standards fund bids. We have seen an increase in the allocation for professional development, and new classrooms. The effect of that on head teachers was fantastic. They have been after the extra money for many years, and it has made a positive difference.

There were five literacy and numeracy schemes in my constituency over the summer. One of them was the very first to integrate special needs children and children from mainstream schools. To see the determination of children on those schemes to achieve something and better themselves was fantastic. The council has also run several projects on social exclusion, and much more.

There has also been a good increase in annual capital guidelines. The need for more school places is recognised, especially in Widnes, the largest area in my constituency.

I am pleased that we have had a large increase in personal social services this year. The increase of 24 per cent. for children's social services is particularly important and recognises the inequalities under the previous system. Areas like mine have a high degree of social deprivation and difficulties in terms of the number of single parents, children living in poverty, and overcrowding. That has been a major determining factor in the allocation of extra resources, which are very welcome in my constituency.

I shall refer briefly to another respect in which the settlement shows the difference between the previous Government and the present one. People who know the north-west know that one of the great landmarks is the Widnes-Runcorn bridge. It is regularly jammed with traffic, because it was not built for the amount of traffic that uses it--we need a new bridge. The existing bridge needs extra maintenance and support. The previous Government and the previous county council did not fund that, but this Government have recognised the problem and have increased the transport programmes from£1 million to £3 million, which will go a long way towards dealing with the problems associated with the bridge. That is another example of the difference that the Government are making.

We cannot separate this year's announcement from last year's or from the other initiatives that the Government have taken. One of those involves capital receipts. For the first time, there has been a relaxation on capital receipts. The previous Government would not do that. Housing Ministers used to blame the Treasury. In Halton, the relaxation on capital receipts has meant an extra£2.2 million, much of which has been spent on

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modernising houses, which had stopped under the previous Government, and on central heating programmes.

The settlement is good for council tax payers in Halton, where the council tax increase this year will be in line with the Government's guidelines. The council tax will also probably be, as it was last year, the second or third lowest in the north-west.

When I was the chair of finance on my borough council, and previously the chair of housing, it used to frustrate me no end--and every other councillor--that we could not plan for future years. We had no idea from one year to the next what settlement we would get. That was difficult not just for us as councillors, but for the people whom we served. Numerous minor changes would be made from one year to the next, which could not be explained away and caused even more problems. Now we have stability for the next three years and the ability to plan, which is a massive step forward and one of the most welcome aspects of the Government's approach to local government finance.

There have been important changes to capping. Universal capping has been removed. The Government are retaining some powers in that regard, which is sensible. I support their position. The previous Government would not countenance any change in capping, whereas this Government have listened and moved a fair way down the road.

Many hon. Members who have spoken in the debate have mentioned problems in their areas. Clearly, the system must be fairer. It will never be fairer to everyone--that would be impossible to achieve--but much progress has been made. There are many issues relating to housing benefit, for example, that affect my constituents, because there are so many housing association houses in the Halton area.

Change takes time, and it is not unreasonable to expect us to be patient. There is some way to go yet. The Government have made a clear commitment to examine the issues, and they have made a good start. I welcome the local government settlement. Local government must modernise itself, give best value and ensure that its services are best directed at those whom it serves, at a price that they are willing to pay.

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