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6.45 pm
The Minister for Local Government and Housing (Ms Hilary Armstrong): We have had an interesting debate about a settlement which, despite what hon. Members have said, is the best overall for seven years. It is the most generous settlement since the introduction of council tax and it is fair to all councils, not fixed in the interests of one or two. We have learnt quickly that, however much the settlement is, there will always be arguments about why it should be more and why different areas have different priorities. Of course, we must continue to look at that and we will be doing so.
Conservative Members need to remember the miserable local government settlements that they heaped on all of local government before they venture into criticism this year. Education and social services authorities, whether in rural areas or urban England, have done well as we honour our pledges to raise standards in education and improve health and social services. We have made some changes to the way the formula is calculated so that it better reflects the findings from research into local need and patterns of service delivery.
Sir Peter Emery (East Devon):
The hon. Lady is talking about fairness. East Devon district council has no debt. It is so efficiently run that there is no long-term indebtedness. Despite that, its grant was cut last year, and this year it has not been restored to the level that existed before the Labour party took office. How can that be fair?
Ms Armstrong:
The right hon. Gentleman will admit that Devon county council has an increased award this year, which represents the Government's commitment to putting money into education and social services.
In any formula-based system, change means winners and losers--of course it does. This year, to make sure that those changes can be phased in, we have made special provision to ensure that no council will lose grant next year compared to this year. That applies to East Devon too.
Every education and social services authority will receive at least 1.5 per cent. extra in grant next year. As my right hon. Friend the Deputy Prime Minister made clear, the settlement provides for £2.6 billion of extra spending--an increase of 5.5 per cent. on last year. That extra money comes with strings attached. It is money for modernisation and for improving the quality of services provided by local councils to their public. Some councils--we have heard this today--may be tempted to use the extra money to restore past cuts and to deal with past problems. I urge them to think again and to use the new resources to look forwards, not backwards. They should plan for new patterns of service to meet the needs of local people today and tomorrow.
Councils now have three years of financial stability to plan and deliver the modernisation of their services. They can use them creatively to restructure services over the medium term and to achieve best value, safe in the knowledge that, for the first time, the Government have set out a three-year funding package.
The Government have made it clear that there will be no methodology changes in the next three years--during which we want to examine the current methodology to determine whether it can be improved. Simultaneously, we want to determine whether there is a system for distributing grant that is much fairer than the standard spending assessment methodology.
I should tell my hon. Friend the Member for St. Helens, North (Mr. Watts) that he would have an opportunity to contribute properly not only to such a review but to his authority. We should think not only about additional educational needs and area cost adjustment, but about whether we can introduce a fairer system of redistribution.
Jackie Ballard:
In the next three years, councils will face the council tax benefit subsidy limitation. The Minister received no letters in support of that proposal,
Ms Armstrong:
In the same way as I have responded to the House today--[Interruption.] We disagree with them. Consultation does not entail agreeing with everyone. I should not have expected any council to say that it was in favour of--[Interruption.] Perhaps the hon. Member for Taunton (Jackie Ballard) does not want to hear the answer.
I should not expect any council to say that it was in favour of the limitation, as it raises the issue of balancing funding from central taxation and from local taxation. Council tax benefit is currently funded from central taxation. We believe that there should be a balance and are giving local councils responsibility for a small element of it.
I reject entirely any suggestion that the settlement is biased in favour of one type of authority or another. I was staggered at the comments on rural areas made by the right hon. Member for South-West Norfolk(Mrs. Shephard). Her county is in a rural area. This year, it received a 6.2 per cent. increase in addition to other specific grants for rural areas, for transport and other rural services. She knows that that is true, and that she was simply being disingenuous.
The hon. Member for South Cambridgeshire(Mr. Lansley) complained about Essex, which received the largest cash increase.
Mrs. Shephard:
Will the hon. Lady give way?
Ms Armstrong:
I shall give way in a moment. First, I should like to say some things to the right hon. Lady, who was plainly out of her depth.
The right hon. Lady said that Norfolk received the worst settlement in its history, which--as she knows--was plain wrong. She said that Birmingham received the biggest increase, which also was wrong. Although Birmingham is the largest authority, it received an overall 4 per cent. increase, which hon. Members will know was not the biggest in the country.
The right hon. Member for South-West Norfolk is prepared to throw mud in the hope that it sticks. The Government will deal with the facts, which she has not quite caught up with yet.
Mrs. Shephard:
Does the hon. Lady deny the contents of her own table, which shows the reductions for shire areas?
Ms Armstrong:
There are not reductions but increases for shire areas--including hers--of 6.2 per cent. Conversely--when was it?--in 1995 or 1996, when the right hon. Lady was in the Cabinet, her Government gave Norfolk county council 0.5 per cent. less than it had received the year before. This year, Norfolk may not have received the increase that the right hon. Lady wanted, but it certainly received a big increase over last year.
Mr. Lansley:
Will the hon. Lady simply recognise the fact that, in the coming year--purely because of
Ms Armstrong:
The hon. Gentleman does not understand. The overall amount going in is greater. It may be less than if we had made no changes, but it is still a huge increase. How much would you have given?
Mr. Deputy Speaker:
Order. The hon. Lady must remember that she is addressing the Chair.
Ms Armstrong:
How much would the Conservatives have given? We are talking about the distribution of the biggest grant since the introduction of council tax. That is not a reduction; it is an increase.
Brent has had a difficult settlement, but we said that we had to re-order matters to achieve greater fairness. Brent tells me that it is the 20th poorest borough in the country. It is, but it has the 18th highest SSA per head in the country.
Mr. Gardiner:
My hon. Friend has listened carefully to Brent's representations over the past weeks and I thank her for that. I also thank her for the extra £2.5 million that she has put in. Will the Government consider rescheduling the debt repayments on the £8.4 million of housing revenue account subsidy that was overpaid under the Conservatives between 1992 and 1995, to give Brent some desperately needed breathing space?
Ms Armstrong:
I am sure that Brent will want to come to us and ask for that. I cannot answer that today because it is not an issue for the settlement.
My hon. Friend the Member for Normanton(Mr. O'Brien) was right to say how generous the settlement is. The council tax benefit subsidy limitation scheme does not hit poorer areas harder. It protects the poorest areas by treating them the same as the average areas.
The right hon. Member for Skipton and Ripon(Mr. Curry) takes the biscuit. He complains that North Yorkshire did not receive damping grant to bring its grant up to the 1.5 per cent. increase. We used the same principles as his Government, damping on the overall settlement and not on individual methodological changes. North Yorkshire has got 4.7 per cent.
I appreciate the comments of my hon. Friend the Member for Leicester, South (Mr. Marshall) about the difficulties that his authority faces. It is working hard to overcome them.
Let me turn to the Liberal Democrats. I remind them--[Interruption.] They do not want to hear it. In their manifesto, they said that they would spend £1.8 billion per year to a total of £5 billion over three years. Just for the next three years, the Government have committed£19 billion. We have already spent more than they committed for the whole Parliament. They said that they would spend an extra £700 million on health to a total of £2 billion over three years. The Government have committed £21 billion. Either they were not telling us the truth then or they are not telling us the truth today.The Liberal Democrats said today that the gap was
£1.7 billion. The Guardian says that few independent local government analysts agreed that the gap would be that big. The Liberal Democrats need to do some work.
In 1994-95, when the hon. Member for Banbury(Mr. Baldry) was in government, Oxfordshire county council got 0.5 per cent. less than it had the previous year. Maybe that is why it has problems this year.
The settlement is the most generous since the introduction of the council tax. There is more money for modernising services, new protection for the council tax payer, better services--
It being Seven o'clock, Mr. Deputy Speaker put the Question, pursuant to Order [1 February].
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