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10.18 pm

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): I congratulate the right hon. Member for South-West Surrey (Mrs. Bottomley) on her success in obtaining this Adjournment debate. I welcome the chance that she has given me to set out the Government's position on the issues that she has raised. I join her in paying tribute to the dedication and professionalism of the staff at Meath house, and I certainly look forward to a future meeting with her and the delegation on epilepsy to which she referred.

The social services department in Surrey has been negotiating with Meath home trustees since autumn 1998 to put the financial arrangements between the social services department and Meath home on a sounder, more permanent footing. Negotiations are constructive, but they have been tough on both sides. I understand that the social services department sees the home as rightly ambitious about the service developments upon which it wishes to embark. However, the social services department in Surrey believes that it has a responsibility to strike a fair balance between funding the home and obtaining best value for Surrey residents. Some progress has been made. The social services department has indicated that it is prepared to make a special arrangement whereby Meath home is guaranteed a retail prices index increase in fees, year on year.

However, towards the end of February, Meath home wrote to the social services department with a proposal for new increases in residents' fees ranging from 2.3 to 85 per cent., with an average increase of 30 per cent. per resident for the coming financial year. If the social services department agreed to those increases, the cost to the local authority would amount to over £112,000 a year.

The social services department is not against the idea of paying fees according to the disability of residents at the home, but it will, quite properly, want to negotiate concerning the costings put forward by Meath home trustees.

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Notwithstanding the recent additional complications in the contractual arrangement between Surrey and Meath home, the social services department is continuing to negotiate. I have the assurance of the director of social services in Surrey that he hopes that the position for 1999-2000 will be resolved in the near future. I am sure that the right hon. Member for South-West Surrey will understand that those negotiations must be left to the parties concerned, but I certainly hope that they will be resolved very shortly in a way that is satisfactory to both parties and, of course, to the residents of Meath home.

Mrs. Bottomley: As I made clear in my remarks, less than a third of the residents come from Surrey. The most acute problems are not with Surrey but with the many other local authorities that send residents to the home and then refuse to increase the fees or even pay the bills.

Mr. Hutton: I know that the right hon. Lady made those points, and I shall turn to the contractual arrangements with other local authorities in a moment. She has not left me much time to respond as fully as I would like, but I shall do my best.

I turn quickly to some of the other issues on which the right hon. Lady remarked. On 2 December, my right hon. Friend the Deputy Prime Minister announced the provisional local government finance settlement for next year. He told the House that the Government's support for local authorities would increase by 5.5 per cent. next year--more than double the rate of inflation. On 4 February, having listened to representations from many local authorities about the settlement, he announced the Government's intention to add £30 million to the provisional settlement. He also guaranteed that every social services authority would receive an increase in Government support of at least 1.5 per cent. next year. That is, without doubt, the best financial settlement for local government since the introduction of council tax in 1993.

As for funding for social services, within the total amount for local government, the Government have provided for a 6.3 per cent. increase for social services departments. For the first time, we have guaranteed that national resources for social services will be increasing in real terms for each of the following two years, enabling social services departments to plan ahead knowing that there will be increased funding. In fact, social services will receive almost £3 billion more in total over the next three years--an average of 3 per cent. more than inflation in each of those years.

We have also honoured our election manifesto pledge to make the distribution system fairer by introducing changes to the standard spending assessment formulae to ensure that the resources provided nationally are allocated in accordance with need. Some of those changes did not benefit Surrey, but I am happy to take this opportunity to convince the right hon. Lady of the wisdom of making the changes.

We changed three of the four SSA formulae for social services this year. I shall deal with each change in turn, explaining why it was made and how Surrey was affected.

First, we completely changed the formula used to allocate resources for children's social services. The old formula for calculating the SSA for children's services was based on evidence from almost a decade ago and was heavily criticised. It was out of step with current policy

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and my Department has spent three years on research to improve the formula. That work was started by the previous Administration, of which the right hon. Lady was a prominent member. The Local Government Association has been closely involved throughout, and many authorities have commented on the proposals in that time.

There are no lingering doubts about the factors in the allocation formula. All the major objections have been dealt with, and we believed that this was the moment to introduce the new formula. Surrey will gain somewhat from its use.

We also made two changes to the SSA formula used to allocate resources for residential care for older people. I know that the right hon. Lady was concerned about that. First, we decided to include in the formula a factor that reflects the number of people aged over 65 who are in receipt of disability living allowance. That has proved to be an uncontroversial change.

The second change was to exclude from the calculation the number of people living in institutions. We made that change for a number of very good reasons. First, the research that led to the formula was based on the characteristics of people living in the community. As the research did not consider people living in institutions, it follows that they should also be excluded when the formula is applied.

Moreover, if the SSA calculation reflects the total number of people in institutional care in an area, it will be giving the wrong amount of financial credit to each authority. That is because some of the people publicly supported in care in Surrey are not Surrey's financial responsibility. Some will be paying in full for their own care and will not represent a call on Surrey's resources. Others will be in care in Surrey, but will have been placed by another authority, such as a London borough, perhaps--the right hon. Lady referred to some such people--and will therefore be the financial responsibility of that other authority. As I understand it, that applies to some of the residents at Meath house.

Thirdly, and very importantly, people have said to us that it is not fair to take account of the numbers in care when allocating resources, because that number is open to local authority influence so should not appear in an objective allocation formula. What signals would it send for the Government to use a formula which, in effect, gives credit for putting people in residential care, yet gives no credit for keeping people out of residential care, especially since it is one of the Government's main priorities--it was outlined in the recent social services White Paper--to promote independence?

It is manifestly wrong for the SSA formula to give a perverse incentive to local authorities to place people in residential homes, rather than caring for them in the community, promoting independence and self-sufficiency. Making this change worked against Surrey, but I hope that the right hon. Lady can understand why we chose to make these changes and the powerful logic behind them.

The right hon. Lady may feel that the Government are being unfair to Surrey, but let us look at some statistics. On children's services, Surrey has less than half the number of children in families on income support compared to the national average.

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Mrs. Bottomley: I made it clear that I did not want to discuss Surrey's funding, I sent the hon. Gentleman the seven questions that I hoped that he would address, and the place is called Meath home, not Meath house.

Mr. Hutton: With great respect, I have been referring to Meath home throughout my remarks. The right hon. Lady referred specifically to the deplorable settlement in Surrey, and I am contesting the basis on which she made those remarks. She chose to raise that issue, so I am afraid that she will have to accept that I intend to respond to that part of her speech. We have made a number of changes to the SSA formula, and I have given the reasons why we did so. I feel confident that they are fully justified and have led to a fairer distribution system.

I ought to correct the impression given by the right hon. Lady that we have somehow reduced spending on social services in Surrey. Nothing could be further from the truth. In general, resources for local government spending in Surrey will increase by 4.6 per cent. next year. Spending on personal social services will increase by 2.4 per cent. Total social services expenditure in the county was £141.427 million last year. Next year, that will rise to £144,625,000. Those are the facts.

The right hon. Lady also expressed her concerns about the way in which local authorities purchase residential care in the independent sector, and called for more direct Government control over the rates at which such care can be contracted. The Government's position on this issue was spelled out clearly in the White Paper "Modernising Social Services", in which we identified four key elements of good commissioning practice.

Local authorities should use a variety of contract types to deliver positive outcomes for users and security for good providers. We encourage authorities to issue block contracts to providers of innovative services for which there is a need. Block contracts can give security to providers by guaranteeing certain levels of income each year. I agree with the right hon. Lady that contract prices should not be set mechanistically, but should pay proper regard to providers' costs and planned outcomes for users.

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Such encouragement, with our proposals for best value and a new performance assessment framework for social services, will help local authorities to deliver services to a clear standard--covering both cost and quality--by the most effective, economic and efficient means possible. Best value must be secured in all social services, whether provided in-house or contracted out to the private sector. We do not take an ideological approach to this issue. We have no preconceived ideas about whether the public or private sector should be the preferred providers. Those decisions should ultimately be based on judgments about best value and optimum outcomes for local users. Local authorities must be able, in the final resort, to demonstrate that their arrangements are delivering that.

The right hon. Lady expressed some concern that she was not able, during her period in office, directly to intervene in, and regulate, those matters. It is only fair that, I point out to her that the system that she is drawing to the attention of the House, about which she is complaining, is the one that she bequeathed to this country. It is a bit rich that the right hon. Lady is complaining about the system of which she was the prime architect. We announced in the White Paper our proposals to improve the commission process. We believe that that is a significant step forward--a step that the right hon. Lady was unable to take.

The right hon. Lady drew attention to several important issues, and I have been unable, in the time that I have, to respond fully to all her arguments and points. I shall correspond with her about some of the other points that she raised.

All hon. Members share a common concern to protect vulnerable people and especially to ensure that our local social services are able to provide the effective care and support that is necessary for that purpose. I believe that the action that the Government have taken--including the additional resources for local government and our plans to modernise social services--will help local authorities such as Surrey county council to do just that.

Question put and agreed to.

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