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10.35 am
Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East): Thank you, Mr. Deputy Speaker, for calling me in this debate. I know that hon. Members have been quite brief, but I have much to say today, so I apologise in advance. I shall try to finish as quickly as I can.
I wish to use this opportunity to highlight issues affecting the spending profile, performance and abilities of one of the local authorities in my constituency--Redcar and Cleveland borough council--resulting from the present operation of the revenue support grant, the standard spending assessment and the national non- domestic rate.
Initially, I shall say a few words about the social and economic background of the community for which the council is responsible. Then I shall comment on matters affecting the SSA and the revenue support grant for the council. In doing so, I want to make some suggestions for change in the context of the present review of the revenue support grant arrangements--suggestions which I hope chime with the recent report of the Select Committee on the Environment, Transport and Regional Affairs.
I have been galvanised to raise that matter in this place today by the operation of the present formula, which has caused the critical barrier of £1,000 for local band D property to be broken in the borough in the current financial year. Paying a bill of £1,000 is a serious matter, but it is a far more serious matter if one must pay such a bill in an area where there is continuing high unemployment and poverty, and where, as a result of social demography and trends, the local authority is simply running up a downcoming escalator.
Let us consider some of the facts about Redcar and Cleveland. In 1984, there were 44,000 people in work in the borough area, but in 1996--the last year for which we have proper figures--there was a reduction in the employment base of 10.5 per cent. Of the adult population, 42.8 per cent. are economically inactive, and long-term unemployment, at 26.6 per cent. of registered unemployment, is rather high.
Despite all the work of regeneration agencies, there is still little evidence of independent entrepreneurship being able to change these figures. Customs and Excise figures from the VAT registration figures show low levels of new company formation.
A low level of economic activity and a history of working lives in unhealthy and dangerous conditions in shipyards, steel mills and mines leave an indelible stain on the fabric of local society. People are simply more liable to ill-health in my constituency. Sixteen per cent. of local people are seen as suffering from persistent health problems, against an average for England and Wales of 13 per cent. The morbidity ratio is 127 against a national average of 100.
People die earlier, too. The average standardised mortality ratio for Redcar and Cleveland is 115 against the average of 100 for England and Wales. I stress that these are averages for the borough as a whole; in some wards, the figures are far, far higher.
Low car ownership impairs mobility; 37.8 per cent. of local households have no car. That is a real problem, leading to social isolation on many of the borough estates and far-flung industrial villages.
Not surprisingly, there is a high level of dependency on welfare benefits. Twenty-three per cent. of households depend on income support, and 34 per cent. of the child population is being brought up in households where a weekly giro is the only cash lifeline available.
The index of local deprivation--an official measure, to which I shall return--sums up graphically what it means to live in the borough of Redcar and Cleveland. It is ranked as the forty-third most deprived borough in England, with 13.5 per cent. of its population in the worst 10 per cent. of all electoral wards in the country. It is simple, then, to see the scale of the problems that face my local authority--stupendous problems across the whole spectrum of service delivery.
Poverty and unemployment have an impact on schools. It is harder to motivate children whose life expectations are formed by the unemployment that has affected their parents, and possibly their elder siblings, too. It is far harder to teach children who come to school with empty stomachs, which is one reason why there is an initiative to give our children a school breakfast.
Sickness, ageing and debility have a heavy impact on the personal social services, and more than physical sickness is involved; there is a wealth of evidence linking poverty and unemployment with mental distress, failed relationships and broken homes. Human beings affected by those ills need a lot of help, delivered over a long period.
Demography also has an impact on the social services in areas such as mine, where there is a significant population loss as younger people move out in search of better opportunities elsewhere. That means that there are more elderly people isolated from family support, who need additional local authority help and support if they are to maintain their independence.
Poverty also has an impact on other aspects of local authority services. Where many people live on credit, the need for good trading standards and money advice services is paramount. People have to buy food cheaply, so the need for good environmental health protection is obvious.
Good partnerships are being built up with all the agencies within the borough, so that those problems can be tackled jointly. We need good relationships with the local health authorities so that ill health and health inequalities can be fought. We also need good relationships with the local universities, training and enterprise councils and colleges, so that lifelong learning can become a reality, and with the local business community, so that local industry can be competitive and meet the challenge of the coming millennium.
However, Redcar and Cleveland is being starved of the resources to deal effectively with those issues and to contribute more meaningfully to those partnerships. The impact of the standard spending assessment is totally negative.
That brings me to the second part of what I have to say: the revenue support grant needs-based formula does not reflect actual need. I merely need to point out that, under the health formula, Redcar and Cleveland's notional SSA per head, at £917, is below the £964 per head allocated to the neighbouring authority of Middlesbrough, a borough dealing with exactly the same problems.
Our £917 is dwarfed by the sum of £1,152 currently awarded to Westminster council, and by the £2,972 per head awarded to the City of London and adjoining districts. I do not dispute that there is social need in the inner city, or that the impact of a large non-resident working population has to be taken into account--but I must point out the sheer scale of the differences between the high unemployment, ill health and social isolation of the string of small ex-mining villages in my constituency, and the job and life style opportunities afforded by living in, or on the fringes of, one of the most vigorous labour markets in western Europe. The gap is enormous.
I will not go into detail about all the anomalies within the formula as it relates to elements of spending within the borough council, but I will highlight a couple of them. It is absurd that a council with a widespread pattern of settlements and towns, with the consequent need to keep the highway network up to scratch to maintain social cohesion, has been awarded £2 million less per annumfor highway maintenance than the nearby town of Middlesbrough.
There is a very silly anomaly in the formula for salting and gritting snowed-up roads, which could only have come from "Yes Minister". It seems that Redcar and Cleveland has a low weighting under that formula, which is rather odd, as much of the borough is hilly and borders on high moorland. Indeed, in old Norse, Cleveland means "land of cliffs". However, the weather station on which the formula is based is outside the borough in Whitby, nearly 20 miles away, which is warmer and lower. That is not much comfort to a motorist stuck in a snowdrift.
There is more to come. When I am trying to assist constituents who are angry and perplexed about the closure of our neighbourhood library, it does not help to learn that Redcar and Cleveland has been awarded less in the environmental and cultural block than any other unitary authority in the former county of Cleveland. Indeed, it receives less than the average for all unitary authorities.
There are other absurdities. A key element in the distribution formula is the number of flats in a local authority area. That means that a borough such as Redcar and Cleveland, in which past generations of town planners, architects and housing specialists avoided the quick fix of building high-rises, and chose traditional terraces--the houses that people wanted--is penalised in comparison with those who took the alternative course.
I would like some of the experts from Eland house to explain why a poor family living in a poorly maintained street-level house is less deserving than a family living in the same circumstances on the third or fourth floor of a block of flats in a neighbouring authority. That is a riddle worth solving. They could explain, too, why the same
formula means that wealthy towns on the sunny south coast can benefit when their stocks of expensive privately rented penthouses and flats are assessed.
Such bizarre examples mean that Redcar and Cleveland, like many authorities, has to spend far more than its SSA if it is to deliver the services that local people demand and deserve. Such councils run slap into the gearing problems that face any authority that spends more than the nominal level. They also face the disbelief of local people, who see the contradiction of common sense presented by a constantly rising council tax combined with cuts in services.
The non-domestic rate has also hit the borough. Despite unemployment, heavy industry is still a pervasive part of the local economy--a pattern of industry which often has an adverse impact on the resident population. To say that is not to be anti-industry, and both the local council and I recognise the vital contribution that our steel and chemical industries make to both the local and the national economy, and we work with them to assist their competitiveness and vitality.
None the less, the council still has to manage the environmental and visual impact, and the effects on the highways, which it does through air pollution monitoring, maintaining a proactive planning department, and constant upkeep of the highway network.
Our local industries are big contributors to the national non-domestic rate pool. The borough collects £41.5 million to pay into that pool, but gets only £35.5 million back. That means that the council exports £6 million to other parts of the country--money which helps to keep down council taxes in other areas, which may be far wealthier than Redcar and Cleveland, and whose local population and local councils would violently resist any thought that their district, too, was a potential site for new large-scale chemical or metal processing plants.
I am pleased that the Environment, Transport and Regional Affairs Committee has recommended that the business rate return to local control and determination. I hope that the Government are considering that idea seriously, and I shall make one practical suggestion that may override the resistance from the local business community.
Local businesses expect services from local authorities, exactly as any house owner or tenant would, so why can the local business rate not be ring-fenced? That could pay for the services from which industry expects to benefit--a good planning service, a good environmental health service, a good highways maintenance programme and a well funded economic development department. Those activities could be wholly or partly underpinned by a local business rate. I do not mean that Redcar and Cleveland, or any council, should expect the Government simply to write out a cheque.
My local authority has been carrying out a modernisation programme. Local councils have set up a full, rigorous process of peer group evaluation. They must accept a full, in-depth and no-holds-barred examination of their systems, procedures and methods of working. They will be expected to show convincingly that they are in touch with the electorate, and that they have built up robust and meaningful partnerships with other actors on the social stage. Their internal methods of political operation must be relevant to today's world, not yesterday's smoke-filled committee rooms.
I have raised many serious issues concerning services and providers. That work must be part of a two-way bargain between central Government and the local council, between Whitehall and Redcar and Cleveland's town hall. I urge my right hon. Friends the Deputy Prime Minister and the Minister for Local Government and Housing to examine carefully the council's financial position. I hope that I will receive support from the Front Bench today.
Thank you, Mr. Deputy Speaker, for allowing me to speak in the Adjournment debate.
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