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Mr. Crispin Blunt (Reigate): On a point of order, Mr. Deputy Speaker. An announcement is running on teletext that the Secretary of State for Northern Ireland is to make a statement to the House later tonight. Have you had notice that we can expect such a statement, or is that simply speculation by the BBC?

Mr. Deputy Speaker (Sir Alan Haselhurst): Had the hon. Gentleman been present for business questions, he would have heard the Leader of the House foreshadow the possibility that there would be a statement later today. I cannot add to that, but notice has certainly been given to the House.

3 Feb 2000 : Column 1267

Local Government Finance

4.13 pm

The Minister for Local Government and the Regions (Ms Hilary Armstrong): I beg to move,

Mr. Deputy Speaker (Sir Alan Haselhurst): With this, it will be convenient to discuss the following motions:

Ms Armstrong: I shall set the financial settlement in the context of the Government's radical reform for local government. Modernising and improving public services is central to the Government's approach, to enable people throughout the country to have a higher quality of life. High-quality, accessible and affordable local public services are an essential part of community life.

Promoting the economic and social regeneration of our villages, towns and cities, tackling crime, ensuring that our schools deliver excellence, maintaining decent health and social care, enhancing the local environment, and protecting our most vulnerable citizens--all these are responsibilities which local government at its best fulfils best in partnership with others.

Our ambitious and long-term reform agenda for local government requires a long-term approach to the funding of public services. As my right hon. Friend the Prime Minister has made clear, dealing with the Tory inheritance has taken and will take time. We are determined not to make the mistake of boom and bust, and instead have sought to create a stable economic climate within which our public services can develop and improve over time.

Mr. A. J. Beith (Berwick-upon-Tweed): I am grateful to the right hon. Lady for giving way. I must point out to her that the only thing stable about education funding in Northumberland is the fact that we are still working on the plans of the previous Government, and that even this year the education standard spending assessment for Northumberland is one of the lowest of any shire county. When can we hope for some improvement in the situation in which children in Northumberland have so much less spent on them per head than in so many other parts of the country?

Ms Armstrong: As the right hon. Gentleman knows, there has always been a system of redistribution, taking account of need. We have paid greater attention to the sparsity factor, which has benefited Northumberland. I know the problems of Northumberland because, as the right hon. Gentleman knows, my constituency is separated from it only by the river.

The problems are being tackled. There has been a 4.4 per cent. increase in education funding this year. Everything possible is being done to ensure that all children in Northumberland get the opportunity that they deserve.

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A distribution formula inevitably means that not every place gets exactly the same amount of money per child, but we are conducting a review and looking at how we can ensure that people throughout the country know that they are getting a better deal. They know that this year because, however low education spending in Northumberland is, it is a lot more than it was in the last three years of the previous regime.

Mr. Peter Atkinson (Hexham): Will the Minister give way?

Ms Armstrong: I am sure that the hon. Gentleman, who is my neighbour, will speak later in the debate. I must make progress.

We were acutely aware that local government inherited a short-term challenge, exacerbated by a 4.3 per cent. cut in real terms in the three years preceding 1997. There has been no such cut since this Government were elected. I am pleased to confirm today that this year's settlement will mean that over the first three years of this Government, grant to local councils will have increased by £6 billion. That is a real-terms increase of 7.8 per cent., compared with a 4.3 per cent. cut in the three years preceding the election of a Labour Government.

Mr. Andrew Robathan (Blaby): I am grateful to the right hon. Lady for giving way. May I move the debate from Northumberland down to Leicestershire? The right hon. Lady may not know that Leicestershire has the lowest standard spending assessment for education of any shire county. The Government's recommended spending on education in Leicestershire would involve a 3.3 per cent. cut per pupil. However, that is not going to happen, because Leicestershire county council is to spend more than the recommended amount.

Will the Minister speak to her right hon. Friend the Secretary of State for Education and Employment and explain, first, that Leicestershire is concerned about the small amount of money that it is getting from the Government through the education SSA and, secondly, that the leader of the council is not the chief executive? Although the Secretary of State has been told that on more than one occasion, he keeps writing to the chief executive, Mr. Sinnott, as the leader.

Ms Armstrong: The average increase in education standard spending assessments is higher in shire counties than in metropolitan counties. That means that Leicestershire received a higher increase than many other authorities. Not everybody can be average or at the top in a system that uses a distribution formula.

Mr. Peter Atkinson: Will the right hon. Lady give way?

Ms Armstrong: I shall be neighbourly to the hon. Gentleman.

Mr. Atkinson: The Labour leader of Northumberland county council has written to the Secretary of State for Education and Employment to plead for extra help. Northumberland county council has had to cut its education budget and, consequently, it cannot take

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up £2.8 million of standards fund money because it does not have the match funding. Schools in Northumberland currently face that problem.

Ms Armstrong: Despite the substantial increases, some authorities and schools have historically received low funding. The hon. Gentleman knows that, under the previous Government, his local authority suffered substantial cuts. The Government have ensured increased funding. We have not been able to put everything right, because righting all the previous Government's wrongs will take time. We are considering the third settlement. I remind the hon. Gentleman of the real-terms increase of 7.8 per cent. for local councils since the general election, in contrast with what was happening before the election.

The Government are mindful of the long-term challenges that local councillors face, and appreciate that they are eager to modernise the fabric of the community through capital investment, of which the Tories starved them. We have therefore made available more than £6 billion of additional capital to invest in schools, homes and other much-needed community facilities.

Additional resources must be invested wisely. That is why we are committed to modernising the local government finance system, which at present makes up in complexity for what it lacks in transparency. If local councils are to plan ahead and work effectively in partnerships, they need assurances about the stability of future funding. That is why we announced totals for SSAs and grant for three years, during which we do not expect to change the SSA formulae. The Local Government Association welcomes that move.

Sir Paul Beresford (Mole Valley): Will the right hon. Lady explain the enormous variations between last year and this year, and the rumours that they are caused by a glitch in a computer, which affected the previous year's data?

Ms Armstrong: I do not deal in rumours. Changes have been made this year because of the additional investment that we are providing, and because of changes in data. As the hon. Gentleman knows, we have consistently said that we would change not the formulae, but the data. Of course changes have occurred, but the good treasurers were able to predict what would happen.

We continue to work with the LGA to review the revenue grant and capital control systems to ascertain whether, together, we can achieve a simpler, fairer system that puts the grant where it will do most good. That is why we are implementing radical proposals for a more efficient, transparent and accountable local democracy.

We have abolished crude and universal capping and we no longer set authorities' spending limits in advance. Those changes make councils more accountable to local people for their tax decisions. In general, councils responded well to that approach in 1999-2000. Unlike Conservative Members, the Government are not in the business of forecasting council tax increases. Indeed, it is becoming a tired old ritual for Opposition Members to forecast high council tax increases and make alarmist predictions that rarely materialise.

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