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Mr. Eric Illsley (Barnsley, Central): How does the hon. Gentleman reconcile what he has just said about the restraints on local government caused by specific grants and the fact that authorities are not able to choose how they spend some of their money with the statement that he accepted from his hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) that northern authorities are spendthrift? How can they be spendthrift if they are being constrained in spending the money that they have?

Mr. Waterson: My hon. Friend said that northern authorities were doing better than non-Labour-controlled authorities further south under the three years of the settlement. I agreed with him.

I should like to mention a specific and technical education issue that the hon. Member for Torbay (Mr. Sanders) has already referred to--I think that this is the same point that he raised. The Government's decision to ease pressure on education budgets following the removal of £150 million from the education SSA has attracted support from the LGA and elsewhere. The Government consulted on how the extra £50 million would be distributed. It has recently emerged that the Secretary of State for Education and Employment has decided--not suggested, as the Minister said--to allocate all the additional £50 million through specific grant, with the additional caveat that, before deciding whether to release an LEA's share of the money, he will need confirmation that the whole of the increase in the education SSA has been passported through to education. That is unprecedented and is causing great concern in the LGA and elsewhere. It runs counter to the traditional notion of a block grant, under which authorities were allowed to distribute money between services as they saw fit. For the first time, there will be a financial penalty for failing to comply with the Government's view of how the money should be spent. One of the documents sent to me describes that as "a very disturbing precedent".

Mr. Chope: Will my hon. Friend confirm that it is particularly disturbing for local authorities that are spending above the level of their education SSA, as they will be penalised by this extraordinary action by the Government?

Mr. Waterson: My hon. Friend is absolutely right to say that there will be an extra penalty for those education authorities. That entirely sums up the Government's approach--they do not trust local government to make decisions.

Another issue is the cost of Government initiatives. We are always hearing about the Government rolling out new initiatives on this, that or the other, but they all have to be paid for locally. That means that councils are often running up a lot of expenditure--on officers' time and so on--on the initiatives. Some councils have begun to strip out from their figures the cost of these initiatives, which shows that the costs are mounting at the moment.

I ask the Minister again not to claim that she has abolished capping, because that is just not true.

Ms Armstrong: Cruel and universal capping.

Mr. Waterson: The Minister says more from a sedentary position than she ever says at the Dispatch Box

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during these debates. She has replaced cruel and universal capping with two versions of capping. First, there are the so-called reserve powers. I have described these before--councils worry about a knock on the door in the middle of the night after the event, when they are told that they have spent too much. They never know from one year to another whether they will be invited in for a ministerial ticking-off.

Secondly, there is so-called refined capping--the council tax benefit subsidy limitation scheme. The scheme is a precise and targeted way, as the LGA has said, of making the nearly poor pay for the really poor. The nub of what the Minister said was that she had had representations from local government and that she was not going to take a blind bit of notice of any of them. The scheme will continue, and on a cumulative basis. Our policy in the next Parliament is not to have capping at all. [Laughter.] I thought that that would go down well.

The best value regime is in danger of turning into an expensive farce, with some councils having to cope with no fewer than 179 performance indicators. A good idea--which, in many respects, grew from the success of compulsory competitive tendering under the Conservative Government--has been strangled by this Government's over-prescriptive and nannying approach to local government. The LGA says that the costs of implementing best value are causing problems for smaller authorities in particular. We should not forget the draconian powers that the Government took in the Local Government Act 1999 to intervene in the running of councils which they did not think were up to scratch.

Last year, some social services SSAs declined in Labour heartlands such as Hackney, Lambeth and Newham. It is no wonder that hon. Members such as the hon. Member for Walton are beginning to lose faith in the Government's attitude to old Labour heartlands around the country. We all know the pressures on local social services departments, and there will be hardship as a result of this settlement--let us be in no doubt about that. In addition, many local businesses will be picking up the bill in business rates for the Government's unfair treatment of some parts of the country.

On a brighter note, we welcome the Government's announcement yesterday about the appeals system for business rates. A new programme has been set out, so that ratepayers will have an idea when their appeals are to be considered by the valuation officer or the valuation tribunal. The Government say that they are encouraging the early submission of appeals. We can all envisage that there will be many appeals under the new revaluation, and it is to be welcomed that the system will be streamlined to some extent.

The problem of asylum seekers and refugees is causing much concern to some councils. The LGA has spoken of the uncertainty of funding

It continued:

    "Local authorities are concerned about the perceived lack of an overall strategy for funding the particular additional service needs of asylum seekers and refugees."

I hope that the Minister will let us know when she winds up the debate whether more flexibility can be introduced into the system to deal with that specific issue.

Mr. Loughton: My hon. Friend will know that Gatwick airport is in the neighbouring county to mine.

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Because of the number of asylum seekers, especially children, coming through the airport, social services in West Sussex have faced a 50 per cent. increase in the number of children requiring care in the past year alone. The social services SSA for the past five years has decreased by 16 per cent. Does he agree with the Minister when she described as "profligate" attempts by counties such as mine to keep up social services spending, which will involve an extra £4 million on the budget, despite the decline in the SSA and the additional factors such as asylum seekers?

Mr. Waterson: My hon. Friend makes a good and serious point. The Home Secretary was unable to tell me the other day how many asylum seekers and refugees are living in my constituency. We do know that more than 200 were assigned to local GPs in Eastbourne in November and December last year. It is only when people present themselves to some branch of health or social services that one knows they are there. [Interruption.] I now have a running commentary from two lady Members on the Labour Benches. I am very grateful, but they are drowning each other out.

Ms Armstrong: The hon. Gentleman may not realise it, but one must register with the local social services department in order to qualify as a refugee or asylum seeker.

Mr. Waterson: Does the Minister really believe that 100 per cent. of them ever do register? As we all know, many places such as Eastbourne have large numbers of asylum seekers and refugees sent there by London boroughs that will not perform the simple courtesy of informing the local council that they are coming. Local communities deserve more support from central Government to meet the costs entailed, and the asylum seekers themselves need support more than most, in language, health and social services.

Mr. Edward Davey (Kingston and Surbiton): The hon. Gentleman's point about asylum seekers and refugees is pertinent to my local council, the royal borough of Kingston. We have several demand-led pressures, including asylum seekers and homelessness, of which the SSA does not take account. The council faces £4 million of cuts because of the allocation it has received from the Government. However, under the Tories, Kingston council's grant was cut year on year. The problems we now face are exacerbated because of the council's inheritance from the Tory years of misrule.

Mr. Waterson: One can never accuse the Liberal Democrats of not being even-handed in their abuse. When it comes to local government, Labour is all talk and no delivery. Despite all the rhetoric about this year's settlement for local government, the reality is that the council tax has already risen sharply under Labour and could go up next year by more than 10 per cent. All together, band D households could be nearly £200 worse off under Tony Blair's Government. It is another example of the great Labour lie.

Labour's figures are biased against the south of England. County councils, London boroughs and shire district councils are all losing out. Education authorities,

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as we have heard, will be short of a total of £110 million to meet the teachers' pay settlement. Even Labour leaders in local government admit that that will mean fewer teachers or larger class sizes--or both. The Government are threatening education standards as well as law enforcement.

The Government's attitude to finance for local government is symptomatic of their control freak tendency. They have a centralising agenda and are taking more and more control over what local councils spend. They are undermining local government and local choices. The Labour Government are ripping off local government.

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