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Local Authority Funding

8. Mr. Steve Webb (Northavon): When he expects to bring forward proposals for the reform of the system of allocating funds to local authorities by reference to standard spending assessments. [120146]

The Minister for Local Government and the Regions (Ms Hilary Armstrong): Decisions about the merits of the various options for reform will not be taken until we have consulted widely this summer.

Mr. Webb: Does the Minister accept that, for my constituents in South Gloucestershire, SSA might as well stand for "schools short-changed again", because for as long the council has existed, it has been the worst-funded local education authority in the country in terms of primary schools? Does she accept that my constituents will be angry if a whole Parliament goes by without reform of that unfair scheme? Will she tell them today that, before the current Parliament is through, we will have a fairer scheme in place?

Ms Armstrong: As I am sure the hon. Gentleman knows from previous Question Times, I am keen for us to move to a new form of funding, but that requires co-operation from local government, as well as ideas and determination from central Government. We have a system that I support, which recognises that different parts of the country need different levels of support from central Government. We believe that we should respond to need, and it is from that basis that we start.

I hope that we can move forward, but there is no holy grail. What is important in one area has a different priority in another. What is seen as fair in one authority is seen in very different ways in others. I am sure that constituents of other hon. Members will feel that they have as much right as any of the hon. Gentleman's constituents to get an uplift. We will do what we can but, as I say, we need the co-operation and support of hon. Members and local government to move forward.

Mr. Keith Darvill (Upminster): Does my right hon. Friend agree that the system of allocating local authority funds creates too many inequalities and anomalies? For that reason, it is important that the review be carried out as quickly as possible to ensure that local authorities such as the one in my area, the London borough of Havering, can resolve some of their difficulties in delivering public services.

Ms Armstrong: We knew when we came to power that there were great problems within the local government finance system. We have made some adjustments.

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More than that, we have substantially increased the amount of money going into local government compared with what went in under the previous regime. It is a question of ensuring both that we run the economy to get more money for good public services, and that we get a distribution system that is as fair as possible. We are seeking to do that, but I repeat: there is no holy grail and no system that everyone will think is fair to them.

Mr. Nigel Waterson (Eastbourne): Will the Minister undertake not to repeat the outrageous fix whereby, in the life of the current Parliament, shire counties will lose out by £623 million? Will she abandon the so-called front line first policy, under which funds will be diverted from properly elected local councils, with funding decisions being made by Ministers in Whitehall? The move was attacked recently by Sir Jeremy Beecham, the Labour leader of the Local Government Association, as amounting to

Ms Armstrong: Let me nail once and for all the absolute rubbish that the hon. Gentleman comes out with time and again about funding for shire areas. Far from the position that he suggests, we have put substantially more money into local government in the past three years, including into the shires. If shire authorities received the same amount of money now as they received under his regime, they would be receiving substantially less. We have uplifted the amount that has gone in, and his crazy creative accounting fools no one.

Mr. Jeff Ennis (Barnsley, East and Mexborough): Does the Minister agree that the grand objective of the review should be to reduce the differentials between the winners and losers under the existing system?

Ms Armstrong: That could be one objective. We are canvassing a range of objectives. My hon. Friend needs to recognise that if we reduce the differentials, we also take less account of differential need.

Council Tax

10. Mr. David Heath (Somerton and Frome): What is the average percentage increase in council tax for residents of band D properties in shire districts of England in 2000-01 from the previous year. [120149]

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): The average band D council tax for residents in shire districts is £848, an increase of 6.6 per cent. However, I think that a more accurate representation of what people really pay is the average council tax per dwelling. For shire districts, that figure is £735, an increase of 6.7 per cent.

Mr. Heath: Whether the figure is 6.6 or 6.7 per cent, is it not true that the ordinary member of the public does not understand a word that we say about area cost adjustments and standard spending assessments? The public understand only that--regardless of who controls their council, and of their council's location and efficiency--each year, their council tax increases, while councils struggle to maintain services. Is that situation not the result of the fact that the current Chancellor, and

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previous Chancellors in previous Governments, have shifted the taxation burden from central Government to local government? Is it not time that we had a system that was transparent and honest?

Ms Hughes: The hon. Gentleman says that it does not matter who controls a council, but the fact is that in Labour-controlled authorities, the average council tax per dwelling is lower by about £100 than it is in Conservative-controlled or Liberal Democrat-controlled authorities. As for the Government's record--I shall not even begin to try to speak for the previous Government--we have increased the grant to local authorities by 8 per cent. in real terms. Moreover, in the three years since the previous general election, unlike the three years leading up to it, that increase has allowed local authorities to increase spending by about 20 per cent, compared with a real-terms spending cut and diminution in service standards under the previous Government.

Mr. David Taylor (North-West Leicestershire): Is the Minister aware of the formation, last month, of the all-party fair deal for shire districts group, which I have the honour to co-chair? Does she agree that part of the problem is the fact that the SSA system fails to recognise the needs of smaller urban and semi-rural areas--areas such as North-West Leicestershire--which have growing populations and significant levels of unemployment and deprivation? Is she confident that the reform to which the Minister for Local Government and the Regions referred a moment ago will produce a better and more effective system for shire districts?

Ms Hughes: As my right hon. Friend the Minister for Local Government and the Regions said, we are hoping that the creation of a fairer system will be the outcome of our review. However, such a system will depend on co-operation from all types of local authorities. If we are talking about a system that distributes money differently, we must be able to reach agreement not only with the authorities that might benefit from a different system, but with those that might feel that the current system is in their interests. Achieving that consensus is important.

I acknowledge my hon. Friend's work in promoting the interests of shire districts, and I can tell him that, while working on the review, the Government have given shire districts a much fairer settlement than they have received in previous years. This year, I myself met representatives of the district councils, and they were very pleased with the settlement, which is well above the average for English authorities.

Miss Julie Kirkbride (Bromsgrove): The Minister for Local Government and the Regions told my hon. Friend the Member for Eastbourne (Mr. Waterson) that he was wrong to say that the Government were starving shire counties of funds. Can the Under-Secretary therefore explain why, this year, residents of the shire district of Worcestershire--which has a Labour-controlled council--are facing a council tax increase of almost 10 per cent? Are they facing that increase because the Labour-controlled council is inefficient? Are they facing it because the Government are starving the shire district of Worcestershire of funds that rightfully belong to it? Or is the increase--as Opposition Members believe--part of the Government's programme of stealth taxes? Can the

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Minister also explain to the pensioners of Worcestershire how they will pay that increase with the measly 75p increase in their pensions?

Ms Hughes: Perhaps I can begin to attempt to unravel that ragbag of a question. I remind the hon. Lady that a council tax increase in any local authority is a direct consequence both of Government grant--which has increased--and of councils' decisions on their spending. It is right that local people, as well as Government, should contribute to the improvement of local services. The Tories are pursuing the argument--[Hon. Members: "Answer the question."] I am answering the question as I choose to answer it. The Tories are pursuing the argument about stealth tax, but their figures are absolutely wrong. The Government have increased grant to local authorities in real terms by 8 per cent., compared with a real-terms cut of more than 4 per cent. by the previous Government. That demonstrates the different commitment of this Government to local government and local services.

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