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Mr. Brian Sedgemore (Hackney, South and Shoreditch): Bearing in mind that the current financial crisis in Hackney has been caused by a combination of political instability and the gross negligence of senior officers over the past five years--led by the former
chief executive, Tony Elliston--will the Minister tell us what she can do to help? If she cannot tell us today, will she write to me?
Ms Armstrong: My hon. Friend knows that the Government have been in close contact with Hackney, where there are serious problems. It is, of course, up to the council to sort out its finances, and it is now getting on top of the problems caused by the amount that has been lost--the amount for which it was unable to account. I hope that, with the support that the council is now receiving, it will be able to turn things around, for it is in all our interests for the people of Hackney to be better served than they have been. I shall certainly keep in close touch with my hon. Friend about developments.
Mr. Adrian Sanders (Torbay): I also thank the Minister for letting me have a copy of her statement in advance.
Is not the message of the statement that £8.3 billion of local government expenditure is now devoted to special and specific grants? Does that not mean greater centralisation? The decision about what those grants will be spent on rests with central Government, rather than with the local councils, which in the past have received the money in their normal block grant.
Does not the increase in special and specific grants heighten the unpredictability for local government? When local authorities wish to plan their budgets, they will be unsure about whether they will have access to those grants. Does not such a bidding process have a cost implication, with many council officers devoting much of their time to bidding on behalf of their authority, in the knowledge that they may not succeed and that their time will have been wasted if they do not?
Overall, will the statement meet the rising costs, some of which have been imposed by the Government? In particular, there is no mention in the statement of how local government will fund the bus concessionary fare scheme from next April. There is no mention of the increased costs from best value. No decision has yet been reached on the cost of nursing care and how that impacts on social services budgets throughout the country. There is no mention of the costs of climate change, the impact of which falls on local councils that suffer from flooding, coastal erosion and other natural disasters.
The Government talk a lot about giving local government more power over decision making. In effect, all they have done is allowed the dog out for more walks, but they have kept it on an ever tighter leash.
Ms Armstrong: I was waiting for another line from the hon. Gentleman. I think that this is the first time that he has ever spoken in a settlement debate without predicting a double-digit increase in council taxes--I was waiting for him to perform his normal role. He has got it wrong every year and I was looking forward to being able to point that out.
I referred to the issue of specific grants in the statement. This year, we will set out the three-year programme for local government. I think that local authorities will welcome that. They will be given information before they set their budgets, for example, they will know what they can expect from special grants. Therefore, the issue that the hon. Gentleman raises will not arise.
There are some special grants that local government has asked us to set up: for example, revenue support for public finance initiative projects. It was not considered fair that that should be in the general settlement; it was felt that PFI should be the subject of a specific grant. Therefore, if an authority gets a specific PFI project, we specifically allocate the revenue support to it. I am sure that, as the hon. Gentleman looks at the detail, he will begin to see the logic of what I have announced in relation to special grants.
In formulating the overall amount, we have taken account of all the pressures on local government. The settlement reflects a substantial commitment to investment in public services because public services are so important.
On concessionary fares, clearly, the financial implications will vary widely from one local authority to another, according to whether a scheme is being operated and what that scheme provides. Our estimate of the total cost of the scheme nationally is £54 million, and we have provided for that sum in the settlement.
I am confident that, despite the hon. Gentleman's doom and gloom, the settlement is good news for local government. I look forward to working with him and with others to ensure that, next year, local government is able to perform the tasks that its citizens expect to be done.
Mr. Bill O'Brien (Normanton): I welcome my right hon. Friend's statement on the commitment to public services, and I believe that she is genuine in that commitment. However, I must draw attention to the fact that the difference between actual local government spending and the standard spending assessment is about £4 billion. The gap began to emerge when service cuts were imposed by the previous Government, and it is still causing problems because it has to be compensated for in charges for services and in local taxes.
I draw my right hon. Friend's attention to the area cost adjustment, which is estimated to be equivalent to a £51 million reduction. With a data estimate of a reduction of £72 million, it is thought that the special interest group of municipal authorities--SIGOMA--will suffer a £123 million loss. As that loss is almost twice the sum that has been allocated to SIGOMA for neighbourhood renewal, some thought should be given to that problem.
Will my right hon. Friend also clarify how specific grants will work? Will the £219 million for care leavers or the £127 million for learning and skills councils count against SSAs?
Could we also have full details of all funding--
Mr. Speaker: Order. I think that the hon. Gentleman has given the Minister enough to go on with.
Mr. O'Brien: May I also just ask the Minister if she will give us a breakdown of all the special grants made to local government?
Mr. Speaker: Order. I must appeal for shorter questions and, of course, shorter replies. Many hon. Members are seeking to ask questions, but some will be disappointed.
Ms Armstrong: I am sure that my hon. Friend will welcome the fact that Wakefield is receiving a 3.2 per cent. increase. I can confirm that the money for adult
education has been transferred out of the SSA settlement and into learning and skills councils. I can also assure him that special grant information will be presented to the House for approval.
Mr. David Curry (Skipton and Ripon): Does the Minister recall that, two years ago, she said that Labour would make the local authority settlement more simple? Now, however, the settlement is massively complicated by her floors and ceilings. Does she recall saying that she would make the settlement more fair? However, by abandoning the incorporation of objective data, the Government have made the settlement more unfair. Does she remember saying that the Government would make local government more independent? However, the increasing amount of direct grant has made local government more dependent. Does she agree that when the Labour Government talk about modernising local government, they mean making it more complex, more unfair and more dependent?
Ms Armstrong: No. I have not abandoned objective data, but used them. I also believe that the situation is now very simple: no authority will receive an increase of less than 3.2 per cent. or more than 6.5 per cent. I think that that is very simple and straightforward and that folk will understand it.
Mrs. Anne Campbell (Cambridge): I welcome my right hon. Friend's commitment to floors and ceilings, to dampen the percentage increases that are caused by data changes. However, has she considered the proposal made by the all-party fair funding group that there should be a floor on the education funding allocation per child?
Ms Armstrong: Of course we have considered that; I have met the group, and I frequently meet group members. Every authority has a different idea of what will be fair. The area cost adjustment, about which I know my hon. Friend is very concerned, has been an attempt--a flawed attempt, I think--to reflect differential costs across the country. My right hon. Friend the Secretary of State for Education and Employment is still pursuing a basic entitlement per pupil approach, as outlined in the local government Green Paper. I am not at this stage able to say where that will end up, but whatever system is adopted, we will still have to reflect need as well as the differing costs. That is always a problem. Simply dividing up the cake equally, as it appears, does not really end up being fair to anyone.
Sir Paul Beresford (Mole Valley): As my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) said, the Minister seems to have made a complicated system even more complicated and introduced the potential for political bias. We will certainly have to watch that. Is she aware that, for many local authorities, if their grant was set at average, about 25 or 50 per cent. of it, or, if it was set at floor, perhaps all of it, would go in the increased bureaucratic costs of the two systems of which she is, mistakenly, so proud--best value and the new scrutiny system? She should recognise that any competent authority--and there are some--could produce the savings that she talks about without those additional costs.
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