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Several hon. Members rose--

Mr. Deputy Speaker (Mr. Michael Lord): Order. Before I call the next speaker, I must tell the House that very many hon. Members are seeking to catch my eye, and unless we have short questions and reasonably short answers, an awful lot of them will be disappointed.

Mr. Harry Barnes (North-East Derbyshire): I cannot believe what I have just heard from the Opposition. Either they have been converted to a completely new position or they are talking through the backs of their heads--I assume the latter. They created our present problems in local government finance.

Is it not disappointing, however, that despite what was said earlier about the three-year provision, there is no change in the standard spending assessment methodology, so the evils introduced to the system by the previous Government through the Local Government Finance Act 1988 have not yet been fully tackled? The effects are bad in Derbyshire, especially in north-east Derbyshire, where the weighting in the area cost adjustment system needs changing, and the enhanced population figures need to be taken into account. For my area, that would be like the relief of Mafeking. Is there any hope that it will happen?

Ms Armstrong: I have announced that we are undertaking a fundamental review of the distribution method for revenue support grant. I hope that north-east Derbyshire, and my hon. Friend, will take an interest in that. A questionnaire was sent to every authority, and the overwhelming response was that they did not like the SSA system and would like to consider an alternative.

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Other interesting alternatives are being suggested by some of the groupings within the Local Government Association and the Association of London Government, and I look forward to finding out over the coming year whether it will be possible to change to a system that does not rely on the extremely complex SSA settlement system, which local authorities often feel is perverse.

Mr. Adrian Sanders (Torbay): I thank the Minister for having made a copy of her statement available in advance. However, is it not a statement designed to ensure that the Chancellor gets a pat on the back while councillors get it in the neck? Does it not confirm the shift in taxation from central Government to the council tax payer and the users of services?

Do not some of the Government's figures show council tax rising at twice the rate of inflation, while the Treasury forecasts an even higher figure of 7 per cent? Despite the £64 million announced today, is there not still a danger that taking money out of the general education budget to cover performance-related pay will mean that one teacher's pay bonus is another's P45?

Finally, when will the Government get their tanks off town hall lawns and allow local communities to set their own priorities without the fear of capping?

Ms Armstrong: I had hoped that if I gave the hon. Gentleman the statement in advance, he would be able to work out that we were not taking the money for teachers pay out of the settlement for schools. Teachers have to be paid, and we must ensure that the money is there, but I am sure that when the hon. Gentleman reads again what I have said, he will understand that the money is additional and that the same sums will go to schools as we promised last year, so there is a substantial increase.

The hon. Gentleman complained about council tax going up by twice the rate of inflation. I hope that authorities will do everything possible to hold council tax down because they are getting a substantial settlement this year. They also have the best value system, which is already demonstrating that authorities using it can make significant efficiency savings which cannot be described as straightforward cuts. We look to the rest of local government to do the same.

I think that the council tax payer will soon recognise that the Government's contribution will amount to an increase of more than double that required to keep place with inflation, and that that is a good deal for local government.

Mr. Ronnie Campbell (Blyth Valley): We need take no lessons from the Tories on local government finance, given that they introduced the poll tax, which cost the tax payer £6 billion.

I welcome the Minister's statement that she will look at the formula for standing spending assessments, which we have been trying to change for years. My hon. Friend will be aware of the problems encountered in Northumberland since it was introduced. For example, it is remarkable that the formula gives a greater population sparsity element to the city of Bradford than to the county of Northumberland. Does she accept that we need a correct formula that is fair for everyone?

Ms Armstrong: I thank my hon. Friend. I know the problems in Northumberland, which I visit often. County

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councillors regularly lobby me. I assure my hon. Friend that Northumberland will continue to receive the highest SSA per head of population of any shire county.

Sir Peter Emery (East Devon): I realise that one must examine the Minister's statement carefully, but does she accept that there is little doubt that overall it is bad news for local government? It contains nothing to correct the particularly bad treatment meted out over the past two years to rural local authorities, which it appears will have to continue to suffer.

Will the Minister look specifically at the guarantees given by the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Sunderland, South (Mr. Mullin), on the negative housing subsidy arising out of the housing revenue account? We were promised that that matter would be attended to, but the Minister's quite long statement today did not refer to it.

The Minister talked of performance being reflected in levels of funding, but most of the 23 councils so affected have been among those performing best. In my own district of East Devon, the cost is likely to be something approaching £1 million. That cannot be fair, and what will she do about it?

Ms Armstrong: I have already made it clear that rural counties are doing better than average this year, and I invite the right hon. Gentleman to look more closely at the figures later. I know that many figures have been given out today and that it is difficult for hon. Members to grasp them immediately.

On the housing matter, I can tell the right hon. Gentleman that it has been the subject of a consultation that I started when I had responsibility for housing. That consultation continues, and we do not expect to make a decision in the short term.

Mr. Gerry Steinberg (City of Durham): I welcome the increase in education spending provided by the Government in recent years. Schools in my constituency have benefited from more computers, new buildings and major repairs. My right hon. Friend's constituency is also in Durham, so is she aware that many small schools there are still struggling because of the formula used for local management of schools? The formula means that, as pupil numbers increase and decrease, small schools sometimes do not have enough money to pay teachers salaries or to retain staff numbers. That is a major problem in my constituency, and I suspect in my right hon. Friend's. Will she contact my right hon. Friend the Secretary of State and her departmental colleagues to see what can be done to support small schools? Those schools do an excellent job but, because pupil numbers fluctuate, they suffer because they cannot make plans.

Ms Armstrong: I am well aware of the problem. I suspect that the small schools in my constituency are even smaller than those in my hon. Friend's, and it is certainly true that some schools in the north Pennines have very small pupil populations.

I have discussed the matter with my right hon. Friend the Secretary of State and with my right hon. Friend the Minister for School Standards. She has already announced additional help for small schools, but is also keeping the

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matter under review. We want to ensure that all pupils, regardless of the size of their schools, get the opportunities that they need and deserve.

Mr. David Curry (Skipton and Ripon): Will the Minister reaffirm the essential principle of non- hypothecation--that is, the Government provide funding but local authorities are free to decide where best to spend it? To that end, would the right hon. Lady ask the Secretary of State for Education and Employment--before he begins his habitual tirade--not to start telling local authorities that they must spend their money in any particular direction?

If last year's increase in council tax was 6.8 per cent., against the predicted 4.5 per cent., why should it be less than 6.5 to 7 per cent. again this year, as against the Government's predicted amount? Police funding will be particularly sensitive, given the need to spend money on new communications equipment and on early retirement, which is still a tremendous burden on the police.

Finally, do the Welsh intend to apply the council tax benefit limitation principle?

Ms Armstrong: Of course councils make decisions about their budgets, but the Government have the right to let councils know of their priorities, which has led to extra funding being added to the settlement. This issue has always been debated, and will, quite rightly, continue to be debated.

I am afraid that I have forgotten the right hon. Gentleman's next point.

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