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Mr. David Drew (Stroud): I am grateful to my right hon. Friend for receiving representations in regard to Gloucestershire's fire and rescue service, but will she listen again to our special plea about our standard spending assessment? Having managed to negotiate an increase of 1.4 per cent. down to 1.3 per cent., I hope that I can be more successful when I lobby her in the future.
Ms Armstrong: There are special problems in Gloucestershire that I discussed with my hon. Friend earlier today. They result from a blip in the figures this year. It is not right that the formula should respond in the way that it has, and that is why we are reviewing the distribution system. I hope, by taking account of matters such as that, that we can create a fairer system.
We are not rushing to hasty solutions, as some would urge. We are building a consensus on the way forward with local government and other stakeholders. We have received a massive response to our Green Paper--more than 16,000 replies. We are currently finalising our analysis of those responses and the details will be published on the Department of the Environment, Transport and the Regions website by the beginning of March.
However, this settlement must not been seen in isolation. The Government have responded to specific pressures in four areas. First, we have looked again at the funding position of authorities with the most serious deprivation problems. My right hon. Friend the Deputy Prime Minister announced on 24 January a doubling of the provision for the neighbourhood renewal fund in 2001-2002, from £100 million to £200 million. These additional resources will help local authorities improve their mainstream services in the most deprived neighbourhoods.
Secondly, in some areas where there have been serious floods this year, authorities faced the prospect of an increased levy from the Environment Agency to cover the costs incurred in dealing with them. My hon. Friend the
Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who has responsibility for the countryside and fisheries, announced on 26 January that he will provide an additional £11.6 million for the Environment Agency, to limit the burden falling on local authorities.
Mr. Don Foster (Bath): Is the £11.6 million genuinely new money, or is it part of the £51 million over four years announced by the Chancellor some months ago?
Ms Armstrong: I understand that £11.6 million was included in the spending review, but not in the £51 million announced by my right hon. Friend the Chancellor.
Thirdly, my hon. Friend the Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), announced on 26 January additional funding of £25 million to help local authorities facing significant increases in the cost of housing homeless households in temporary accommodation. This will help all authorities that are in that position, including those accommodating large numbers of asylum seekers.
Finally, my right hon. Friend the Secretary of State for Education and Employment announced on 29 January a new grant of £52 million to provide help in meeting education spending pressures to those education authorities with the lowest increases in education funding from other sources.
Mr. David Taylor (North-West Leicestershire): In recent years, Leicestershire has languished at the bottom of the county league table in respect of the amount of SSA granted per pupil in both primary and secondary schools. The extra £100,000 announced just days ago compares with a shortfall of £12 million. On that basis, it will take more than a century for us to reach the average county level. By the time that gap has been fully bridged, children in Leicestershire will probably be rather too old to benefit.
Ms Armstrong: I understand the concern of my hon. Friend, who has constantly paid attention to these matters and made representations about them on behalf of his constituency. However, he has not taken into account the ring-fenced grants that Leicestershire has received this year. They amount to an increase of about 24.6 per cent. My right hon. Friend the Secretary of State for Education and Employment took that into account in calculating the money from the £52 million.
Mr. Steve Webb (Northavon): Before she moves away from the subject of the money announced on Monday, will the Minister explain the exact mechanism by which Bristol council received £700,000? None of the other three former Avon authorities, which include South Gloucestershire, are Labour controlled. They received only £100,000. What formula lay behind those allocations?
Ms Armstrong: I have already said that other funding that councils have received was weighed against the pressures that they face. [Interruption.] The Department for Education and Employment gave a clear indication of the criteria that were taken into account when calculating the amounts disbursed. It allocated £100,000 to all authorities that have not benefited from the
neighbourhood renewal fund. The sum involved totals £8 million. Those authorities that face the greatest pressure as a result of the transfer of adult education funding to the Learning and Skills Council were also compensated.I suspect that gains and losses would have been equally distributed among the authorities that the hon. Gentleman mentioned. A note from the Department for Education and Employment shows that consideration was given to the way in which pressures on authorities from pay, prices and increased contributions to the standards fund compared with their increase in education SSA and the funding that I have outlined. It is clear, therefore, that the Department for Education and Employment took into account pressures faced by authorities, and the moneys that they had already received. It made its calculations on that basis.
Mr. John McDonnell (Hayes and Harlington): It is clear that the formula has produced some anomalies. For example, outer-London boroughs facing severe teacher shortages are not getting significant sums in additional benefit under this formula, but neither are they getting it from funding under the education action zone or excellence in the cities schemes.
Ms Armstrong: My hon. Friend must take that up with the Department for Education and Employment. Under this settlement, outer London did especially well overall.
No doubt Conservative Members will predict council tax increases, as they have every year since we came to office. I understand that they are talking about an increase of 9.1 per cent. Every year they are proved wrong. The rate of council tax increase continues to decline. They were miles out last year, and I suspect that they will be miles out again this year.
The Government will not indulge in such fruitless speculation, and it would not be right for me to make predictions about what are essentially local decisions made by authorities accountable to local people. What is important is that local authorities consult local people and consider fully the scope for cost effectiveness before setting their budgets.
Mr. Nigel Waterson (Eastbourne): Will the Minister give way?
Ms Armstrong: I am anxious to make progress.
Mr. Waterson: I should have thought it customary to give way to the Opposition Front-Bench spokesman in a debate such as this. The Minister cannot get away with what she has said. She has suggested that she expects increases to be below 6.1 per cent. Will she give the House some idea of how much below that figure the increases will be?
Ms Armstrong: I have continually said that I expect that, for most authorities, the rate of council tax increase will continue to decline. Labour authorities have the lowest council tax bills, whereas councils controlled by the Conservative and Liberal Democrat parties cost people £100 a year more, on average. In line with our
commitment to local accountability, we abolished crude and universal capping and no longer set authorities' spending limits in advance. In general, councils have responded well to this approach in the past two years. Local authorities also made representations on council tax benefit subsidy limitation. I have considered these carefully, but have decided to make no change to the scheme that I proposed on 27 November, as amended on 15 December.This local government settlement forms an important part of the Government's commitment to public services. We are working together with local government to provide a stable financial and planning environment for delivering better services. We have consistently put additional investment into local government and, by managing the economy in the way that we are, we will continue to seek to do so.
Our proposals for 2001-02 have been widely welcomed by local government because they complement the reform and the work in which local government is involved. It is true that local government continues to want to do more and the Government will work with it to ensure that that is possible.
I commend the motion to the House.
6.41 pm
Mr. Nigel Waterson (Eastbourne): This is a Government who live and will die by spin. As we have seen in the events surrounding the second resignation of the right hon. Member for Hartlepool (Mr. Mandelson), this is the Government of the short cut, the quick fix, the nod and the wink.
The Minister would have us believe that this financial settlement for local government is arrived at gravely and deliberately, with no political input. She talks about stability and even of a freeze in standard spending assessment methodology. Nothing could be further from the truth.
The plain truth is that the Government have found themselves in a tight corner over the new earnings data for the area cost adjustment. So before the recent statement, we had the introduction of floors and ceilings, despite the fact that we are supposed to be having a freeze while Ministers mull over the reaction to their Green Paper.
There are three real concerns about the floors and ceilings. First, they provide the prospect of distortion by introducing these mechanisms, complicating an already complex system. Secondly, if the statistical data are reliable and show that a particular council has sustained these extra costs in their area, they should be fully reflected in the grant system. The system would surely be more defensible if it related to what happens in the real world. Thirdly, there is the real possibility, now and in the future, of political interference by Ministers in how the grant is distributed between one part of the country and another. We see the system as a way of shifting resources to some Labour-run authorities and marginal seats around the country.
We must remember that shire counties will have lost out in this Parliament to the tune of £700 million as a direct result of changes in methodology at the beginning
of the Government's term in office. All this talk of stability merely cements in these unfairnesses. The London boroughs have lost out by some £350 million.
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