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Mr. Deputy Speaker (Sir Alan Haselhurst): I remind hon. Members that the 12-minute limit on Back-Bench speeches starts now.

8.4 pm

Mr. Jim Marshall (Leicester, South): Thank you, Mr. Deputy Speaker. I am aware of the 12-minute limit; it is one of the reasons why, although I am sorely tempted to debate with the hon. Member for North-East Cambridgeshire (Mr. Moss), I shall refrain from doing so, except to express agreement with a specific part of his speech, but not the arguments that surround it. The hon. Gentleman mentioned the problem of social services, and as the Minister recognises, there is a real problem with them not only in delivery, but in financing them locally. Although the Government are aware of that problem, I am sure that they realise that a solution must be found before the implementation of the next financial settlement in 2003. Unless that problem is addressed seriously, it will not only persist at its present level, but escalate.

I wish to make a parochial speech on the problems that are specific to Leicester, as well as to one or two other local authorities in England. Before I do so, I congratulate the Government—a rare phenomenon for me—on the real-terms increase in this year's local government financial settlement, in which real-terms expenditure is increased by 7.5 per cent. and the SSA by 5.5 per cent. Last year's increase, coupled with this year's increase, represents a real advance in local government resources.

I also welcome the Minister's comments on the floors and ceilings scheme. I do not know what outsiders makes of that phrase, but I presume that at least hon. Members know what it means. The scheme will ensure that no authority with educational services will receive less than a 4 per cent. increase in Government grant compared with 2001-02. Again, I welcome that on the national level, but the Minister will be aware that, on these occasions, hon. Members always have local bleats, and I now wish to turn to them.

Although the grant increase nationally is very good, it will not prevent local authorities from continuing to face difficulties. The Minister will know, even though he is

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looking at his notes, that the increase in SSA that Leicester has received is lower again than the national average. I know the reason for that, as well as the Minister does. There is a falling population, which therefore gives us a smaller proportion of the national pot, but we do not necessarily accept the reasoning behind that argument. As the Minister will also know, even though a population may be falling, it does not remove the difficulties. In some cases, the difficulties can be enhanced by the problems arising from a falling population. I hope that that point will be addressed in the overall review of the formula for 2003-04.

Brian White (Milton Keynes, North-East): I totally agree with my hon. Friend about falling populations, but does he accept that equal problems need to be addressed in constituencies, such as mine, that have a rapidly rising population?

Mr. Marshall: It was implicit in what I said that I recognise that there are problems on both sides. I am concerned that the way that the formula works at the moment seems to neglect the problems arising from falling populations, while recognising the problems of increasing populations. Clearly, both types of local authority have problems, but they are necessarily different kinds of problem. I hope that both will be recognised in the new formula that will come into force in 2003–04.

However, the Minister will be aware that Leicester city council has approached the Department for Transport, Local Government and the Regions about the specific problems that have faced Leicester in the past 18 months, which will continue into 2002–03. We will require additional funding to finance the burden faced by Leicester's education and social services departments in dealing with a large influx of European Union nationals who came from the Netherlands but who were originally of Somali origin.

As I believe my right hon. Friend the Minister is aware, in 2001 approximately 300 to 400 Dutch Somali families moved to Leicester from the Netherlands. I emphasise that they came as EU nationals and not as asylum seekers, but Leicester is inevitably incurring significant additional expenditure to support those families. The social services department must provide the money to cover their daily living costs until those European citizens acquire habitual residence in the United Kingdom. Other support services also have to be provided. The social services department estimates that an additional £300,000 is required to finance those services in this financial year and that a further £400,000 will be required in the next financial year.

As my right hon. Friend will also recognise, the impact on the educational service is even more acute. Some 900 Dutch Somali children of school age have arrived in Leicester over the past 18 months, with 488 of them— 54 per cent. of the total—arriving since September 2001. These arrivals have resulted in an increased requirement in the budgets delegated to schools. On average, the sums are £1,400 per primary pupil and £1,900 per secondary pupil but, in most cases, there has been no matching increase in the standard spending assessment.

Other educational costs, such as the need to provide additional language support and additional support for admission procedures, will also have to be incurred. It is

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estimated that the education department in Leicester will need to spend more than £500,000, rising to more than £2 million next year, to support those children.

However, as the hon. Member for North-East Cambridgeshire pointed out in relation to asylum seekers, the SSA calculation does not recognise most of these pupils for financial assistance. That is because the calculation for primary pupils is based on their number at the beginning of the previous year's spring term while that for secondary pupils is based on the number the previous September. Therefore, all the new primary pupils who have arrived since January 2001 and all the secondary pupils who have arrived since September 2001 have not been included in the SSA calculations.

I hope that, even at this late stage, my right hon. Friend will recognise the problem and that he will be prepared to make a financial adjustment. I realise that it is too late to change the formula and too late to include those children officially in this year's settlement, but I hope that he and the Government will consider the problem, perhaps with a view to providing the type of specific grant that is available to local authorities that are faced with a sudden increase in the number of Army personnel with children in their area. Additional finance can be found in such cases.

Leicester has an enviable reputation as a multicultural city. I should hate to see the difficulties that I have described made any worse because of a lack of financial resources. On behalf of my hon. Friend the Member for Leicester, East (Mr. Vaz) and the Secretary of State for Trade and Industry, my right hon. Friend the Member for Leicester, West (Ms Hewitt), and myself, I urge the Government to consider the problem seriously and to come up with a solution that will provide further financial assistance to the city council in Leicester.

8.14 pm

Mr. Adrian Sanders (Torbay): Given the interest that there was in the earlier debate on police grants and given the number of Members present for this debate, I wonder why we discuss both issues on the same day. More time was made available for the police debate than for the local government debate even though local government is responsible for a wide range of services. Perhaps the Minister and the usual channels might like to consider that point.

Those are not my words or those of anyone on the Opposition Benches, but those of the right hon. Member for Holborn and St. Pancras (Mr. Dobson) in the debate on the final local government settlement of the previous Conservative Government.

A year later the right hon. Gentleman said:

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It is a racket, and the racket is the standard spending assessment that we have had to live with since 1990–01 when it was introduced He also said:

We are still stuck with that present, manifestly unfair racket of a system.

The authorities that have been most disadvantaged by that system suffer from it year on year. Although this year's increase is, indeed, the highest increase that we have ever seen in local government, it does not make up for those lost years for those disadvantaged authorities. When the Minister comes to the Dispatch Box to say, "It is a 7.4 per cent. increase. We do not expect any unreasonable council tax rises," that is only half the truth. Not every authority receives 7.4 per cent. Some authorities receive much more; others receive much less. Even if those that receive much less get more than the inflation rate that the Minister mentioned, it is the retail price inflation rate. It is not the pay inflation rate or the inflation rate that local authorities have to deal with in their real world.

There are some good things in the proposals. I have mentioned the size of the settlement—that is good. Although the Minister did not mention it in his speech, the fact that the council tax benefit subsidy is to be abolished is another good thing.

However, there are some very bad things in the proposals and among them are the constant top slicing and the fact that councils are made to bid for funds. In 1997-98, 4 per cent. of funds were in that category, but the figure is nearly 15 per cent. today. It is a terribly wasteful system for councils, particularly those that go through the effort of applying for funds and do not succeed. It wastes officers' time and council tax payers' money.

The overall increase is not distributed across the board to all local authorities. The main losers from that are county and unitary social service providers. They are hit in two ways. The first is because the formula does not recognise the amount of need that there is in such areas. A number of sources say that local needs are not met by the formula. The second is because the funds are not fairly distributed. Two sectors of social services—children's social services and elderly care—face real problems. Our hospitals are filling up with people who need social services care, not hospital treatment. That fact must be tackled and, although extra money has been made available to help the social services that are under pressure, it is peanuts compared with the scale of the problem facing hospitals and social services departments in many parts of the country.

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