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9.35 pm

Mr. Andrew Lansley (South Cambridgeshire): I am grateful to the House for the opportunity to contribute to this debate. There is a certain symmetry in being the back marker in this debate because Cambridgeshire has the dubious distinction of receiving the lowest SSA per head of any shire county.

I welcome the maiden speech of the hon. Member for Ipswich (Mr. Mole). We at the other the other end of the A14, as part of the Cambridge to Ipswich corridor, would probably be happy to trade a bit of Cambridge's knowledge, industry and expertise if Cambridge United received a bit of footballing expertise in return. He mentioned higher education expertise, and I recognise that that matters. Given that he thought Cardinal Wolsey was the last person to promote such expertise, perhaps he should have a word with the Lord Chancellor, who seems to see himself in like guise.

I want gently to chide the hon. Member for North Durham (Mr. Jones) and, to be evenhanded, my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) on their contributions to the debate. It is very interesting to consider the respective SSA per head of shire counties. Hertfordshire, at £774 per head, and Durham, at £771 per head, contrast dramatically with Cambridgeshire at £647 per head for 2002–03. If my hon. Friend reads the report of my little contribution, he will find that one of the pressures on school places in Hertfordshire is that there are those in my constituency, just over the border from Hertfordshire, who are trying to place their children in schools in Hertfordshire, rather than in Cambridgeshire. They do so because Hertfordshire has £270 per pupil more to spend on schools than we do in Cambridgeshire.

Although my hon. Friend may claim a fast-rising population and high relative costs, the population of South Cambridgeshire is among the fastest growing anywhere in the country. The cost of employment, housing and living

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in Cambridgeshire are at least as high as in many parts of Bedfordshire, Essex and, indeed, Hertfordshire, including Hertford and Stortford, yet those counties receive the area cost adjustment, whereas Cambridgeshire does not.

The hon. Member for Sheffield, Attercliffe (Mr. Betts) remarked on the lack of comment on the area cost adjustment in the debate. He wondered why that was—if for no other reason, it was because I had not spoken at that time. The Minister will recall that the first debate on the Adjournment that I was able to obtain in the House took place in July 1997 and was on the area cost adjustment. One of the more recent—not the most recent—debates on the area cost adjustment took place in January 2001. In response to the debate in July 1997, the Minister said:

he was referring to me—

In January 2001, three and a half years later, the then Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Stretford and Urmston (Beverley Hughes), changed the Government's position. She said:

All that was in pursuance of the commitment made by the then Leader of the Opposition—now the Prime Minister—on 30 April 1997, days before the general election. He said:

I am afraid that the Minister must understand why my hon. Friend the Member for Maidenhead (Mrs. May), the shadow Secretary of State, has pressed that matter a little. We have found in the past that, when we have been told that something will be reviewed in time for the next financial year, four years have gone by and nothing has been done. Something must be done about the area cost adjustment. It must reflect costs accurately across the country. The kind of cliff-edge effects that currently occur are unsustainable. Respective costs across the country must be acknowledged.

I shall not continue to describe how that change should take place. However, I shall say two things. First, the grants must be disaggregated to district council level—with respect to my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), there are big differences between his constituency and mine in Cambridgeshire. It is deeply unsatisfactory that a fast-growing district council, such as South Cambridgeshire district council which is in an area of national importance in terms of development and infrastructure, should have a 2.3 per cent. increase in grant. Not only the county council but the district council—which has such a large planning function—have been woefully under-provided with grant by the Government given the councils' responsibilities.

Methodology may not have changed, but the data have. It is unsatisfactory, from our point of view in Cambridgeshire, that we have seen another increase in area cost adjustment factors, which had the net effect of

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taking £300,000 out of Cambridgeshire's relative allocation compared with what would have been allocated in 2000-01 when the previous factors applied.

The Minister referred to the importance of using the latest data. Data from 16 October 2001 was used for the council tax. Therefore, when the local authority's resources were assessed for the purposes of grant, up-to-date data were being used. However, when population was assessed, estimates for 30 June 2000 were used. For somewhere such as South Cambridgeshire, the difference between the estimate of a 1.3 per cent. increase in population per annum and the actual increase in population of more than 1.5 per cent. meant that that increase was not reflected in the allocation of grant.

Many hon. Members have spoken about the implications for council tax. I agree with what was said about the stress being put on local authorities as council tax reflects an increasing proportion of the cost of providing services. The same is true in relation to the national non-domestic rate, because of a 9.8 per cent. increase this year. The product of that rate is a further burden on businesses.

Cambridgeshire county council is currently consulting on the basis of a 9.8 per cent. council tax increase, and the district council is considering anything up to a 40 per cent. increase—from £50 to £70. We discussed the police, who are considering an increase of 20 or 30 per cent. to sustain their position. The net result could be an overall increase of £95 in band D council tax this year, which is the equivalent of nearly £2 per week.

As my hon. Friend the Member for North-East Cambridgeshire rightly said in his opening speech, a very high proportion of the additional money being provided to those on fixed incomes—through the basic state pension, for example—could be taken up next year by the increases in council tax, much of which is a product of distortions in the Government grant distribution system.

9.44 pm

Mr. Moss: With the leave of the House, Mr. Speaker, I begin by complimenting the hon. Member for Ipswich (Mr. Mole) on his maiden speech. He spoke authoritatively on local government finance and shared his experience and expertise of local government with us. He was gracious and generous in his comments about his predecessor who was an assiduous Member of the House and achieved much for his constituency. The hon. Gentleman showed that he is a worthy successor.

The debate has been useful. I agree with my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that, given the enormity of the money involved as a proportion of total Government spending, it is ridiculous that we have only three hours to debate local government finance when we spend almost a week on the Budget.

Many hon. Members took the Minister up on his promises, especially to review the SSA and, by implication, the area cost adjustment. I intended to mention my experience of the area cost adjustment in Cambridge, but my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) took care of that authoritatively. It makes no sense to have the cliff-edge syndrome, as he described it, in which one side of the

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county boundary receives substantially more money per pupil than the other. That needs to be addressed. The hon. Members for Sheffield, Attercliffe (Mr. Betts) and for Stafford (Mr. Kidney) also mentioned that.

The Minister said that the SSA is unfortunately so complicated that only boffins in anoraks can understand it and, by implication, that he, perhaps, did not. [Interruption.] If any hon. Member can tell me that they understand the formula in the report, I shall willingly take my cheque book out. It is extremely complicated and we wish the Minister good speed in coming up with something that is agreeable to all. I suspect, however, that he is setting himself an impossible task and that those who have suffered low SSAs will be disappointed when the fruits of the reorganisation do not materialise as they expect.

There were recurrent themes on both sides of the Chamber. The crisis in social services was emphasised in particular. We all know that that is a problem not just for local government funding and local government, but for government as a whole. We would be more than happy to co-operate with the Government to consider that in a broader perspective so that social services are given the right funding without necessarily making councils rob Peter to pay Paul.

My hon. Friend the Member for Mole Valley (Sir P. Beresford) and the hon. Member for Torbay (Mr. Sanders) mentioned best value. My hon. Friend also raised problems of ring-fenced funding, as did the hon. Member for Sheffield, Attercliffe. The important point was made that if 80 per cent. of local government money is funded by the Government and 15 per cent. of that goes to specific grants, that reduces significantly the flexibility of every council to pursue its responsibility to ensure that it has a balanced approach to the provision of services across the board.

My right hon. Friend the Member for Skipton and Ripon also mentioned the transfer of funding for post-16 education. That has not been calculated correctly. I know that the Government have made some adjustments from the initial announcements made late last year, but some councils still believe that they have been penalised because of the inadequate compensation. The floors and ceilings mechanism was not universally welcomed by hon. Members on both sides of the House. It is possible that the Government are devising a crude way to even out differences, especially in relation to the area cost adjustment.

We will not seek to divide the House on the report. We want money to go to local councils as soon as possible and cannot understand why the Liberal Democrats want to vote against the Government. Perhaps the Government should sit on their hands. Liberal Democrats might then have the difficulty of explaining to their local councils why there is no money in the budgets next week.

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