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15 Oct 2002 : Column 281—continued

Mr. Portillo : I noted that the Minister was extremely careful in his use of language this evening. Not only is there a zero guarantee for the first year, but in subsequent years floors and ceilings, he said, would continue. He did not say which floor would continue—he did not say that it would be the same floor—and did not specify the years. Does my hon. Friend agree that his reluctance to repeat what he said yesterday in a private meeting in the Chamber, where it can go on public record, may reflect the fact that floors and ceilings in future years will not be the floors and ceilings of the first year?

Mr. Pickles: My right hon. Friend is correct—the Minister is not in a position to say that there will be no pain or to say, XDon't worry, the amount of money will be reduced." Even on a cash basis, there will be a substantial cut for local authorities of 5 or 6 per cent. We must remember that the total sums being discussed are tens of millions of pounds.

Resource equalisation, whereby a council's tax-raising potential is taken into account, was introduced relatively late and offers a perverse incentive to embrace higher levels of expenditure. It also penalises lower-income families in areas with high house prices. Labour Members laughed and scoffed at the mention of East Sussex, which has high local house prices but low incomes. It has almost the lowest average income in England, comparable to that of Tyne and Wear. The system, however, which is supposedly designed to deal with deprivation and sparsity, takes #43 million from the county.

Sir Nicholas Winterton (Macclesfield): The hon. Member for Sherwood (Paddy Tipping) asked my hon. Friend what the Conservative party would do in government about local government finance. Will he fill out his reply and say whether he has followed the excellent work conducted for more than two years by the F40 group of local authorities, led in the House with great distinction by the hon. Member for Stafford (Mr. Kidney), who has highlighted many inadequacies and made sound proposals on the way in which injustices in the present system could be put right? I speak for Cheshire, a county that features extremely badly in the formula, and has done so under successive Governments.

Mr. Pickles: The hon. Member for Stafford (Mr. Kidney) is blushing, and so am I at my hon. Friend's question. I believe that I elaborated my thoughts in considerable detail and shall happily go to greater lengths, but I hope that my hon. Friend will allow me to do so in private.

Mr. Adrian Sanders (Torbay): Will the hon. Gentleman clear up something that was not obvious in his speech? Fourteen per cent. of the pot of money that goes into local government is taken out and given to local authorities, which bid for it in special grants. Is the

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hon. Gentleman's policy to restore that 14 per cent. or is it to get back to the 4 per cent. that applied when the Conservatives were last in power?

Mr. Pickles: It was not 4 per cent., but nearer 6 per cent. It depends on how one counts.

Mr. Don Foster: It was just over 4 per cent.

Mr. Pickles: I shall not haggle over a couple of percentage figures, but I do not believe that the hon. Gentleman is right. On the general point, however, the level of discretion is about 17 per cent. Given that most local authorities spend three quarters of their budget on staffing, that leaves them little discretion on how the rest is spent. Both I and my right hon. Friend the Member for Haltemprice and Howden (David Davis) are firmly committed to increasing the amount of local authorities' discretion so that they do not have to go cap in hand to the Government. If the Liberal Democrats want to join us in defending local government, they will be more than welcome to do so.

As we have discovered, we can talk for hours about the area cost adjustment, the relevant merits of different recruitment costs, zone integrity and various different steps. We can talk about the desirability of lowering the top-up for additional educational needs, but at a time when rural communities are desperate for reassurance that their concerns have been heard in this Chamber, the Government have kicked away the ladder. This is a mess masquerading as a solution; a blind rush without purpose or principle. The proposals do not have the confidence of local government and should not have the confidence of the House.

9.40 pm

Mr. Bill O'Brien (Normanton): I am amused by the comments of the Opposition spokesman, the hon. Member for Brentwood and Ongar (Mr. Pickles). In response to an intervention he referred to defending local government. I remember clearly that when he was leader of Bradford council for a short period he sold off old people's homes with old people in them. Therefore, defending local government was far from his mind then.

Mr. Pickles: I am glad that the hon. Gentleman has given way because it gives me a chance to say this: under my leadership of Bradford council, we sold not one single old persons' home. The party that sold an old persons' home—to a Labour councillor—formed the incoming Labour Administration. Hypocrites!

Mr. O'Brien: The hon. Gentleman set in motion the sale of the homes and was then removed from the leadership of Bradford council because people in the community said that that was not what they wanted. In fact, they are saying to the Tories now that they do not want their policies. The hon. Gentleman's speech showed clearly that the Tories have no proposals for the future of local government.

Mr. Colin Challen (Morley and Rothwell): My hon. Friend has hit the nail on the head. The Opposition did

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not have a word to say about cities or urban areas; they are trying to divide the country. They do not want a fair system; it is all about East Sussex.

Mr. O'Brien: I am sure that my hon. Friend has identified the real point.

Local government finance and the distribution formula will be of paramount importance to local authorities if we are to provide the world class services that we talk about. As chairman in the House of Commons of the Special Interest Group of Municipal Authorities outside London—SIGOMA—I join my colleagues who represent those 48 major authorities in pleading with the Minister to ensure that we get a fair, transparent, simpler and more stable system of resource distribution for local government. People expect a great deal from government. They want well-run schools for their children, crime-free streets and good quality care for older people and the vulnerable in our communities. Little or no change to the system of local government funding will not provide those services and the better environment that we all expect. SIGOMA's case is for a more robust system of resource distribution. That is well known to the Ministers and all Departments.

To make our case, I must compare the authorities in SIGOMA and those that will be affected by the resource distribution with London authorities, as there are some similarities between the two groups. Our communities suffer from generally higher deprivation than that suffered in London's urban areas. A major consequence of that is lower attainment, particularly in education. Despite the deprivation and lower attainment, our communities pay on average #125 more in band D properties than people in band D properties in London communities.

Ms Karen Buck (Regent's Park and Kensington, North): Will my hon. Friend give way?

Mr. O'Brien: I am sorry, but I have only a few moments.

Even after the assumed higher cost of providing services in London is taken into account, our communities still receive on average #140 per head less than the London boroughs. My own authority, Wakefield, has one of the lowest education SSAs in the country. To bring this element of Wakefield's SSA up to the metropolitan average would entail an increase in SSA or its replacement by #11 million. The children in the Normanton constituency are entitled to the same standard and quality of education as children elsewhere in the country. Not to change the financial formula for local government services is to deny my constituents fairness and justice.

In April this year, the Secretary of State for Health announced his intention to create a radically different relationship between health and social services, particularly in the provision of care for older people. Local government shares central Government's aim to improve care for the elderly, but the NHS plan will fail if social care is not properly funded. The way to address the problems of social care is not by penalising local councils. That has happened in areas where the Audit

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Commission has been compiling reports. My area suffered because of such a report. Penalising local authorities will not solve the problem of caring for the elderly and the vulnerable.

Mr. Tony McWalter (Hemel Hempstead): Will my hon. Friend give way briefly?

Mr. O'Brien: I am sorry—I have only three minutes left.

Councils' total contribution to supporting social care amounts to more than #1 billion over and above the SSAs on which the Government base the grant that they give to local authorities. That is a further reason for the current system to be reviewed.

The area cost adjustment is always mentioned in debates such as this. It was raised at the seminar, and I am sure that it will be raised repeatedly until some fairness is introduced into it. Members of SIGOMA are not against any adjustment in the distribution system to recognise some of the problems that London boroughs may have. What we ask is that any adjustment should be made on the basis of actual, rather than assumed, needs. I appeal to my right hon. Friend to give that serious consideration.

This morning, in a meeting of the Select Committee taking evidence on social housing, we were told that local authorities in London have different problems, and that what applies in one borough does not necessarily apply in others. The area cost adjustment must therefore be based on actual costs, not on assumed costs, as that is demonstrably unfair.

Finally, I refer to the EPCS—environmental, protective and cultural services—block, which is a further concern to local authorities. Provision of services under this block is almost always the lowest funded and most under-resourced. A review of the services covered by the EPCS block is essential. The EPCS block is usually a passport to other services, and it is those other services that lose out.

On the consequences of the decline in population, a fall in population might be seen as a blessing. We in SIGOMA refute that. Those who are most able to move from an area are those most likely to have transferable skills and a better education and to be more economically active. Those left in the area are less able to pay higher council taxes, yet are more in need of quality public services to guarantee a decent standard of living. On the EPCS block, such increases and the transfer of resources mean that there will be underinvestment and a lack of support for the delivery of world class services if we do not recognise the importance of services in that block, including playing areas, roads, open spaces and street lighting. The services take the brunt of the cuts, so I ask my right hon. Friend to give us a formula that will be transparent and robust, and which we can understand and explain to the people whom we represent.

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