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Mr. Michael Portillo (Kensington and Chelsea): I join the hon. Member for Denton and Reddish (Andrew Bennett) and my hon. Friend the Member for Mole Valley (Sir P. Beresford) in saying that I think the Minister of State is very brave to search for a simpler and fairer system, albeit one that is not very wise and unlikely to be successful. As one who once held the same office, may I say that I hope he emerges from the process without being suspected of being merely partisan?
Today, however, I wish to make a narrower speech on behalf of my constituency, including the Royal Borough of Kensington and Chelsea, which I share with the hon. Member for Regent's Park and Kensington, North (Ms Buck), who is in her place. No authority is more at risk from the Government's proposals. The Government's review puts 20 per cent. of the royal borough's grant funding at risk. In all, #39 million is at stake, which is the equivalent of 70 per cent. on the council tax or cuts in services.
For that reason, I have pressed the Minister of State on the question of floors and ceilings. He has said clearly that the floor will apply without any compensation for inflation for the first year. However, while there will be floors and ceilings in subsequent years, there are no guarantees about the level at which they will operate. One can expect a transition from the present position to the new position at a considerably higher rate than the effect of inflation year to year. That is why it is right for us to say how much is at stake and express our anxieties, and to refuse to take any great reassurance from what the Minister of State has told us so far.
The Royal Borough of Kensington and Chelsea has lost #13 million from its grant entitlement over the past two years thanks to the operation of a ceiling that is already in place. I thought that it would be right for the Minister of State to discuss that matter with me, as a Member of Parliament who represents a borough that
My borough has received some huge accolades with which I am delighted, and I pay tribute to all those who have worked so hard to achieve them. For example, the Ofsted report on Kensington and Chelsea's education system said that the borough spends a lot of money very effectively. The hon. Member for Denton and Reddish thought that some areas might use standard spending assessment money to reduce council tax, but we do not: we use the money to improve education.
The problems in central London are very difficult. Of our primary school teachers, 32 per cent.very nearly one thirdmove on each academic year. That is not because we are a poor education authority. We are doing well, but mobility among teachers remains very high. That definitely needs to be recognised.
The hon. Member for Bath (Mr. Foster) mentioned the need to recognise the number of languages spoken in schools. In Kensington and Chelsea's schools, 97 different languages are spoken, 46 per cent. of pupils have English as a second language, and 35 per cent. of pupils are entitled to free school meals. We must maintain measures of our school population that relate to that population and which are not broader measures of economic deprivation. We need to focus on the schoolchildren themselves, and on the difficulties that they face. Pupil mobility in some of the borough's schools is as high as 40 per cent. That problem has been recognised by Ofsted, and should be covered by any future formula.
Kensington and Chelsea has the highest population density in England, and the borough receives 32 million visitors annually. There is a net inflow of 35,000 commuters a day, which places high demands on our services. For example, given its population, the borough has six times the usual amount of non-household rubbish, and traffic congestion makes rubbish collection much more expensive. The borough receives almost six times the normal number of noise complaints, because people live side by side with businesses.
The borough's social services gained a three-star assessment, a success achieved by only seven other local authorities in the country. Moreover, the borough was said to be serving people well, and to have excellent prospects for the future. Only two authorities in the country received that accolade. In other words, the borough is performing well, and using its resources well. It has been successful, and I echo the sentiment,
I shall close by saying that those problems could be dwarfed by the difficulties that arose with the censusa matter raised at business questions by the hon. Member for Manchester, Blackley (Mr. Stringer). There were extraordinary problems with this year's census. I consider them to be palpable errors, and believe that they will feed through into cuts in services for the borough's population.
Mrs. Janet Dean (Burton): I welcome the Government's commitment to reviewing the local government funding formula, but I recognise that it will be difficult to achieve a solution that will satisfy a majority of authorities. Nevertheless, it is vitally important to use the one-off opportunity presented by the increased amount of finance available for local government to address the problems inherent in the current SSA system.
As a Staffordshire Member of Parliament who was previously a county and borough councillor, I know that there have been grave concerns about the relatively poor funding in Staffordshire for many years. Those concerns are not about education funding alone, but it is the perceived unfairness in the amount of money available for educating our children that has so outraged parents, governors and teachers in areas such as Staffordshire. That unfairness was clearly demonstrated by one head teacher in my constituency who, in response to the recent consultation, said:
Along with the dozens of my constituents who have responded to the consultation, I support the option 5 proposal put forward by f40. I pay tribute to my colleague from Staffordshire, my hon. Friend the Member for Stafford (Mr. Kidney) for the work that he has done in this respect. Of the four options put forward in the consultation document, only option 2 begins to address fair funding. The other three options would leave Staffordshire worse off.
Sir Patrick Cormack (South Staffordshire): I am extremely grateful to the hon. Lady for giving wayof course, there is a little injury time. I should like to underline her comments regarding the tribute to our colleague the hon. Member for Stafford (Mr. Kidney) and the widespread feeling throughout Staffordshire, which crosses all party boundaries.
On the specific points in the consultation, I believe that it is right that working families tax credit or its replacement should be used to recognise deprivation, not just in the education funding formula but in areas such as social services and EPCS. With the drive to get people into work, it is logical to use the working families tax credit as a measure of need to reflect the fact that those on low incomes have similar requirements to those who are unemployed.
With regard to the area cost adjustment, I support Staffordshire county council's view that to base the education area cost adjustment on house price variations would not accurately reflect increased living costs. It would also be unwise to base any adjustments on such a variable factor. Although I support ACA2, I am disappointed that all the options for the area cost adjustment are based on the general labour market theory. I believe that it would be better to recognise the average wages in the public sector, especially since large groups of local authority employees such as teachers, police officers and firefighters are on national pay scales. It has been said that it is difficult to use specific costs because of the difficulties for some authorities in recruiting and retaining staff. However, it should be recognised that the wage bills in authorities such as Staffordshire can be high because of the low turnover of staff. Some 72 per cent. of classroom teachers in Staffordshire are on the top of the main scale or have progressed through the upper pay spine.
The disadvantages faced by Staffordshire schools are demonstrated by the authority's pupil-teacher ratios. The average figure in primary schools in Staffordshire is 23.2, compared with 22.5 for England. Secondary schools are similarly disadvantaged, with pupil-teacher ratios of 17.3 compared with 16.9 for England.
I have grave concerns about the proposals for resource equalisation if the result is to reward authorities which have traditionally been high spenders and which have spent above the standard spending assessment. Others, such as Staffordshire, which have stuck to the rules in the past should not be penalised. We should be looking at need rather than historical spend.
I cannot overstate the strength of feeling in Staffordshire, particularly with regard to education funding. Many parents recognise the extra funding for schools; indeed, it is important to recognise that the above-inflation increases that we have received in recent years are reflected in improvements in our classrooms. Between 1992 and 1995, Staffordshire's teaching force fell by about 5 per cent., while pupil numbers rose by about 4.7 per cent. That situation was completely reversed between 1999 and 2002, with pupil numbers falling by 0.8 per cent., while teaching staff increased by 4.1 per cent. However, the gap between other shire counties in the south-east and authorities such as Staffordshire remains totally unacceptable. I hope that the strength of the arguments made by the f40 group, the northern alliance and authorities such as Staffordshire will be recognised and acted upon by Ministers.
Briefly, on the options for change for other services, I support the response of Staffordshire county council to the consultation regarding social services, fire and highway maintenance, as well as option 3 for EPCS, which is supported by both the county council and East Staffordshire borough council.
There is concern in Staffordshire that the great strides that have been made in recent months in improving policing may be jeopardised by several of the options put forward. Staffordshire police authority could lose more than #5 million in the worst-case scenario. While I recognise that any changes to the formula would be phased in, I hope that Staffordshire is not disadvantaged by a new formula. Therefore, I support police formula l and believe that the sparcity component weight should be increased to at least 1.4 per cent. to avoid losses to rural police authorities with the incorporation of the rural police fund into the main formula.