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24 Oct 2002 : Column 465continued
Ms Karen Buck (Regent's Park and Kensington, North): I am from London. Although meetings of London Labour MPs might as well begin with a few rousing chants of the Millwall football supporters' chorus XEverybody hates us and we don't care". I promise the House that we do care. It is very important that there is some mutual understanding of the pressures facing local authorities in different parts of the country. I have always had huge sympathy for those local authorities in the north and elsewhere that faced great pressure in trying to deal with the devastating economic collapse as a consequence of Conservative policy. Those authorities have had to deal also with the effects of falling populations. All I and my colleagues in London ask is that there is a similar degree of recognition of the pressures and demands that face us.
I do not believe that the formula as currently structured gives us what we are looking for, which is a closer reflection in Government grant allocations of the need to spend. It is very hard to see how the need to spend is reflected in the options under consideration, essentially in the formula's personal social services and environmental services block. The reasons for that are many and diverse, but they are rooted in the impact of deprivation.
I hope that the House will accept certain facts. London has the highest level of child poverty in Britain, and the reduction in child poverty that has taken place in London is smaller than in any other region. More households are without work in London than in any other region. A quarter of the country's problem drug users are in London, and two thirds of all the homeless people in the country are concentrated in London. Local authorities in the city support 40,000 destitute asylum seekers. Twice as many children in inner London are eligible for free school dinners as in any other area of the country. My constituency of Regent's Park and Kensington, North sounds like an elysian paradise, but it has the seventh highest eligibility for free school dinners in the country. Those levels of deprivation need to be understood in the formula, and I hope that they gain some degree of recognition among colleagues in the House.
It is also extremely important that the complex pressures of ethnicity and deprivation, and their interaction, are understood My right hon. Friend the Member for Birkenhead (Mr. Field) spoke about that balance. I accept that ethnicity is not necessarily and always a proxy for disadvantage, but the complex ethnicity now appearing in London and elsewhereincluding Sloughis completely different from the simple presence of an ethnic minority population. I hope that my right hon. Friend will accept that. There are 300 languages spoken in London's schools. That creates a demand for spending and support that is not recognised by deprivation indicators in general.
I turn now to personal social services. The education formula gives considerable recognition to the costs of meeting ethnicity, but that requirement is not always properly reflected in other service areas. Personal social services in London are overstretched precisely because they have to deal with 300 different languages, and with the related issue of high turnover and mobility. High turnover is a huge pressure on schools. In many primary schools in London, no pupil at key stage 2 was in the school for key stage 1, but high turnover also places huge demands and pressures on personal social services. London also has twice the rate of mental health admissions of other parts of the country. Many of these factors are related.
London is changing at a rate probably not seen by any western city in the past century. We are now absorbing 100,000 international migrants a year. Although that is exciting, challenging and probably necessary, it places a demand on all our health and local authority services. If we do not meet that demand properly, there will be serious consequences. Yet under the proposed formula, London councils, which spend #356 million above their standard spending assessment at present, could lose between #38 million and #140 million. I do not see that that is in any way a reflection of the need to spend. That is why I am arguing, as my colleagues would have done
Andrew Bennett: Does my hon. Friend recognise that almost all Labour Members accept that she should get a fair deal, but we are concerned that an awful lot of people in London still pay a lot less in council tax than people in other parts of the country?
Ms Buck: I accept that there are disparities which have historical roots, and that there is a need to change them. I am most concerned about the fact that the majority of London councils are Labour controlled and levy a high council tax. If we allow for the fact that there are fewer band A and B properties in London than anywhere else, our council tax levels are higher than elsewhere.
Mr. David Chaytor (Bury, North): Will my hon. Friend give way? It is on this point.
Ms Buck: I cannot give way any more; only two London Members have been called to speak from the Labour Benches, and I am sure that other people will have an opportunity to make their point.
We in London are asking for a fair deal; the floor that many authorities are likely to be on should be set at a level that ensures that services are protected. Secondly, we want all the options in the personal social services proposals to be reconsidered. I believe them to be technically deficientthey were designed to reflect higher levels of need yet, perversely, they seem to do the opposite. We do not believe that any of the options in the personal social services formulae are reasonable.
Thirdly, we need to ensure that the environmental services proposals reflect London's needs. Last year, more abandoned cars were removed in Merton, in the constituency of my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh), than in the whole of Manchester. That is the scale of the environmental pressure in London. It should also be recognised that in the streets of the west end there are more visitors at 3 o'clock in the morning than at 3 o'clock in the afternoon, yet there is no specific weighting for this huge number of night-time visitors and the pressure that they put on services. We need an option in the environmental services block that allows us to provide a quality environment right across London. That effectively means the fourth option in the environmental services block, but weighted for visitors and commuters.
We also need the Government to recognise the impact of high population turnover and mobility, particularly on social services and education. It is correlated largely, but not entirely, with ethnicity. We need local education services to be funded on the basis of the school, not the resident, population. They are entirely different in London, although not necessarily in other parts of the country.
In my view, we need to be wary about the working families tax credit
Matthew Green (Ludlow): I welcome this review, because we have waited a long time in Shropshire. During the past decade we saw services slashed year on year and large council tax rises as a result of the changes that the Conservative Government made to local government finance. As has already been mentioned, we are in with the f40 group and with the northern alliance. I pay tribute to both campaigns.
I want to be constructive in my approach to the problems. Resource equalisation is the almost invisible problem; I do not think that its implications have always been thought out fully. All the proposals equalisation would create quite perverse outcomes as they would take resources away from low-spending authorities with relatively buoyant local tax baseslargely shire countiesand direct them towards traditionally overspending authorities in areas of lower council tax value. The proposal would remove grant funding from shire areas that are already funding services above SSA to London authorities that are spending below SSA. The result would be to create massive turbulence in the funding of local government services. The revised funding formula already provides a system of resource equalisation. There should be no changes to the current methodology of resource equalisation.
The problems with resource equalisation are that the options are based on past spending patterns which the Government have stated that they wish to move away from as a matter of principle. High spending is rewarded, taking no account of policy decisions underlying such spending or the quality of service provided. The provision for deprivation in urban areas, already addressed in the needs-based formula, are double-counted. No detailed research has been undertaken into the case for any of the options.
If the Government accept higher needs to spend, they should make their own contribution and not leave council tax payers to foot the bill. The redistribution effect is anomalous and cannot easily be justified when compared with the pattern of existing budget and SSA variations.
We have heard a fair amount about the area cost adjustment, in the past decade, which grew from #500 million to around #2 billion. The increase has been twice that in local government funding as a whole. That has meant that in the past decade, money has been moving away from the areas outside the area cost adjustment.
Sparsity has also been mentioned. It has been recognised in the schools blocks for primary and for the local education authority block for transport. However, it has not been recognised for early years settings, the private, voluntary and LEA-maintained settings that are often on an even more geographically spread basis than primary schools. It has not been recognised for secondary schools nor for the additional costs of providing support services such as special educational needs specialist services or information and communications technology networks over sparsely populated areas.
Department for Education and Skills officials went on record at the Local Government Association education finance conference to say that they had been given no evidence of a need for sparsity beyond the levels in the
The work of Professor Ros Levacic and Antonia Simon highlights a number of recommendations. For example, SSA for sparsity in the schools blocks should be revised upwards to ensure that LEAs are adequately compensated for the additional costs of small schools owing to sparsity. The increase required in the SSA is in the region of #74.8 million in this year's costs. LEAs should be funded for the greater costs of small secondary schools due to sparsity as well as the primary sub-block.
The formula proposed by the education funding strategy group for funding home to school transport should be reviewed to ensure that it correctly reflects the relationship between sparsity and expenditure on school transport.
I wish to add my voice to the calls for the inclusion of working families tax credit in the arrangements for recognising deprivation. Incorporating working families tax credit recognises the effect that low pay within the family can have on education needs. Ignoring working families tax credit excludes recognition of needs in low-income economy areas. Introducing working families tax credit would reduce the economy-related volatility in the distribution of deprivation funding.