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24 Oct 2002 : Column 469—continued

Mr. Edward Davey : Does my hon. Friend realise that the working families tax credit is not taken up in London anywhere near as much as it could be compared with other regions? If WFTC is to be included, it should be on the basis of eligibility and not take-up.

Matthew Green: I agree. That is a fair point. The key is that real deprivation must be recognised—including people with low pay and with no pay. We need to find a proper way to recognise that.

The roads block has not been mentioned. The formula is being based on previous spend on roads. This has been raised in the seminars and I realise that Ministers have rightly said that they have struggled to find another formula that works properly for roads. I would like some more to be work done on the subject, however. In Shropshire and in many other rural counties in the past decade, county councils have rightly preserved their education and social services spending, but cut their roads spending. They did so because one can always repair a road later but one cannot repair a child's education or the results of a lack of care by social services.

If road spending is to be based on that of previous years, those areas in which such spending has suffered in the past and which have a huge backlog of repairs will not receive fair funding to maintain their road network.

4.21 pm

Dr. Desmond Turner (Brighton, Kemptown): I recognise that there is a perception that local authorities in the south enjoy an unfair advantage over those north

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of Watford. That is not a universal truth, however, and I ask my right hon. Friend the Secretary of State to be careful to ensure that in the process of rectifying perceived injustices he does not, even unintentionally, produce new ones.

I note, for instance, that one of the greatest perceived injustices has been the treatment of Wandsworth and Westminster. They are hardly touched by this review, so it has almost failed at the first fence if one uses that marker. There are authorities in the south-east where any external impression of prosperity masks areas of considerable deprivation, with consequent extra demand on council services, but which are set in a high-cost area. My own unitary authority, Brighton and Hove, is just such a case. My hon. Friend the Member for Pudsey (Mr. Truswell) wanted some justification for the existing area cost adjustment. My authority will give him that. I can show him the devastating effect that withdrawing such support as the authority has got under the formula would have.

I am not simply pleading for Brighton and Hove to be a special case, or having a good whinge as my hon. Friend the Member for West Ham (Mr. Banks) might say. If I did not have a bit of a whinge, however, I would be failing my constituents. My authority strikingly illustrates the problems that will also apply to a greater or lesser extent to some other authorities in the south-east.

Ms Julia Drown (South Swindon): This issue does not affect the south-east alone. As my hon. Friend will know, in Swindon, which is the worst-funded unitary authority and one of the four of the f40 group that fails to gain on any of the education funding formulas, high costs are a real issue. That area suffers similar deprivation problems to Brighton. Does my hon. Friend agree that the area cost adjustment formula needs to be changed so that the likes of Swindon are taken into account as well as Brighton?

Dr. Turner: I have great sympathy with my hon. Friend. I want us to come up with a just solution and I do not think that we have got there yet in the proposals that are out for consultation.

Brighton and Hove have some of the most deprived wards in the country—sufficiently so for two of them to have been selected as a pathfinder for the new deal for communities. There are 17 pathfinders in the country and only the most deprived areas have been selected. Of the rest of the wards, approximately two thirds are among the top 20 for deprivation. Those hon. Members who come to Brighton, look at the sea front and think, XThis is great, I like it," might not like it if they lived in some of the more deprived parts of the city. They would see a very different side of Brighton and Hove there.

Judy Mallaber (Amber Valley): Will my hon. Friend give way?

Dr. Turner: I cannot give way too often.

We also have extremely high housing costs in my area—some of the highest in the country, and among the fastest rising prices at present. In that respect, we are no different from most of London. Some of our key statistical indicators, such as the number of children in

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care or on the at-risk register, could be superimposed on those for inner London boroughs. Our unemployment is 50 per cent. above the national average. We have grave difficulty in recruiting and retaining key workers in public services. For example, we have a 25 per cent. vacancy rate for social workers in child protection, which is a grave issue in Brighton as we have had some serious cases. That shortage is the last thing we want.

We have a general difficulty with recruiting to local government posts. Often, we get only one qualified applicant, if any. Some posts have to be readvertised. In common with the health service in the locality, the council has to spend more on recruitment and retention packages to get anyone. All those problems are a result of very high housing costs. A reasonably qualified and experienced teacher's salary will not finance the purchase of the cheapest one-bedroom flat in Brighton and Hove.

The council has been stuck for some time in a vicious circle of spending cuts and large council tax rises. Under the proposals as set out in the consultation paper, even allowing for the floor, Brighton and Hove will be dealt a devastating blow. It has some of the same characteristics as a London borough, but it is being treated much worse than the London boroughs under the options set out in the consultative document. When one reads the document that fact is glaring. We are listed next to Bristol and we always feel that we have a great deal in common with that city, but it is treated quite well and we are treated appallingly. There is thus a dramatic difference in the way in which two similar authorities are treated under the proposals.

Some of my hon. Friends have been highly amused when Conservative Members have pleaded poverty on behalf of East Sussex. I must tell my hon. Friends that, for once, those Conservative Members were right. I served my time on East Sussex county council as a Brighton member before local government reorganisation. I know the county well and I know its problems. There is much deprivation. It used to be a low-spending Tory-controlled authority, which has not helped it, as it started from a low base. Also, given the GDP per capita, the area would qualify for objective 1 status under European funding. That is another area that could be badly hit by the proposals because it already has some very under-supported services.

We are expecting an increase in the number of policemen in Sussex. The Home Secretary has promised that increase, but a 9 per cent. cut in funding for the Sussex police will clearly make that impossible. We suffer from the problem of being next door to the Metropolitan police who are poaching officers by offering them #5,000 a year extra and free travel. The Sussex police will not do well out of this proposal.

We are nowhere near getting this formula right. We must get a true picture of deprivation, but we must mix it with a real definition of the actual costs of providing a reasonable level of service in all authorities throughout the country. The proposals that are before us do not just need a little tweaking, they need rather a lot, and I hope that my right hon. Friend the Secretary of State will do that.

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4.30 pm

Mr. Geoffrey Clifton-Brown (Cotswold): It is a privilege to wind up on behalf of the Opposition in this highly important debate continued from 15 October. There have been about 27 speeches, in addition to the two or three on 15 October, which shows the widespread interest in this extremely important subject. There were probably as many people on the two days who did not manage to catch your eye because of time, Mr. Deputy Speaker, and I must therefore protest to the Government that we should have had more time—in fact, a full day's debate—for these highly important proposals. As they cover 25 per cent. of all public spending, it is essential that we get them right.

The Government made the reform of local government spending a manifesto commitment in 1997. They have spent the last five years thinking hard about what to do and in July they came up with the big tome that we are discussing, yet they have given us and the general public only three months to consult on it, and two of those months were part of the summer recess when many people were on holiday. The Government have not given experts in the field or the general public much time to express their views on the subject, so I hope that Ministers will continue to receive representations sympathetically. I was especially touched by the comment of my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo) that the Minister for Local Government and the Regions had refused to discuss the matter with him. I hope that that will be put right.

The debate is important because only once every 10 years do we have the chance to effect changes to local government finance. The matter is highly complex. The present system covers 120 measures, many of which involve complicated maths, including regression analysis. As my hon. Friend the Member for Mole Valley (Sir P. Beresford) pointed out, if it is simple, it is not fair; and if it is fair, it is certainly not simple. Whatever Ministers say, the new system will not be simple.

The hon. Member for Bath (Mr. Foster) said that we should delay the whole matter for a further year, but I cannot agree. I congratulate the hon. Gentleman on his new post. I gather that he has been promoted to the transport brief, but I am sorry that we shall lose him on local government matters. As my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) pointed out, the NAS/UWT believes that implementation should take place in the forthcoming financial year, and I have a great deal of sympathy with that view.

I cannot refer to all 27 speeches, but I shall take up some of the more significant points. The speech of the hon. Member for Denton and Reddish (Andrew Bennett), the Chairman of the Select Committee, was especially interesting. His comments, like those of many of his hon. Friends, were almost universally critical of the Government's proposals. I was particularly impressed by his observation that there should be more discretion on local spending. We all say amen to that. My hon. Friend the Member for Mole Valley made the same point: there should be less specific and general grant, less top-ups, less ring fencing and more discretion for local authorities to spend as they please. I wholly agreed with him.

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We heard an erudite and articulate speech from my right hon. Friend the Member for Kensington and Chelsea, who made an interesting point about floors and ceilings, which amplified an intervention that I made on 15 October. Will the Minister give us a reassurance on that point? Will he guarantee that no authority will lose out in either cash terms or real terms in any of its expenditure blocks in this year's settlement under the new system compared with the present system? The consultation paper already gives that guarantee for education, but will the Minister extend it to all the other expenditure blocks? As the annual rate of local authority inflation, including pay settlements, is running at between 5 and 6 per cent., and I am asking the Minister for a real-terms guarantee in years one, two and three of the current rate of inflation of 2.5 per cent., perhaps he will be able to accede to my request.

The paper is highly complex. It covers all seven local authority expenditure blocks, each of which has between two and five options. It also deals with resource equalisation, fixed costs, sluggish costs and declining populations. We are dealing with a complicated subject, but my hon. Friends have made some telling points.

My right hon. Friend, like the hon. Member for Regent's Park and Kensington, North (Ms Buck), referred to the real difficulties posed by changes in London, not the least of which is the large number of commuters and visitors who come into London every day.

My right hon. Friend the Member for North-West Hampshire (Sir G. Young) made some perceptive remarks. He set out the fears of Opposition Members and of many people in local government that the proposals are a mechanism to transfer money from smaller, efficient and low-spending rural and shire counties to the profligate and less efficient northern and high-spending councils. He pointed out that as much as #80 million might be lost in Hampshire, which amounted to two teachers in every school.

My right hon. Friend also explained that if core funding is withdrawn by the Government, any increase will have to be borne by council tax payers. In my authority, Gloucestershire, the ratio of core funding to council tax is about three to one, so #3 has to be raised locally to make up for every #1 lost from central Government. My right hon. Friend pointed out that only a very imperfect system would rely on council tax increases, because property values do not necessarily reflect spending patterns, especially those of pensioners and people on fixed incomes. Such a system would act regressively on poorer and less advantaged groups in society. I hope that the Government will not take the line of forcing some local authorities to impose council tax increases that are greatly in excess of inflation. That would hit disadvantaged groups very hard indeed.

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