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5 Feb 2003 : Column 356—continued
Mr. Edward Davey (Kingston and Surbiton): If the Government are being so generous, why do figures from his Department show that assumed council tax yield for next year will go up by 9 per cent?
Mr. Raynsford: The figures do not show that. The documents make assumptions for the sake of calculations. They do not imply that any assumptions are being made about council tax levels. However, if the hon. Gentleman bears with me, he will hear me explain about the adjustments that we have made, as part of the new system, to the level of council tax and the formula spending share. Assumptions have been made as part of that process, but they have no implications for the future. The hon. Gentleman's authority will receive an increase in grant of 4.9 per cent. I hope that he is grateful for that, and that the authority appreciates that it is a decent above-inflation increase and that we are putting in place an arrangement that will ensure that every authority can budget sensibly, with the confidence of floors and ceilings. They will not be subject to the huge increases or reductions—mostly reductions—that applied during the years when the Conservatives were in power. All too often, authorities found that their budgets were cut, whereas this year, in every case, they are receiving an above-inflation increase.
Joyce Quin (Gateshead, East and Washington, West): I do not envy my right hon. Friend many aspects of his task. My local authority, Gateshead, hoped for great things under the new system, as for several years it had done badly under the previous one. Our settlement is the lowest in Tyne and Wear and has recently become even lower, so I need to give my electorate an explanation. Can my right hon. Friend provide one?
Mr. Raynsford: My right hon. Friend visited me, on behalf of her local authority, and we discussed that matter. In the light of the representations that we received from her and her colleagues, we looked carefully at the figures. The overall increase of 4.3 per cent. for Gateshead is above inflation, even if it is not at the same level as for other north-east authorities. That is one of the consequences of a major change in the funding system, whereby the effect of a large number of different factors feeding into the final conclusion produces results that are not wholly consistent from area to area due to the weighting given to those individual factors. We have examined the figures for Gateshead closely and are satisfied that there is no mistake in the calculation, but I understand my right hon. Friend's anxieties and will be more than happy to
hold further discussions with her and her colleagues in the months ahead about the impact of the new formula on her authority.
Mr. Raynsford: I shall give way to my hon. Friend the Member for Cambridge (Mrs. Campbell), but then I want to make some progress.
Mrs. Anne Campbell (Cambridge): On behalf of Cambridgeshire county council, may I express our extreme gratitude to my right hon. Friend for the high increase that we received this year? At 11.5 per cent., it was one of the highest.
Will my right hon. Friend explain clearly to the Liberal Democrat leader of Cambridge city council that a 3 per cent. increase does not represent a cut and that he was not promised 4.6 per cent., as he claims? The leader of the council seems to have translated an average increase in the 2000 spending review into a promise. Can my right hon. Friend set the matter straight?
Mr. Raynsford: I am pleased to confirm that the settlement for Cambridgeshire county council is indeed a good one, as my hon. Friend says. Cambridge city council is receiving an above-inflation increase of 3 per cent., guaranteed by the floor. That is certainly not a cut and the council was certainly never promised any other figure. If the leader of the council believes that there was such a promise, he is deluding himself.
I understand that the difficulties in Cambridge are attributable to the census, which has affected several authorities, and that representations are being made to the Office for National Statistics. If the ONS were to take a different view, we should take that into account, but while it continues to hold that the census figures are robust we have to be guided by that—as we were in the settlement.
Mr. Eric Pickles (Brentwood and Ongar): I have given the right hon. Gentleman notice of my question. I entirely agree about the problems caused by the census. However, the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee recommended that in such circumstances we should be able to look at electoral registers or school rolls and check service use. The Office for National Statistics seems to be unwilling to give information and to justify the figures. Will the right hon. Gentleman tell us what representations he has made to the ONS to try to sort things out? We should base the calculations on proper statistics.
Mr. Raynsford: We have discussed with the ONS not just this year's census figures but those that it provides for us otherwise, which are always the basis for settlements. When we have evidence that there might be questions about the validity of some of the data, we always ensure that they are passed to the ONS, although it is ultimately for it to reach a judgment. I know that the ONS is considering such factors. I have personally spoken to the Treasury Minister responsible for these matters and have been assured that the ONS is giving them serious consideration. As I said, while the ONS remains confident that the census figures are robust,
we must apply them and there can be no question of us substituting our judgment of the appropriate figures for theirs.
Mr. Raynsford: I shall take one more intervention and then I must make progress.
Ms Karen Buck (Regent's Park and Kensington, North): My right hon. Friend will be aware that the two boroughs in my constituency, Westminster and Kensington and Chelsea, both suffered as a result of a sharp discrepancy between the census and the previous population estimates. Does he accept that there might now be an argument that a door-to-door head count in inner-city communities is no longer the most appropriate way of measuring population and making decisions on service allocation, and that it is time to move to a more flexible and meaningful way of assessing population?
Mr. Raynsford: I am not responsible for the census or the ONS and therefore cannot give my hon. Friend the assurance that she seeks. However, I can assure her that her comments will be relayed to the ONS, which as I have said, has given a lot of thought to the matter. It is right that representatives of local authorities who are concerned about the implications of the census data should continue a dialogue with the ONS.
Mr. Brazier: Will the right hon. Gentleman give way?
Mr. Raynsford: No, I need to make a little progress.
The application of the floor in my hon. Friend's case has properly protected both her local authorities. Under the system operated by the Conservative party, those authorities would have suffered serious, genuine cuts in grant rather than receiving an increase of 3 per cent., which is above inflation.
I have referred to floors and ceilings, and those have two main uses: they help to phase in the system changes, and in any year bring a degree of predictability and stability to a system under which previously there could be large swings in grant allocation from one year to the next. That continues to be generally welcomed by local government, and that is why I intend that such a damping mechanism should continue to be a feature of the grants system indefinitely.
For 2003–04, I can confirm that, for authorities with education and social services responsibilities, the floor will be 3.5 per cent. and the ceiling 8 per cent. For police and fire authorities, the floor will be 3 per cent. and the ceiling 4.9 per cent. For shire districts, the floor will be 3 per cent. and the ceiling 12.5 per cent. As I have made clear, every council in England is guaranteed an above-inflation increase.
David Taylor (North-West Leicestershire): Will the Minister acknowledge that in the wider world the use of terms such as "a floor increase" and "real terms" suggest that a local education authority will receive an increase in grant of at least 3.5 per cent. However, when one expresses the grant in terms of grant per pupil educated in Leicestershire, for instance, where there has been
substantial growth in the number of three-year-olds, one sees that the grant can fall beneath the floor into the cellar, where the increase is 2.5 per cent. or less. Is that not a possibility?
Mr. Raynsford: Leicestershire is receiving a 6.6 per cent. increase in grant, which is significant. That represents very many millions of pounds. It is for local authorities to work out how they set their budgets in the light of the increases. As I said at the outset, I do not for a moment deny the pressures with which local authorities must work. It was always thus. That applies everywhere in our world—to businesses, public authorities and the Government. Hard decisions have sometimes to be taken. I once again stress that every local authority in England is receiving an above-inflation increase, and that is the first time that that has happened.
Since 5 December, I have had the benefit of views on the provisional settlement both in writing and in meetings. The Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Shipley (Mr. Leslie), other ODPM Ministers and I have met 55 delegations to discuss the proposals. I have considered carefully all the points made. For the most part, I have decided to confirm the proposals that I made, with one substantive modification to the area cost adjustment, to which I shall return. In addition, as usual, the final figures reflect the more accurate data and resource totals that have become available since we published our proposals, and also data corrections to reflect errors discovered by the Office of the Deputy Prime Minister or notified to us by local authorities.
I shall deal briefly with certain points made during consultation. On resource equalisation, our proposals to take more account of the ability of councils to raise council tax attracted a lot of comment, much of which was based on a misunderstanding of our aims. Resource equalisation is not new; it has been part of the grant distribution system for decades. Nor are our proposals radically different from what went before. Like previous arrangements, we take account of a council's ability to raise council tax—our estimate of the national average band D. As under the old standard spending assessment system, we are doing just that. However, because the assumptions underpinning the old SSA had been allowed to slip behind changes in the real world, its calculations were based on an unrealistically low council tax figure. We are therefore bringing the data up to date to reflect today's realities. That is why the calculations that the hon. Member for Kingston and Surbiton (Mr. Davey) has seen are in the report.
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