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5 Feb 2003 : Column 359—continued

Matthew Green (Ludlow): Will the Minister give way?

Mr. Raynsford: No, I must make progress.

The report, however, makes no assumption whatever about what would be an appropriate council tax increase for individual authorities. That is a matter for them to decide. We are bringing the data up to date to reflect today's realities. I should emphasise that we are not seeking to reflect individual authorities' spending decisions. That is rightly a matter for them, and it should not, and indeed does not, influence their grant entitlement.

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The new level of resource equalisation has distributional consequences, giving lesser increases to those authorities with a low formula spending share and a high council tax base, and larger increases to those with a high formula spending share and a low tax base. I make no apology for that; it is quite deliberate. It makes the system fairer.

Greater resource equalisation means that the formula totals also increase, from the historic level that SSAs had reached to something much closer to actual average figures.

Mr. Mark Francois (Rayleigh): The Minister has said that what he has done is quite deliberate and he makes no apology for that. The people of Essex will have heard clearly what he has just said. Our county council received the worst grant settlement of anywhere in county and many people in the county will suffer as a result. The Minister has said that that is deliberate and he has made no apology for it. The people of Essex will be very angered by what he has said.

Mr. Raynsford: I am astonished that the hon. Gentleman should be angry that his county council should receive an additional £27 million. I hope that he will reflect further on what he has said. Given the increase that we are giving to every council in the country—that did not happen when the Conservative party was in power—he should reflect on the fact that the Government are funding local authorities and giving them a greater ability to respond to local needs.

Matthew Green rose—

Mr. Andrew Dismore (Hendon) rose—

Mr. Raynsford: I will give way once more.

Matthew Green: Will the Minister confirm one point about resource equalisation? Before he quotes the figures back to me, I point out that Shropshire has had above inflation increases in grant and, for the first time, the formula spending share reflects some of the real costs that the SSA did not. However, the increase in the formula spending share over the previous SSA is far greater than the increase of the formula grant. The result is that the Government's figures suggest that the council tax should go up by at least 12 per cent., which is more than twice the increase in the grant level. We welcome the extra money, but will he confirm that what I have said is true?

Mr. Raynsford: There are no assumptions in the system; I have just been saying that. I am surprised that the hon. Gentleman has not been listening. We are setting out a system that is designed to distribute grant fairly between authorities. There is no assumption in the system, as there was under the old SSA, about what the Government—[Interruption.] No, I hope that he will listen. I have already had to say this twice, because he did not listen the first time. We are not making any assumptions about what individual authorities should spend other than in the one area of education to which I shall turn shortly. Decisions are for the authorities themselves to take. We are putting in place a fairer system to distribute grant. If he has considered what

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happened in the last years of the Conservative Government, he will know that Shropshire received an average increase of 2 per cent then. It has had an average increase of 5.5 per cent. in the years that we have been in government. As in virtually every other part of the country, it has received significant increases compared to what happened under the Conservative party.

Mr. Pickles rose—

Mr. Dismore rose—

Mr. Raynsford: I shall give way to the hon. Member for Brentwood and Ongar (Mr. Pickles).

Mr. Pickles : I merely wish to tell the right hon. Gentleman that one of his colleagues has been trying to get his attention for some time.

Mr. Raynsford: I am grateful for the hon. Gentleman's self-sacrificing response, and shall give way to my hon. Friend the Member for Hendon (Mr. Dismore).

Mr. Dismore: On education, schools in my constituency have been told that they will receive a passported 7.6 per cent. increase at the ceiling, without which they would get more, as school rolls are rising. At the same time, however, the amount in cash terms is £2 million less than the local authority has been told to pay. I know that my right hon. Friend has talked about the census before, but school rolls are rising. With the best will in the world, the sum passported by my education authority will be at least £2 million light.

Mr. Raynsford: I shall deal with education funding in a moment, but my hon. Friend should reflect that in the last years of the Tory Government, Barnet council—[Interruption.] I know that Opposition Members do not like it, but it is the truth, however unpalatable they find it, and I shall make sure that they hear it.

Barnet only received an average grant increase of about 1 per cent., well below inflation, during the years of the Conservative Government. By contrast, under Labour, Barnet has enjoyed an average increase of about 5.5 per cent. over the past five years. This year, it received an extra £7.3 million. I accept entirely that there are important issues to do with education, and I shall come on to them in a moment.

Several hon. Members rose—

Mr. Raynsford: I shall never get to education, however, if Members continue to try to intervene. I believe that most Members would like me to make a bit of progress.

The total for formula spending shares—FSS—is therefore some £4 billion higher than the total for standard spending assessments, purely because of greater resource equalisation. That does not mean that local authorities should increase their budgets by this amount. FSS figures are not spending targets, and with the exception of education, to which I shall return in a moment, they do not imply an overall Government judgment about the spending levels of individual

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councils. In that respect, they are quite unlike the old SSAs, which were originally designed to represent appropriate levels of spending across all council services. That was the product of an era in which the Government thought that they knew best and could dictate to councils what they should spend. We do not agree. A council's budget decisions are for it, not for us.

Turning to education, the Government do, of course, have a long-standing interest in the increases of schools' spending from year to year, which authorities with education responsibilities will want to take into account when setting their budgets. I readily accept that that is the one exception to the principle that I have previously outlined. I understand that almost all authorities have notified the Department for Education and Skills of their proposed schools budget. A substantial majority intend to pass to schools at least the target amount suggested by the Department for Education and Skills. I know that a number of authorities have considered making representations and discussing those matters with my colleagues in the Department for Education and Skills, who have told me of their willingness to consider such representations.

Mr. Derek Foster (Bishop Auckland): My right hon. Friend has received my colleagues from the county of Durham and myself very courteously. He will tell me that Durham will receive an increase in grant of 6.9 per cent, but we come to the nub of the problem in education. As the majority of the education budget is passported, there is very little flexibility for councils on other services. In the county council, the budget for social services is under great pressure, as it has had an increase of only 4.6 per cent., following two or three tight settlements in recent years. My right hon. Friend will understand the dismay and disbelief in the county of Durham at the settlement.

Mr. Raynsford: I say to my right hon. Friend, as I did when I spoke to him about these matters, that the overall increase for Durham county council of 6.9 per cent. is a good settlement. I understand the pressures the county faces with regard to social services. Many other authorities face similar or different pressures in particular service areas. I am sure that Durham county council, which has a good record of meeting local needs in a cost-effective way, will do everything it can to respond very positively. I am also sure that my colleagues in the Department of Health, who have a particular interest in these matters, and whom I suspect my right hon. Friend will probably approach, if he has not already done so, will be only too happy to discuss the specific implications and working of a number of the elements in the settlement that relate specifically to social services.

I turn now to the environmental, protective and cultural services. This too has been a controversial block. The difficulty with EPCS is that it is a complicated area, covering many services. Research showed that it was not possible to construct a meaningful formula from a bottom-up analysis of the cost of all those services. It was simply too complicated. We instead used the available evidence to inform the most appropriate choice of factors and ratings for the service area as a whole. We accepted the arguments put forward in the summer that the costs of many of the

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more important EPCS services, such as waste management, fall relatively evenly on councils. The new formula, therefore, has an enhanced per head allocation.

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