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5 Feb 2003 : Column 374—continued

Mr. Raynsford: Instead of making selective comparisons, will the hon. Gentleman compare like with like? Will he compare Enfield not with Harrow, but with the adjoining borough of Waltham Forest? What are the percentage increases for both boroughs? Will he compare Bromley not with a south-west London authority, but with the adjoining borough of Croydon? If he makes fair comparisons, he will find no political bias. Does he agree that Conservative authorities such as Wokingham, Cambridgeshire and Cheshire received huge increases? Will he therefore put an end to an outrageous political slur?

Mr. Pickles: I think that I have touched a raw nerve and that the right hon. Gentleman has been rumbled. The people of London understand that places such as Bromley and Merton, and Harrow and Enfield are comparable. The statistics that I cited are correct.

The settlement fails in many ways. It is unjust and unfair. It is also politically partisan and partisan between town and country. It ignores the growing crisis in local authority pension schemes, which will require a massive injection of cash. It fails to acknowledge that councils will have to pay the national insurance jobs tax in April. It does not take account of the unfunded element of national negotiated pay bills. Above all, the Government have forgotten whose money we are considering.

It is foolish in times of economic uncertainty to increase the tax burden on the part of the country that generates our prosperity. To hit it simultaneously with a vicious redistribution of resources is provocation. As the council bills hit the mat in April and the full impact of the Government's actions is literally brought home, Ministers should not be surprised at the growing chant of, "Give us back our money."

Several hon. Members rose—

Madam Deputy Speaker: I remind Members that Mr. Speaker has imposed a 10-minute limit on Back-Bench speeches.

6.25 pm

Mr. Iain Coleman (Hammersmith and Fulham): I promise to speak briefly, Madam Deputy Speaker. I know that many others wish to speak.

I want to concentrate on the specific problems affecting my local authority, the London borough of Hammersmith and Fulham, as a consequence of this

5 Feb 2003 : Column 375

year's local government finance settlement. I am sure the Minister will realise that my comments should be seen in the context of a high-performing local authority with a wide reputation for providing good services for a diverse and very mobile population.

A week after the Minister announced the details of this year's settlement, he gave details of the Audit Commission's comprehensive assessment investigation of the workings of local authorities, which he mentioned earlier. My borough emerged as one of the best performing councils in London, and was awarded "excellence" status. The settlement is all the more disappointing in the light of that independent assessment.

Under the new grant distribution system, it is even more important to distinguish between movements in formula totals—known as formula spending share—and actual grant, actual cash. In that context, the settlement contained very bad news for the people of Hammersmith and Fulham: a 10.5 per cent. increase in FSS; a 3.5 per cent. increase in cash owing to the application of the floor, without which it would admittedly have been only 2.6 per cent.; huge losses from the methodology changes, £19.9 million in cash terms; an increase from resource equalisation of £5.4 million in cash terms; and a very small increase from data changes, amounting to less than £1 million.

If we subtract the £5.4 million increase provided by resource equalisation from the massive loss caused by the changes in methodology, we find that the council has made a net loss of £14.5 million, or 9.7 per cent., as a consequence of the revenue grant distribution. That is easily the worst of the percentage losses experienced by inner-London boroughs, although the council has just been recognised as a high performing, high-quality authority.

Early analysis shows that Hammersmith and Fulham has done extremely badly in comparison with virtually all other London boroughs in all three of the major services blocks: education, environmental protection and cultural services, and personal social services. The only explanation seems to be that the council is considered to be less deprived relative to other boroughs, presumably because of the indicators used by the Government to determine deprivation. In other words, a number of indicators favourable to Hammersmith and Fulham have been removed from the formula, and replaced with less favourable indicators. For example, census indicators included in the previous deprivation formula—such as the number of children living in flats, which is very high in my borough—have been replaced by

Such an indicator, relating to the nature of the employed occupation that a head of household might have, is very bad for Hammersmith and Fulham.

The deliberate decision—all these were deliberate decisions—to simplify the formula and, for instance, to rely on fewer deprivation indicators means that complex and multiple deprivation in boroughs like mine simply is not detected.

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Hammersmith and Fulham benefited to some extent from the resource equalisation element of the grant distribution system, which takes account of the relative tax-raising abilities of boroughs before determining the amount of cash they should receive. That benefits councils whose need is great in relation to their tax base. Hammersmith and Fulham has a high tax base, based on the value of properties and a high council tax banding, and—because of the new formula to which I have referred—a relatively low recognised level of need. In the case of many inner London boroughs, losses related to methodology have been largely compensated for by substantial gains from resource equalisation but, as I have said, that does not apply to Hammersmith and Fulham. The double whammy for the borough is the over-simplification of the formula, and other reductions in weighting applied to deprivation and density factors.

These are obviously highly complex matters with which few residents in my constituency will wish to be bothered. However, the reality on the ground is that last week, the one remaining social services nursery in my constituency was peacefully and highly responsibly occupied by parents, in protest at its impending closure. The one remaining sports and leisure centre and swimming pool in Hammersmith and Shepherd's Bush is also now set to close. I must advise my right hon. Friend the Minister that the leader of the council informed me this morning that council tax payers in Hammersmith and Fulham face a local taxation increase of at least 12 per cent.; indeed, it could be as much as 15 per cent. At the same time, millions of pounds worth of cuts will be made in the valued and much-needed services that are often directed at some of the poorest and most vulnerable of my constituents.

I was a councillor in Hammersmith and Fulham for many years under successive Conservative administrations, and every year we faced cuts and reductions in services. Local people, particularly council staff and committed local councillors—again, I emphasise that it is an excellent local authority—cannot understand why we face a similar, if not worse, scenario under a Labour Government, and nor can I. That picture has emerged not because of uncontrollable data changes, but because of political decisions taken by Ministers. I urge my right hon. and hon. Friends to look again at the practical, and in my judgment disastrous, effects that this settlement will have on the people of Hammersmith and Fulham.

6.31 pm

Mr. Edward Davey (Kingston and Surbiton): The Minister is highly respected throughout the House—[Interruption.] I believe that he is, and the Conservative Front-Bench spokesman actually said as much. The Minister wears a pained visage throughout this debate, and particularly when various Members criticise his settlement, which he seems genuinely to believe is very generous. He should be frank with the House about the fact that many councils, particularly those at the floor, are having serious difficulties as a result of this settlement, and he should realise that the many council tax payers out there who will face the consequences of this settlement will be wearing expressions rather more pained than his own.

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There are many problems with the settlement. The first problem is that it will result in the highest ever rise in council tax. The second problem is the education passporting issue, on which we have heard a lot of double-talk from Ministers. The third problem is the underlying cost pressures in respect of national insurance and the local government pay settlement, which various Members have already talked about. Fourthly, there is the effect on pensioners. In some boroughs and local authorities, pensioners face the double whammy of high council tax increases and cutbacks in care services. Finally, we need to look at the long-term implications of the settlement, which are very worrying.

Mr. Bennett : Perhaps the hon. Gentleman will answer the question that the Conservatives failed to answer. Would his party deal with the problem of the authorities at the bottom of the pile by putting more money in, or by taking money away from those that have done slightly better?

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