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5 Feb 2003 : Column 377—continued

Mr. Davey: As the hon. Gentleman knows, my party has a long-standing commitment to increasing funding in education. That would be achieved through the local government grant settlement, so the answer to the first part of his question is yes.

On the passporting of education increases, the Government are completely unjoined-up. In the past five years we have heard much about how the Government intend to act in a joined-up way, but to be frank, Mars and Venus are more joined up than this Government in this settlement. The Minister said on one day that there will be a reduction in ring fencing, but on the very next, head teachers up and down the country received a letter from the Minister for School Standards saying that there will be passporting of the education settlement. Indeed, the situation was worse than that. In addition to the Minister's letter, officials wrote to councils up and down the country setting out the calculations used by the Department for Education and Skills in determining whether the block formula spending share increase is deemed as having been passported to schools. So the whole of Whitehall has been putting pressure on the passporting through of the education settlement. Indeed, the Select Committee chaired by the hon. Member for Denton and Reddish (Andrew Bennett), who has just intervened, criticised the Government on this very issue.

So a major problem is caused by education passporting requirements, and it is hitting councils hard. There are, I think, 12 councils among those on the final list that the Government published on Monday where the total increase in the total revenue support grant is less than the education increase that the Minister for School Standards is telling councils to passport through. Those authorities are in real difficulty. The hon. Member for Brentwood and Ongar (Mr. Pickles) said that they are Conservative councils. I can tell him that a number are Liberal Democrat councils such as mine, Kingston upon Thames, and councils such as Cumbria which are run by Liberal Democrats with Conservatives.

Mr. Francois: The hon. Gentleman knows that Essex is also on the list of councils that are suffering. I want to

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play back to him the question that he asked earlier. As he is setting out policy from his Front Bench, can he tell the House whether, if councils have to increase their council tax because of the lack of support from the Government, the Liberal Democrats will not campaign against those councils? Yes or no?

Mr. Davey: We will not campaign in many areas. A lot depends on how such a council has run its affairs. Unlike Conservative Front Benchers, we believe in local democracy.

Not only for the list of 12 councils that I mentioned but for a long list below that, the increase in education grant as a percentage is still less than what the Minister for School Standards is requiring them to passport through. I worked out that there are 51 local authorities which, if they do what the Minister requires, will have £3 million or less to spend on all their other services. That is bizarre, and it will be very difficult for many councils to do.

Matthew Green: Is not the reality that any authority that has a grant increase of less than 6 per cent. will find the settlement difficult? The education grant—two thirds of such an authority's budget—will be passported, so the remaining services will be squeezed in areas that have a settlement of less than 6 per cent.

Mr. Davey: My hon. Friend is exactly right. That is why I want to ask the Minister a question that the Local Government Association has been asking him. He will know that the chair of the LGA, Sir Jeremy Beecham, wrote to the Secretary of State for Education and Skills asking him to give a guarantee that the reserve powers recently taken by the Government to intervene on local councils if they did not passport the education spending increase through would not be used this year, especially given the special circumstances of the major grant review. The Secretary of State refused to give that assurance, and the LGA wants to know whether Ministers will now do so.

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): The hon. Gentleman has clearly given a Liberal Democrat spending commitment to give more money to education. How would he ensure that that money is spent by schools without requiring a passporting arrangement?

Mr. Davey: The Minister failed to answer a very basic question, which is being asked not only by Liberal Democrat Members, but by the chair of the Local Government Association, who is a Labour party member. The LGA has written to the Government, but they have failed to give an answer. Until they respond to an issue that is affecting councils all over the country, the Minister should not be asking me such questions.

Mr. Betts: May I ask the hon. Gentleman a direct question in the light of the question that the hon. Member for Ludlow (Matthew Green) asked a moment ago? Would the Liberal Democrats solve the problem of councils that have a less than 6 per cent. increase owing to passporting by asking for less passporting, so that

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schools would get less, or by proposing that every council should get an increase of at least 7 per cent. in grant?

Mr. Davey: We say that there should not be so much ring fencing or passporting—that it should be a matter of local democracy. We are asking the Government for some honesty on the issue. We want them to admit that the implication of their spending settlement is that council tax will have to go up by huge amounts if the money for schools is to be secured. I am surprised that the hon. Gentleman does not recognise that.

I want to refer to my authority of Kingston upon Thames, whose provisional grant was £730,000 less than the education passport. Subsequent data changes meant that the final total grant settlement for Kingston council announced on Monday is £1,059,000 less than the Government are asking the council to pass on to schools. That is a huge problem, and it is shared by many councils up and down the country.

The grant increase for non-education services in Kingston is a staggering negative 22 per cent. Many other councils, such as the one in Essex covered by the constituency of the hon. Member for Rayleigh (Mr. Francois), are in the same position. If councils are to pass through the education spending, as Ministers intend, they will have to make huge cuts in all other services, or impose a large council tax rise. The Under-Secretary failed to be honest with the House on that very significant matter.

We have many problems with the way in which the Government have gone about the settlement, above and beyond education. They seem unable to see what is obvious to everyone else—that there are huge cost pressures on local authorities. We have heard about them already. They include the 4 per cent. increase in local government pay, and the 1 per cent. increase in employers' national insurance contributions. That alone will cost local authorities £280 million and, as the LGA has said, the Government should have provided that money.

Service pressures also exist. Ministers have trumpeted a rise of 6.3 per cent. for personal social services, but many of the special grants that previously existed have been taken out. Stripping out that figure leaves the rise at a level that does not even cover demand-led pressures, especially on social services for vulnerable children. Service pressures are also evident on pensions, and many London boroughs have to meet expanded requirements stemming from new waste disposal services, additional licensing duties and increases as a result of the freedom pass.

A floor of only 3.5 per cent. does not begin to take account of such increased service pressures. The Minister has said that we should not worry, because every local authority is being given an above inflation rise, but he fails to take account of service pressures way above inflation.

Tim Loughton (East Worthing and Shoreham): I am grateful to the hon. Gentleman for giving way, but I am tempted to use his analogy and say that people on other planets should not throw meteors. He has challenged the

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Government to meet the £200 million cost of increased national insurance contributions, for which his party voted. He has challenged the Government about the extra costs of pensions owing to the pensions raid enacted by the Chancellor of the Exchequer, for which his party also voted. He has also asked for extra spending on education, which his party also favours. Where is the money to come from?

Mr. Davey: My party, unlike the hon. Gentleman's, has always produced costed manifestos and alternative Budgets. [Laughter.] Hon. Members may laugh, but I have been involved in the painstaking research that was required. We shall listen to the hon. Gentleman when he tries to do the same. He failed to vote for the extra money for the health service, and he should be ashamed of that.

Local government faces the pressures that I have described, and the Parliamentary Under-Secretary should acknowledge that they exist. Councils around the country will not understand that he has failed to do so.

Sir Paul Beresford : Will the hon. Gentleman advise the Liberal Democrat group on my local council, whose members complain that the council tax will go up by too great a percentage but who at the same time want more expenditure?

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