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5 Feb 2003 : Column 386—continued

Sir Paul Beresford: I completely agree. I think that the hon. Gentleman will agree with me that because we have only 10 minutes I could not spend the whole time listing all the extra burdens that all the local authorities have, although it would be a great temptation.

One of the Government's excuses for the shift in the funds is the perceived ability to pay. That is that the people of Surrey are more able to pay than are the people of other areas in England. As for everywhere in the country, it is true that some people are more able to pay, but I do not see why they should have to pay increased taxes because of a biased formula derived from ministerial judgments. More important, though, many people in Surrey simply cannot afford to pay. This allocation is another burden on the cost of living in the south-east and it will drive away the people whom we want to attract back to the area—teachers, policemen, bus drivers and shop workers. All the people whom we are trying to attract and whom the Government say that they are trying to attract will be driven out.

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I am sure that the Minister will not worry. He has dealt with the clamour made by many of the hon. Members on the Benches behind him, although a few of them have put the other side of the case this evening. This situation and the way in which allocation is carried out are complicated. The issue is difficult for the people out there who pay the bills to understand, but they are starting to learn that, on high council tax, it is the Government who are to blame.

7.10 pm

Mr. David Clelland (Tyne Bridge): I am pleased to follow the hon. Member for Mole Valley (Sir Paul Beresford). He is a fellow member of the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, but I shall not take the same entirely distorted route in criticising the report, although I have criticisms of my own that I shall point out.

I accept that the local government settlement is, overall—I deliberately insert that word—a better settlement than we ever got under any Tory Government. I congratulate the Government on trying to produce a better system of local government finance and finally ending the anomalous SSA system. As the Select Committee pointed out, however, there is still some further work to do. As we said, the equality of the outcome suffered from a lack of proper preparation. We also said:

and that

That month included the Christmas period. As I shall mention later in my speech, at least one local authority is still awaiting information, even though the final settlement has now been announced.

The Committee also pointed out:

That is a huge anomaly for local authorities in the north, despite what we are hearing from Conservative Members who are crying out about difficulties in the south. It is the poorer areas in the north that have to pay higher council tax in order to subsidise some areas in the south. Indeed, we are now having to do that to try to depress council tax rises in Westminster because of the anomalies in the 1991 census figures.

The report made another point that is very important for my local authority:

That is certainly the case in Gateshead, where the Government's view of the figure to passport to schools, £6.877 million, is greater than the council's increase in total grant from 2002–03—£6.734 million. That leaves no additional funding for all other council services, with the burden falling on council tax payers.

There are further difficulties that are more local, but certainly affect the north-east. For example, the new formula fails to take account of the need to maintain

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back lanes. We have many miles of such lanes in the north, but they are ignored in the formula. They have to be surfaced and lit, which is especially important with regard to crime problems, and local authorities have to provide funding. Furthermore, such lanes generally divide long streets of Tyneside flats, but the children in flats indicator that is retained in the children's personal and social services formula does not include Tyneside flats. It usually refers to multi-storey flats. Councils such as Gateshead have a policy of not housing children in multi-storey flats for very good social reasons, but as a result, they are not included in the formula and suffer.

The north of England, which generally comes lowest in most social and economic indices, is still one of the regions that does worst out of the settlement. We heard from some of my hon. Friends representing Durham seats about its concerns about the settlement, but I should like to concentrate the rest of my remarks on my home town and constituency. Gateshead is a beacon council that is excellent by all the standards that the Government and the Audit Commission have set down, so we were surprised and concerned to find that we received a settlement of only 4.6 per cent. In comparison, Wiltshire received a settlement of 13 per cent. Far from transferring money from the south to the north, it seems that this process has operated the other way around.

The Minister very kindly agreed to meet my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin), my hon. Friend the Member for Blaydon (Mr. McWilliam) and me, and members and officers of the council. That meeting took place on 13 January, and we were told that population loss was the reason for the problem with Gateshead's settlement. I was interested to hear the Minister tell the Opposition that we should compare like with like, as it was pointed out at that meeting that the populations of the neighbouring authorities—Newcastle and Sunderland—had reduced by 4 and 3 per cent. respectively, yet they had received 6 and 6.2 per cent. respectively and that Gateshead's population had reduced by only 2.9 per cent., yet it had received only a 4.9 per cent. increase. So it seems obvious to us that population loss was not the reason for the lower increase in grant.

We were then referred to the resident expert on local government finance—a civil servant who would tell us what was the reason. The answer was, "It must be because of other factors." Well, as hon. Members can imagine, that really was not the answer that we were looking for, so we pressed the expert and asked, "What other factors?" We were told, "It might be education." Again, that is not a satisfactory answer.

Finally, the local authority chief officers were invited to go back to Gateshead to look up the Department's website, where they would find all the figures and be able to work out for themselves why we only got 4.6 per cent. That may be satisfactory in some people's minds, but it is not in ours: we felt that we should have been given a proper answer at the time. Following that meeting, my hon. Friends, the leader of the council and I sent letters to Ministers, but I regret to say that, to date, no reply has been received and no explanation has been given about the 4.6 per cent. increase.

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I can understand Ministers' argument that, with a complicated formula that covers the whole country, there will be winners and losers and that some people will get more than others. That is understandable, but we are entitled to an explanation as to how the increase has come about. If we had an explanation that we could understand, we might be able to accept it, however distasteful it might be, but, unfortunately, we have had no explanation.

We now find that Gateshead's final settlement has been reduced by a further £346,000, so the increase now works out at 4.3 per cent—even lower than before. It is certainly the lowest figure in Tyne and Wear. The next lowest in that area is 6 per cent., and it is certainly a lot lower than the 7.3 per cent. average for metropolitan districts. That is not acceptable.

My right hon. Friend the Member for Gateshead, East and Washington, West intervened on the Minister's speech to ask whether he had an explanation for the settlement. I am afraid that, again, we did not get a satisfactory answer. There is still no detailed explanation for that settlement. I accept the Minister's offer of a further meeting—I am sure that it will be taken up—but that is no comfort to us here and now, when we are asked to go through the Lobby to support a settlement that we find totally unsupportable. So unless a miracle happens and the Minister is able to give us a satisfactory reply in his winding-up speech, I have to say that the hon. Members who represent Gateshead will be unable to support the measure in the Lobby this evening.

7.17 pm

Tony Baldry (Banbury): Today's report marks the end of a six-month consultation by the Government on local government funding. By any yardstick, it has been an opaque consultation, obfuscated by the Government themselves. The consultation trumpeted the replacing of the standard spending assessment of grants to local authorities, with a "fair funding formula", but not even post Einsteinium relativity theorem could be as difficult to work out as the formula that the Government have presented; nor can anyone say whether the new formula is fair because we have yet to see all the announcements on local authority funding. That is absurd.

The changes affect every service provided by every local authority, yet the Government have deliberately left councillors compromised by lack of information and lack of explanation. Consider Oxfordshire. Only two things are certain. The first is that council tax will have to rise by at least 13.4 per cent., so band D homeowners in Cherwell will pay £25 more because of today's announcement. The second is that local councillors who provide the services on which so many local people depend now have absolutely no idea what the service provision will be following today's announcement.

The imposition of the grants, ceilings, floors, and resource equalisations, which are now part of the compulsory mumbo-jumbo of local government finance settlements, has yet to be communicated to local authorities, including Oxfordshire. Lack of information creates uncertainty. Uncertainty leads to instability.

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In a letter to ODPM officials in December 2002, Oxfordshire county council explained how the proposed settlement

I would go further. The deliberate late release of information by Ministers has made it practically impossible for Oxfordshire county council and Cherwell district council to stabilise existing services. What do they decide to put out to tender if they do not know what stage their budget is at? How can they properly decide what represents best value, under the Government's own criteria, if they do not know what bit of their budget is doing what?

In the same letter, Oxfordshire county council explained that waiting until February 2003 for the Government to make most of the remaining announcements would

Yet here we are, early in February 2003, and councillors are confused. The local media are confused, and council tax payers are so confused that they find it difficult to know whom to hold to account.

Accountability is central to democracy. Without it, democracy is undermined. Of course Ministers and certain Labour councillors are trying to spin the story that any failures are of the councils themselves, but how so? Oxfordshire county council did not draw up the terms of last summer's consultation. It did not dream up thousands of pages of incomprehensible formulae and it did not decide to drip feed local authorities with important financial information that would clearly have a domino effect on their entire provision of key public services. All those are ministerial tactics.

I was initially encouraged when the ODPM announced a local government finance review. I suspect that last summer's consultation document was not intended to be taken to the beach for holiday reading. None the less, the consultation was important for local government and local services, as its aim was, apparently,

Sounds good, but then we get to the detail.

Buried away in the Government's document is a sentence that rather alarmingly admits that

Then there is the caveat that rough justice

Council tax payers and business tax payers in Oxfordshire and elsewhere will now experience the Government's "rough justice".

I have referred to the council tax, but there will be no less an impact on business rates in Oxfordshire. Under the consultation options, it was clear that in every case business rates would have to rise by about 7 per cent. It is clear today that that will indeed happen. On that

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basis, it was somewhat cynical of the Government to trumpet in an earlier local government finance Green Paper that

Under all those scenarios, it is plain that the Government will pass the buck to local authorities, which will either have to undermine local businesses with higher rates or under-resource local public services.

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