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5 Feb 2003 : Column 398—continued

Mr. Clifton-Brown: The hon. Gentleman would have a point if his party were not imposing increases that local authorities will have to fund. If this were a real 5.9 per cent. increase, without all the tax increases imposed by the Government, we would not be whingeing so much; but when the Government impose extra duties and extra costs on local authorities, of course authorities have no alternative but to raise council tax to double figures.

As well as all the problems I have mentioned, there are significant other problems. Members have mentioned a problem with the social services block. How can it be right to take money from the elderly and give it to children's services? Surely both are vital services, for which authorities should be fully funded. Authorities such as my own—already mentioned by the hon. Member for Kingston and Surbiton—a large proportion of whose social services budget must go towards care of the elderly, will be particularly badly hit. It really is mean-spirited of the Government to start saving and penny-pinching at the expense of the elderly.

Many Members have described increases in their areas as unacceptable. One reason why 12 authorities have got into particular difficulties is that the passported education increase is higher than the total increase. The Local Government Association is Labour-dominated. Its chairman, Sir Jeremy Beecham, has written to the Secretary of State for Education and Skills, the right hon. Member for Norwich, South (Mr. Clarke), saying that given the turbulence in funding this year the association strongly believes that new powers that a former junior education Minister had assured the House would be used only in exceptional circumstances should not be used. In his reply, the Secretary of State recognised that in some authorities the grant increase

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did not wholly cover—I would say "does not cover"—the increase in school funding, but declined to give an undertaking not to use the reserve power in 2003–04.

It must be wrong, in the case of any authority anywhere in the land, for the Government to insist that a certain amount must be spent on education and then not to fund it properly. The only consequence can be that authorities having to spend too much on education must cut spending on other services.

This is redistribution of local government funds on a grand scale. Not only must we deal with resources equalisation, but couple that with the pooling of capital receipts, the moving of money from one housing revenue account to another, and the repayment of huge debts, and what we have is a redistribution from southern authorities to northern, Labour-dominated authorities. That cannot be a fair system.

7.49 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): The hon. Member for Cotswold (Mr. Clifton-Brown) gets himself into a terrible muddle. I was very interested to hear that he calls this a mean settlement. That explains why he was whingeing so much. If the settlement is so mean, does he completely dissociate himself from the comments of the shadow Chief Secretary, who says that he wants to cut public expenditure by 20 per cent.? Does he not feel that such a cut would be even more mean and penny-pinching, and would inflict considerable damage on vital public services?

It was also very interesting to hear the hon. Member for Brentwood and Ongar (Mr. Pickles) announce that he is not content with this settlement, and that the Conservative party will set up a commission to look into local government finance. I wish him luck with that commission, and we shall certainly watch that development with great interest. We will remind him of that promise next year, and see how he is progressing. Perhaps people such as Dame Shirley Porter are working on that issue.

Many contributions were made during the debate, and I want to pick out a few from the Members who are still present. The hon. Member for Banbury (Tony Baldry) complained about the settlement for Oxfordshire county council. I should remind him that when he was a Minister during the final three years of the previous Conservative Administration—I think that he was a Minister—Oxfordshire county council received only a 2 per cent. increase, but under this Administration it has received a 6.6 per cent. increase over the past three years. I should tell the right hon. Member for North-West Hampshire (Sir George Young), who was also a Minister during the final three years of the previous Conservative Administration, that Hampshire county council received only 1 per cent., on average, during that time. Under a Labour Government, it has received 4.9 per cent., on average, over the past three years.

Richard Younger-Ross (Teignbridge) rose—

Mr. Leslie: The hon. Member for Mole Valley (Sir Paul Beresford), who was the Minister with

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responsibility for local government during the final three years of the previous Conservative Administration, awarded an average of only 3 per cent. under his own stewardship. However, the Labour Government have awarded 5.8 per cent., on average.

Sir Paul Beresford: The Minister is forgetting the other side of the coin: the best value, the changes in committee structure, all the auditors and the cost in extra staff to meet all the liabilities that he and his Government are imposing on local authorities. He should balance that against it.

Mr. Leslie: To echo a phrase that was used earlier, I think that I have touched a nerve. There have been a number of changes in the settlement, in the light of the consultation.

Richard Younger-Ross: Devon county council is run by a coalition of all parties, including Labour. It estimates that the council tax rise will be £2.60 a week; otherwise, it will have to cut services. Will the Minister tell his Labour group leader and the other leaders in Devon whether they should cut services or raise the council tax by £2.60 a week?

Mr. Leslie: The hon. Gentleman's county council is receiving a grant increase of 4.2 per cent., which is way above the rate of inflation, and Teignbridge district council is receiving a 5.9 per cent. increase. I do not understand his references to excessive increases in council tax, because they just do not exist.

The hon. Members for Brentwood and Ongar, for Mole Valley and for Cotswold alleged a north-south divide in the allocation of resources. I know from what we have heard so far that some Members from the south think that the north is getting too much, and that some Members from the north think that the south is getting too much. The truth is that there are big gains in every single region: for example, 8.4 per cent. in Conservative-controlled Wokingham unitary council; 8.5 per cent. in Tory-controlled Cambridgeshire county council; 7.1 per cent. in Bedfordshire county council; and 8 per cent. in South Gloucestershire council. I could go on.

My hon. Friend the Member for Tyne Bridge (Mr. Clelland) expressed concern about the 4.3 per cent. settlement for Gateshead, but I should point out that there has been a 33 per cent. increase in neighbourhood renewal funding. I accept that the settlement is less than for some other metropolitan authorities, but it is not catastrophic, and I hope that he will look again at the matter.

Mr. Pickles: I have listened to the Minister carefully. Would it be a fair summary to say that what he told Barnet council—that it should not worry as no money was involved—is what he is telling the House?

Mr. Leslie: No. Every authority, including Barnet, is receiving an increase in grant above the rate of inflation, and that has not happened before.

Many hon. Members—including, among others, my hon. Friends the Members for Cambridge (Mrs. Campbell) and for Hammersmith and Fulham (Mr. Coleman), and the right hon. Member for North-

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West Hampshire—mentioned floors and ceilings, which ensure that all authorities are protected. The process has been generally welcomed. Stability in the system is extremely important, and we foresee that floors and ceilings will be part of the finance settlement for the foreseeable future.

The hon. Member for Kingston and Surbiton (Mr. Davey) asked about the ring fencing of grants. We want to move away from ring fencing, which for the coming financial year is 12.4 per cent. but which will fall below 10 per cent. in the financial year 2005–06.

My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) hit the nail on the head in his excellent speech: the settlement is giving significant increases. We are debating how to divide a bigger cake. Since taking office, the Government have raised local government funding by 25 per cent. in real terms, compared with a real-terms reduction of 7 per cent. under the Conservatives.

My hon. Friend the Member for Sheffield, Attercliffe was right also to highlight the changes to the area cost adjustment. There has been less criticism of that matter than in previous years. The Government's approach is more sophisticated, and specifically reflects individual authorities' circumstances. The old area cost adjustment was arbitrarily confined to London and the south-east. The new area cost adjustment recognises that higher-cost areas border the south-east and exist in some of the major northern conurbations.

Several hon. Members raised the question of funding for social services. Resources for personal social services are increasing in real terms over the next three years by 6.3 per cent., 4.5 per cent. and 6.3 per cent. That represents an average annual increase of 5.7 per cent. on a like-for-like basis. The hon. Member for Brentwood and Ongar said that the settlement amounted to robbery from the shires, but that is complete nonsense. Shire district councils have benefited from an average increase in grant of 7.4 per cent., and shire counties are getting 5.7 per cent. more, or £690 million extra in grant. We have found a way to reflect questions of rurality and sparsity in the grant formula, and that is how we have managed to secure the increases that we have made.

Several hon. Members rightly pointed out that there is concern about the census, and how the population figures will impact on the settlement. We have discussed the matter with the Treasury. We have to use the best data available, on a nationally consistent basis. The ONS is confident about the information that it has but, if any revisions are made, we shall have to look carefully at their potential impact.

We have listened carefully, and we have consulted at great length about this formula settlement. We believe that it is one of the most radical settlements for local government finance for a generation. The new formula spend-share approach is very different from the old standard spending assessment. We no longer tell councils what to spend. The buck has to stop with local councils, which must make their own judgments about council tax levels.

The new formula is transparent, and based more on evidence of need. We believe in investing more and in supporting local government. The settlement grants £51 billion to local government. As I said, the Government have increased spending on local government by 25 per

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cent. in real terms. That contrasts with the 7 per cent. real-terms cut by the previous Conservative Administration. That is the Opposition's track record.

The choice for the public could not be clearer. Labour believes in improving services and investing more. The Conservatives plan to cut that vital spending by 20 per cent. and damage public services. They never gave an above-inflation increase—

It being six hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Order [28 January].

The House divided: Ayes 316, Noes 190.

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