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Sir Paul Beresford (Mole Valley) (Con): One of the nice things about following—admittedly, one step behind—my right hon. Friend the Member for Skipton
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and Ripon (Mr. Curry) is that he fires the traditional shots across the bow, so I can afford to be more parochial, which also means that my speech can be shorter.

The Minister, as ever—although it is not a failing restricted to this Government—described the figures as a tremendous increase, while ignoring the fact that, as has already been pointed out, education has been removed. He also ignored the fact that the percentage is based on the change that was introduced with the FSS—the formula spending share. To be parochial, that change meant that Surrey county council lost £39 million year on year. So any percentage increase dates back to that loss, and I suspect that some of the officials who guide the Minister on such matters are very aware of that, because they live in Surrey.

The changes were so dramatic that the Government had to introduce floors and ceilings as buffers. The ceilings have gone, but the chop for those well above the floor is dramatic. It affects those well above the floor in order to raise others to the floor. The new system coincides with the dedicated schools grant, which removes education funding from the normal grant. The new grant system, as I pointed out earlier, is extraordinarily complex, and needs a brain capable of rocket science to manage it. It is impenetrable. The Minister is giving me looks of surprise, but even if he has the intellect to handle it, what I am saying will be no surprise to anyone else who has tried to struggle with it.

Surrey county council's formula grant was drastically reduced on the introduction of the FSS, to £101.4 million. Without the buffers it would have been reduced to £65.1 million—a potential reduction of 39 per cent. Fortunately, the Government have recognised that such a cut would be a tad too far, so they have introduced the buffers and the actual grant will be £103.4 million. However, because of the requirements built in by the Government for the minute-by-minute handling of local government such as inspections and comparative performance assessments, the limiting of the council tax rise for the coming year to 5 per cent., and the possible lowering of the floor in future years, Surrey county council will have to introduce some £50 million of cuts over the next two or three years.

I accept that many local authorities can make efficiency savings, and I hope that most of Surrey county council's savings will come from such a source. However, given the size of the cut, it cannot all be found from efficiency savings. Constituency letters about the potential impact of the cuts are already pouring in.

When I was a Minister dealing with these issues comparisons were always thrown at us, and I wish to pick up an example given by my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles). He mentioned that Labour-run Lancashire county council would have to make cuts in the next financial year. However, Conservative Surrey has a grant per head of population of £95.85 and Lancashire has a grant per head of £191.96—more than twice that of Surrey.

I remind the Minister of his second principle, because he should look carefully at the ability to pay. I have raised that issue already in the debate on the revaluation, and I suggested an alternative approach. The present approach is a duplication of that under the FSS, and hidden in the formula is the spread of
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properties over the council tax valuation bands. That is not a fair way of making the calculation. Surrey receives the second lowest grant of the English shire counties, yet it is the second most expensive area of England in which to provide services. To put it more simply: the value of properties is spread across the higher echelons of the bands, because they are more expensive to buy and maintain, with bigger mortgages that cost people more, so they are less able to afford the huge council taxes that are required because the grant has gone down.

Unusually, I am not asking the Minister to change Surrey's grant. That would be a hopeless request and a waste of my time. If the motion is put to a vote it will roll through, with Scottish MPs behind it. I am asking him to look ahead and think again about his second principle. Will he look at ability to pay—I hasten to add, before there are squawks of encouragement from the Liberal Benches, that that would still be on the basis of a property tax—and recognise that we need a mixture of an understanding of property values and the cost of living? The cost of living in Surrey and London is much greater than in the rest of the country, so that proposal would give a much fairer balance and might stifle the protestations about local income tax from some corners of the House.

9.31 pm

Michael Jabez Foster (Hastings and Rye) (Lab): It is not new for East Sussex county council to whinge; it does so annually. Indeed, back in the 1970s I took part in the whingeing, although then we had some cause. In the four years to 1997, our real-terms funding was minus 7 per cent., and that included education. There is a history—and that situation occurred not long ago. Even more recently, at the general election, the Opposition offered us a zero increase in local government funding. If that had come about, we should be experiencing real problems.

This year, East Sussex county council received an extremely good education settlement—and not minus 7 per cent., but a 2.1 per cent. funding increase, to deal with everything else. As the hon. Member for Brentwood and Ongar (Mr. Pickles) pointed out, the council's Tory leadership suggests that the increase was only 0.6 per cent. That is wrong. Let us at least get the facts correct: it was 2.1 per cent., more or less in line with inflation.Given such an increase, it is shameful that the council is trying to destroy many important local government services, especially social services. I am grateful to the hon. Member for Brentwood and Ongar for mentioning that the only day-care centre in Rye for older people is to be closed.

I am honoured to be president of the local branch of Mencap, but funding for its active art provision for about 60 adults with learning difficulties is to be completely withdrawn. One of the cruellest cuts of all will affect Rethink SOS, which helps people in the first weeks after they have attempted suicide. As far as the service is aware, no one has tried to take their life again. That may be luck, but the service has been vital, and its funding, too, will go completely. Furthermore, £500,000 is to be withdrawn from care for carers. The Government may have made a mistake in not ring-fencing the care grant, as they originally proposed, because the Tory council is now able to cut it, as well as funding for respite care. That shows what caring
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Conservatism means in East Sussex. At least we have a test bed—we know what Tories do when given the opportunity—so that will be a lesson, despite what the new leadership suggests.

Such things might have been necessary if the funding had been cut, but with an inflation increase in grant and a double-inflation increase in the council tax proposed, they are simply unnecessary. None the less, is 2.1 per cent. enough? Cuts are not necessary this year because the county council can look to balances and other funds, but I have to tell my hon. Friend the Minister that in the longer term, it would not be possible to maintain such services if an increase of 2.1 per cent., covering inflation only, were provided.

The reason is very obvious. East Sussex has a growing elderly population—many people are over 85 years of age—and the formula is flawed. The Minister well knows about that because he has been gracious enough to listen to the arguments made by East Sussex county council—or perhaps he did not quite hear them, but he certainly listened to them—and there is certainly a need for additional funding for people over 85. That is very important, but it has not been fully taken into account.

Moreover, East Sussex has particular needs because of the cost of labour. We are just outside the home counties, but we compete with them for labour. My hon. Friend will say that the area cost adjustment has been spread, thus making it fairer, but it does not feel like that in East Sussex; the truth is that the current formulation of the ACA allows counties way outside the London area to benefit, and we lose out.

Mr. Woolas: May I draw to my hon. Friend's attention something that I announced in the statement of 5 December? During this round, the intention is to review the geography of the ACA, given the points that a number of councils made in their representations.

Michael Jabez Foster: I should have given my hon. Friend credit for that. I said earlier that he listened but did not hear, but he obviously did hear, and I am grateful to him for indicating that there may be some hope for future years, which is, of course, what we are talking about.

The formula also has another flaw. My hon. Friend has mentioned that the property value arrangements have changed, but it seems to me—he may want to respond to this in his reply—that property values are still taken into account. For example, a pensioner or postman on precisely the same income living in an expensive property in Hastings or East Sussex will have no greater income than a similar person living elsewhere, but the property value will be taken into account in determining the needs element under the formula.

I repeat that this year, East Sussex county council has no reason to make the draconian cuts that it intends to implement—but next year and the year after, there may be an argument for doing so unless the formula is reassessed. I want to ask my hon. Friend a question. How is it that a pensioner in Hastings—the 30th poorest town in Britain—is worth £657 per capita, whereas the sum will be as great as £1,000 or more in other parts of
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the country? There is no justification for that, and I very much hope that my hon. Friend will think again about the grant settlement in the near future.

I thank my hon. Friend for the fact that the borough council in Hastings, where a concentration of need exists, has done extremely well. I am grateful to him for that money, which the council has been able to spend extremely wisely in improving local services, but the difficulties are magnified in a poor area in a not-so-poor region or county, and we need to find a way to deal with that problem. I ask him to tell his friends in the Department of Health that we need to keep our primary care trust, lest a wider spread of the resources create the same problem.

9.39 pm

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