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The Lord Bishop of Hereford: I want to make some brief remarks on Clauses 89 to 95. Like the noble Lord, Lord Marlesford, generally speaking I am convinced by what the Minister said about the necessity of the powers contained in these clauses. However, I am deeply concerned about the way in which they are implemented. In particular, disguise is a very powerful weapon in the armoury of a terrorist. It must be necessary for people to be obliged to remove disguises, but it must be done with the utmost sensitivity, courtesy and consideration. It is not possible to legislate for those things, but it is possible to make one or two provisions, such as, for example, that set out in Amendment No. 157A, which I hope the noble Lord, Lord Dixon-Smith, will press. Such provisions will be absolutely vital if that procedure is to be acceptable.

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In general, I entirely agree with what was said in the Chamber yesterday by noble Lords who criticised Clauses 110 and 111. Indeed, we must stand firm in opposing them. But I hope that the Committee will accept that, in arguing for the broad powers here, the Minister is right in so far as the identity of a terrorist may become evident only after an investigation has begun. I want to commend the points made by the Minister in that respect.

Earl Attlee: Following on from the points raised by my noble friend Lord Marlesford, is the Minister convinced that he has gone far enough? Is it not possible that he will come back at a later stage for another dose of salami powers?

Lord Rooker: We do not have any plans for an Anti-terrorism, Crime and Security (Amendment) Bill at the moment. I said yesterday that we make no secret of the fact—it is what people would have expected—that we trawled Whitehall to find gaps and loopholes in our legislation where we could be vulnerable. We have taken a precautionary approach to closing those gaps and loopholes.

We clearly have plans to bring forward a Bill on extradition but that is not related. It is the result of the review of extradition legislation published 18 months ago. We have said that we will also use that as the vehicle for European arrest warrant details and that we will bring forward another Bill on asylum and immigration in about March. That will follow a White Paper—not related and going much wider—on citizenship and managed migration. It is true that the three Bills were not planned in the gracious Speech as Home Office legislation this Session—but we do not plan any more.

I cannot answer the right reverend Prelate in more detail than I have. I believe that he accepts that the powers are necessary, for which I am grateful. I assure Members of the Committee that we shall rigorously ensure that the powers are operated in conformity with PACE legislation and that the code of practice is unambiguous about how the powers should be used.

4 p.m.

Lord Dixon-Smith: The Minister has given many detailed replies, for which we are all most grateful. Whether or not we agree with everything he says, he has done everything he can to help us forward. I refer in particular to the Minister's welcome offer of a process of review. Our difficulty is that there is no government amendment or anything on paper that would enable us to make a judgment of the value of the noble Lord's assurance. I do not impugn the Minister's integrity—it is simply a matter of reality. If the noble Lord can use the day off from the Bill that we are to enjoy tomorrow to find time to persuade his staff to put something on paper that can be added, to create a reality out of hypothesis, we might be arguing from a different situation.

At the beginning of this debate nearly an hour ago, the noble Lord, Lord Marsh, observed that the emergency which gave rise to the Bill was not temporary. To the extent that the noble Lord was

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talking about the consequences of September 11th, he is correct. I am glad that the emergency that took the noble Lord out of the Committee has allowed him to return in time to hear me sum up .

The emergency is here, in this Chamber. We have had five consecutive sitting days on the Bill. We shall have one day's break, then sit three more days. The emergency is in the procedures that we are going through—which we have agreed and go through happily—to get the legislation on the statute book. We are as intent on doing that as are the Government—even if we will fight parts of the Bill as strongly as we can. Some aspects of the Bill do not relate to the reasons for bringing it before us and are not justified by the sort of procedures that we are putting ourselves through to achieve the Government's aim.

I accept that we are dealing with a change in circumstance. When the Bill is passed, it will be permanent—subject only to any sunset clauses that Parliament may choose to impose or to any review procedure that the Minister may bring forward. I want to make it clear that we are not dealing with simple, straightforward confusion between a temporary situation and a permanent one. We have had a good debate and the noble Lord has given some thorough answers, for which I am most grateful. At this stage—particularly since many Members are beginning to gather to deal with another matter—it would be discreet if I were to conclude now. We may need to return to these issues on another occasion. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 152B and 152C not moved.]

Clause 89 agreed to.

Clause 90 [Searches, examinations and fingerprinting: England and Wales]:

[Amendment No. 153 not moved.]

Clause 90 agreed to.

Clause 91 [Searches, examinations and fingerprinting: Northern Ireland]:

[Amendment No. 154 not moved.]

Clause 91 agreed to.

Clause 92 [Photographing of suspects etc.: England and Wales]:

[Amendments Nos. 155 and 155A not moved.]

Clause 92 agreed to.

Clause 93 [Photographing of suspects etc.: Northern Ireland]:

[Amendment No. 156 not moved.]

Clause 93 agreed to.

Lord Davies of Oldham: I beg to move that the House do now resume.

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Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Local Government Finance

4.7 p.m.

The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Transport, Local Government and the Regions. The Statement is as follows:

    XWith permission, Mr Speaker, I should like to make a Statement about local authority revenue finance for England 2002-2003.

    XPublic services are the clearest symbol of community and solidarity. They are literally what we provide together as a society. For millions of people, public services are social justice made real. Our challenge is to take the action and introduce the measures necessary to raise standards, provide choice and improve quality.

    XI am pleased to be able to inform the House that this local government settlement will see total support from government grant and business rates of #47.3 billion. That is an increase over this year of #3.3 billion or 7.4 per cent—an increase more than three times the underlying rate of inflation.

    XThe #47.3 billion is made up of #19.9 billion in revenue support grant, #16.6 billion in business rates and #10.8 billion in special and specific grants. Today, I am announcing details of the allocation to individual authorities of the #36.5 billion of revenue support grant and business rates. When taken together with the police grant of #3.8 billion and other minor adjustments, this represents an increase of 4.8 per cent over this year's allocation.

    XSo the money will be going in but on its own that will not be enough to secure the extensive improvements we want to see in our public services. So the extra funding must drive forward change. It must ensure that our programme of modernisation and reform is implemented.

    XI know that for some change is never easy. But we need to be clear that reform is not the enemy of good quality public services. Put simply, we cannot leave things as they are. The status quo is not an option. So we must invest in reform and insist on results.

    XToday's Statement, coupled with the Local Government White Paper which we should publish before Christmas, shows how we will apply this approach to local government.

    XCouncils deliver a wide range of services which affect all our lives and which are vital in delivering real improvements to our economy and our quality of life. They help to provide better education services and sustain a better deal for the more

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    vulnerable members of society. They are key players in providing a better quality local environment and safer communities.

    XFor this year, we introduced a system of minimum and maximum grant increases for those authorities with responsibility for education and social services. Such a policy was necessary because we recognised the unfairness that could be caused by the simple application of the present funding formula, which many regard as unfair. I am pleased to be able to inform the House that this will be the final settlement based on the present funding regime. From April 2003, we will introduce a system which is transparent, fair and just.

    XThe introduction of a minimum ensured that every authority within the scheme got a reasonable level of grant increase. To pay for the floor, we imposed a maximum on grant increases, and scaled back the rises received by authorities between those two levels.

    XThis approach was generally well received. This year, therefore, I am extending the scheme to shire districts and a group comprising of police authorities, fire authorities, and the Greater London Authority. I am pleased to be able to announce that I am setting the minimum level so that in 2002-03 these authorities will receive a grant increase of at least inflation of 2.3 per cent on a like-for-like basis.

    XI have, however, given special consideration to those authorities with responsibility for education and social services. Last year the minimum increase was set at 3.2 per cent. This year, with inflation at 2.3 per cent, I have had to consider whether we could match last year's figure. This would not be easy, but 3.2 per cent would give these authorities an income well above the rate of inflation.

    XSome have put forward the case for an even higher floor. Some have suggested 3.5 per cent; others 3.75 per cent. I have rejected these proposals. Instead I want to reflect the value we place on education and social services. I shall be introducing a minimum increase in grant of 4 per cent to all authorities that provide these vital services.

    XThe introduction of a minimum increase of 4 per cent will make a big difference to a number of authorities. It represents an extra #3 million for Halton, #2.4 million for Middlesbrough; nearly #8 million for Liverpool; #3 million for Nottingham; and #3.5 million for Leeds—money over and above that which they would have received under a simple application of the formula.

    XBut a minimum level has to be paid for. Some of the cost will be met from placing a ceiling on the grant increases to be received by authorities in each group. These will be 7 per cent for authorities with education and social services responsibilities—up from 6.5 per cent last year; 4 per cent for fire and police authorities; and 10 per cent for shire district

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    councils. However, these ceilings do not fully meet the costs of bringing education or social services councils up to a minimum of 4 per cent.

    XThis year, councils had their increase scaled back to pay for the introduction of a minimum level. Scaling back would mean that some of these authorities that have raised concerns about their level of funding—like Birmingham, Oxfordshire, Worcestershire, Kent, Nottinghamshire, Derbyshire and Warwickshire which today get a good settlement—would see a reduction to provide for other authorities. Birmingham would lose #1.1 million; Oxfordshire would lose #836,000; Worcestershire would lose #439,000; Kent #2.14 million; Nottinghamshire #659,000; Derbyshire #875,000; and Warwickshire #405,000.

    XI have listened to the views of honourable Members, parents, teachers and those with responsibility for care of the vulnerable. I believe that it would be unfair to scale back those increases. I have therefore decided to put an extra #41 million into the revenue support grant so that there will be no reduction in grant for those getting an increase which is below the maximum. For the other two groups, authorities between the minimum and the maximum will see their grant increase scaled back to pay for the floor for their group. For police authorities and fire authorities, my right honourable friend the Home Secretary and I are putting an additional #5.5 million into revenue support grant. That enables us to set the floor for that group at 2.3 per cent without imposing an unduly high scaling factor.

    XFollowing representations made on last year's settlement, I also propose to promote capital investment by excepting—from the floor and the ceiling limits—grant increases that result from new capital spending allocations. Salford will get an extra #1.7 million; Hertfordshire an extra #1.4 million; Bristol an extra #0.9 million; and North Lincolnshire an extra #0.6 million.

    XWith these grant increases and the stability provided by minimum increases, there is no reason why we should see large increases in council tax next year. I have laid regulations before this House to ensure that taxpayers can see clearly by how much their council tax has changed for each tier of authority. From next spring this will be shown up-front on the bill, not hidden away in a leaflet. Our longer term policies for council tax will be set out in the forthcoming local government White Paper. The increases in general grant will be matched by further good increases in the grants we are providing for specific initiatives. For example, in the next financial year, I can confirm that, as previously announced, there will be #300 million for the neighbourhood renewal fund which will enable councils with the most deprived areas to tackle the real problems they face. I can also confirm that #200 million will be available to help local authorities build care capacity, which will be a

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    significant contribution to allowing them to improve personal social services where we recognise councils face real pressures.

    XLocal authorities are a vital part of our democratic system. People rightly expect a great deal from their own council. That is why, since we came to office in 1997, we have increased grant to local authorities by #11.3 billion—a real terms increase of over 20 per cent. This stands in stark contrast to the final four years of the Tory government which saw a real terms cut in grant of 7 per cent.

    XI believe that this settlement is an important step in ensuring that local councils can meet the needs and aspirations of the communities that they have been elected to serve. It shows that we value local government and the services they provide. This settlement provides the means by which local services can be improved; public services meeting the needs of our people; local councils again recognised as a democratic tier of government. That is the way forward for local authorities. It is the approach which is at the heart of today's Statement. And, as such, I commend it to the House".

My Lords, That concludes the Statement.

4.18 p.m.

Baroness Hanham: My Lords, may I first thank the Minister for bringing this Statement to the House today. In passing, since we are dealing with local government, I declare my usual interest as a member of a local authority.

The total settlement amounts to an increase of 7.4 per cent over last year. However, 3 per cent, or #10.8 billion of that increase, is again being devoted to special and specific grants. Many of these will involve expensive bidding procedures, meaning that once again the grant will continue to be hypothecated or directed in many areas.

Much of the money will go to a limited number of authorities, not to all. So others will either be denied it or will have to spend it on priorities which are not theirs. It also belies the importance placed in the ministerial Statement on local government democracy. This will not be seen as generous or helpful by local authorities.

Does the Minister recognise—the Statement suggests that he does—that the sooner a grant distribution is introduced that is seen to be transparent and fair, the better? I hope that the outcome of the current review, over which there is much concern, will prove to be just that.

This settlement is a reflection of the expectation in the Chancellor's pre-Budget Report that council tax rises will be at least 6.7 per cent, more than three times the level of inflation. That rise alone will come about solely as a result of the Treasury's determination. Does the Minister agree that as a consequence an increase of that size is the lowest that any council will be able to contemplate making? Indeed, does he accept that most

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councils are already suggesting that they will have to raise council tax by at least 10 per cent to cover all the expenditure that they now incur?

The difficulties that will beset local authorities in reaching decisions on council tax levies will be predicated by the extra burdens that are continually introduced during the year. They are under-funded at that stage and insufficiently funded in the annual settlement.

Although the Minister points to education and social service authorities receiving an extra 4 per cent, will he say whether the pay settlements for teachers in particular but also those for other local authority workers will be fully funded? If not, there is a potential cost to be borne by the council tax payer over and above the 4 per cent figure. Does he also recognise that many local authorities are already spending well above their standard spending assessment on those services? The additional sums are already entirely borne by the council tax payer.

Does the Minister accept that there will be great variation in council tax charges because of the vagaries of the systems and the continuing changes to methodology, which switch resources within the revenue support grant? Does he also accept that as a result of previous decisions over the lifetime of the previous Parliament, shire counties lost an estimated #700 million in funding and London local authorities more than #450 million, and that such problems will continue under today's settlement?

Does the Minister accept that social services are currently under-funded overall by some #1 billion, but that there is now enormous pressure on them to provide facilities and care for the elderly to enable them to be looked after in their own homes or, in particular, in care homes? Does he understand that the regulations and costs that are placed on private homes are driving them out of existence and that, if the pressure on hospital beds is to be relieved, such facilities will again have to be provided by local authorities? While the sum of #200 million is to be welcomed for personal social services, it will not, I fear, go very far towards achieving the capacity that is now necessary.

There are many extra burdens from Xbest value" to fridge recycling and including concessionary fares, the extra priorities associated with the homeless and the increasing number of homeless people, landfill taxes, the cost of asylum seekers, the changes to the area cost adjustment, which was meant to help authorities with the highest costs but is still not at a level that reflects that and is subject to changes that switch resources from one type of authority to another, and the abolition of ACT, which has meant that councils have had to increase substantially the amount that they contribute annually to support their pension funds. Does the Minister realise that most of those burdens drive most council leaders to despair? All of those factors increase the costs of councils and consequently the amount paid by council tax payers.

I am sure that the Minister will accept that local authorities want stability of finance and the means to provide the services for which they are statutorily

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responsible at the best standards. This settlement no more does that than previous ones. One can only hope that the current review produces something much more satisfactory for next year and that within it we lose all temptation to work within floors and ceilings. I am certain that anyone listening to the Statement finds that an almost incomprehensible concept, like the relationship between the total standard spending assessment and what councils ultimately receive in grant.

Despite the Minister's reassuring words, the Statement does not have sufficient in it to ensure that local government can carry out its duties to meet the expectations that Ministers and—far more importantly—the public have of it. Every year, the Government say that they have provided sufficient resources to avoid steep council tax increases. My suspicion is that this settlement will be as hollow as was last year's.

4.25 p.m.

Baroness Scott of Needham Market: My Lords, I, too, thank the noble and learned Lord for repeating the Statement. In doing so, I declare my interest as an elected member of Suffolk County Council.

The most noteworthy part of the Statement is the commitment, at long last, to a wholesale review of local government finance. It also contains the explicit recognition that we have been labouring for years under a scheme that is not fair, transparent or just. Can the Minister tell us about the way in which the review might take place? Will it be under the auspices of the White Paper, which is expected soon, or will there be another mechanism? How will local government—individual authorities and the Local Government Association—be involved? Indeed, how will noble Lords and Members of another place, many of whom have much expertise in local government, be involved?

We on these Benches believe that the settlement is reasonable for local government, and we welcome that. Nevertheless, some key issues face local authorities this year, the most pressing of which lie in the area of social care. I should appreciate it if the Minister would spend some time addressing those most pressing social care issues. In recent years, that area of our budgets has been under the greatest pressure. At one end of the scale, children's services are rightly having to develop much more stringent regimes for child protection and for dealing with greater numbers of children. The failure of a very few to do that resulted in the tragic cases that we have seen recently. At the other end of the scale, there has been an increase in the demand for nursing care. The number of people over 80 in this country is set to rise by 68,000 in the coming year.

The Government's recent announcement of extra cash to help prevent bed blocking is welcome, but it falls far short of the #300 million to #400 million that local government believes will be needed this winter to prevent a crisis. Even so, that does not address the underlying structural problems within the social

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services sector. If the Government are serious about reforming the health service, they need to get to grips with the health provision aspects of local authority work.

Across the spectrum, social services departments are having to deal with increased demand, greater need, market problems in dealing with capacity, cost increases and problems with recruitment and retention of skilled staff.

As we have heard, there is a growing problem with local authority pension schemes, which started a few years ago and which, like almost everything else, have been affected by the events of September 11th. Downturns in the equity market mean that councils have to increase their contribution to the pension fund. In a cash-limited budget, there is only one way to do that—by reducing expenditure on other services.

On pay settlements, although the settlements tend to keep pace with inflation, wages tend to run ahead of it. That is because local authorities have to respond to equal pay issues and to recruitment problems. It is paradoxical that in areas such as social services, in order to attract and retain high quality staff we need to pay them more. But when we do so, we can afford fewer staff.

The environmental, protective and cultural services block is, as ever, the Cinderella of the settlement, despite the fact that quality of life issues fall within that block. The Prime Minister recently referred to it as Xliveability". As local authorities move towards a more community-based planning approach, that budget comes under the most pressure to deliver small-scale environmental improvements, which mean much to local communities.

During the Government's first two years in power, when adherence to Conservative spending plans led to very tight settlements for local government, they made more money available to councils, which we welcomed. However, the thread that links this Government with previous governments is the continued dominance of central government over local government's decision-making processes. The landscape is all too familiar. When functions are transferred to local authorities, such as in the Travel Concessions (Eligibility) Bill, enough money never comes with them. When functions are transferred away, there is always a suspicion that the amount that is transferred is too high. We on these Benches will look with interest at the small print and the proposed transfers to the learning and skills councils and the National Care Standards Commission.

The current pressure to passport SSA increases for education severely limits local authority choice and discretion. It also produces serious funding issues for the non-education services. In reality the size of the budget means that social services have traditionally borne the brunt of those choices.

I turn to the theme of local authority expenditure that is controlled from outside. I have a question on the snappily entitled council tax benefit subsidy limitation scheme, which is almost as difficult to explain to people as it is to say. It represents a further

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control of central government over local government and does not fit in with any notion of transparency or accountability. The Statement is quiet on that matter, but can the Minister say whether the Government have any plans to remove it?

Once again, a major feature of the settlement is the continued rise of the specific grant. That stood at 4.5 per cent of the total budget when the Government came into power. Currently it is moving to 9.6 per cent, and we understand that there are plans to increase it to as much as 15 per cent. When the matched funds that have to be found are added in, that represents a huge control by central government over sums that used to be entirely within the remit of local authorities. Extra money is always welcome, but such a means of distribution creates further centralisation.

Councils have to direct their activities towards meeting government priorities rather than their own. Precious resources are being poured into the development of bids, some 50 per cent of which we know will not be successful. Most cynically of all, a myth is created that a particular authority has failed to win a bid rather than the Government failing to fund it. We shall read the small print with interest and look forward to hearing the Minister's replies.

4.32 p.m.

Lord Falconer of Thoroton: My Lords, I thank the noble Baronesses for their guarded welcome to the Statement. They have made a number of points about the detailed provisions with which I shall deal shortly. The noble Baroness, Lady Hanham, raised the matter of ring-fenced grants and indicated, in effect, that she disliked the trend. As she admitted, a large majority of government support for local authorities is not ring-fenced. Ring-fencing has been increasing as a proportion of total government support, but that reflects partly a welcome increase in grants. Ring-fencing makes sense in certain circumstances. For example, in introducing new policies, ring-fenced funds can be targeted on selected projects.

We know that the view expressed by the noble Baroness is the view of local authorities. They are concerned by the increase in ring-fencing over the past few years. We too want local government to continue to be responsible, as much as possible, for spending decisions, so we need to limit ring-fenced grants to areas where they are absolutely necessary. The White Paper on local government, which will be published soon, will set out our position on freeing up local government and will address the issue of ring-fenced grants.

The noble Baroness, Lady Hanham, raised the issue of council tax. Every year we see scaremongering about council tax increases and every year wild forecasts are made in the press and sometimes even by opposition parties. But they often turn out to be wrong. As the noble Baroness knows, local authorities set council tax. Unlike the previous administration, we do not tell local authorities the level at which to set their council tax. Good grant increases and stable

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grant settlements provide a good landscape within which councils can address the issue of the level of their council tax.

Ultimately, such decisions are taken by local authorities after consulting their local electorate and taxpayers. On what is an acceptable council tax increase, councils should look to the views of their local people and not to Ministers. Views on increases in council tax will be decided at the ballot box.

The noble Baroness, Lady Hanham, said that there will be variations between councils, which is true. The level of council tax will depend on the approach that each council takes to that position. The noble Baroness also referred to the position of social services. The total support for social services rises by 6.5 per cent—#684 million—for 2002-03, which is on top of a rise of #576 million—6.2 per cent—in 2001-02. It brings the total increase under this Government to approximately #2.7 billion. Make no mistake, we are well aware of the pressures on social services. As those figures indicate, we have given significant increases to social services, but constant discussion is required with local authorities, the Department of Health and local government bodies to work out where the pressures are and how best to deal with them. We do not in any way seek to underestimate the problems, but those figures indicate that extra money has been provided to that hard-pressed area.

The noble Baroness, Lady Hanham, went through a number of cost pressures in relation to local authorities. There are cost pressures and we hope that this settlement will make a contribution towards meeting them. She raised the issue of education. On the education budget, the increase is enough to cover all the cost pressures on local education authorities next year: rising pupil numbers, increased contributions to the standards fund and, taking up the point made by the noble Baroness, pay and price increases.

I turn to the points raised by the noble Baroness, Lady Scott. On local government finance, she welcomed the fact that this is to be the last year in which the system will be used. As she rightly said, it is a system that has been the subject of persistent and justified criticism for a long time. She is aware that we have already issued a consultation paper on local government finance. We are discussing options for the reform of the grant distribution system with the local authority associations and representatives of the local authorities. That process has been under way for some time and next year we shall announce our proposals. The noble Baroness also raised the issue of social services. I dealt with that issue when I replied to the noble Baroness, Lady Hanham.

XLiveability" is an important area. Many local authorities say that from time to time that part of the grant is squeezed, but other local authorities have proved that incredibly impressive improvements can be delivered in the public space to the benefit of those who live in the local authority area.

The noble Baroness, Lady Scott, also raised the issue of bidding and said that there are too many funds for which bids have to be made. We agree that there is

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much to be said for streamlining the number of funds for which one has to bid. I hope that that answers all the questions raised by the noble Baronesses.

4.38 p.m.

Lord Bradshaw: My Lords, I declare an interest as a county councillor on Oxfordshire County Council and as vice-chairman of the Thames Valley Police Authority, both of which are affected by the Statement.

There is a crisis in social services and in hospitals. The hospitals are full. Recently two community hospitals were closed and one was severely reduced in size. Beds in hospitals are blocked because social services cannot afford the prices charged by the care homes, many of which are closing because we cannot afford to buy the beds in them.

If the Government are serious about doing something for the National Health Service, they must solve the problem in social services. An extra #2 million would be useful, but it will go nowhere against the size of the problem that we face. Not only is this problem weighing down the county council, but it is also weighing down every other service that the county council provides. Those services have to be pared back so that the county council can afford the social services. Even so, we are overspending substantially against the Government's criteria. We need assistance. I ask the Minister whether some satisfaction will be given to councils like Oxfordshire to deal with the problem.


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