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9.2 pm

Mr. David Drew (Stroud): I will keep my remarks short so that as many hon. Members as possible may contribute to the debate. I will also try to keep them to the subject, which is narrow, given the fact that the Opposition spokesman, the hon. Member for Eastbourne (Mr. Waterson), seemed to repeat the remarks that he made in the previous debate, but I will say no more about that.

I wish to reinforce the argument that I made in an intervention on my right hon. Friend the Minister for Local Government and the Regions in the previous debate, but with reference to the special grant. Fire and rescue services in Gloucestershire will face particular problems because as a result of the standard spending assessment they will not be able to access the special grants. The services work with the police and ambulance service in the county. We want a tri-service emergency centre, but it will be put at risk unless we can find some additional moneys. Likewise, we are working with the fire and rescue services of other authorities in the south-west to establish a joint training centre. Both projects require special grants from the Home Office, but will be put at risk unless we can obtain additional funds to pay our contribution.

My hon. Friend the Member for Stafford (Mr. Kidney) will no doubt point out, if he has the opportunity, that the education standard spending assessment is inadequate. Many hon. Members on both sides of the House want the area cost adjustment to be removed because of its gross unfairness.

The sins of the father are visited on the sons and daughters; that is never more true than in local government, where the Government are increasingly

31 Jan 2001 : Column 396

having to address, through additional direct grant, the problems that we were left with. Much as one welcomes the money, if we could sort out the formula, we would prefer to find the amounts from within local resources, so that our schools and social services could be funded more adequately without having to rely on--

Mr. McWalter: Will my hon. Friend give way?

Mr. Drew: It is only fair to other Members who want to speak that I do not give way, as I am sure my hon. Friend understands.

We need to sort out local government funding sooner rather than later. Clearly, that will not happen before the election, but I hope that soon afterwards we shall see light at the end of the tunnel--with the excellent Green Paper and the opportunities that are available.

My hon. Friend the Member for Upminster (Mr. Darvill) pointed out that we continue to suffer from the effects of the poll tax. Another such factor is the early retirement scam. Many of my friends took early retirement for genuine reasons--sickness or job cuts--but the Conservative Government never predicated the long-term implications of getting people off the payroll in any of their calculations. We see the effects of that in the problems with police and local government pensions; many people who left their employment for genuine reasons still have to be paid for through top-slicing. Until we can grapple with that pensions problem, we shall all be at a serious disadvantage. That is why we need to reform the formula and the funding system.

9.7 pm

Mr. Edward Davey (Kingston and Surbiton): Like the hon. Member for Stroud (Mr. Drew) and other hon. Members, I have concerns about the area cost adjustment and its operation in my local council--the Royal Borough of Kingston upon Thames--and, especially, about the need for long-term reform. This year, a short-term fix--the floors and ceilings idea--has caused hardship in many councils, especially in outer London, as the hon. Member for Upminster (Mr. Darvill) pointed out.

The ceiling will significantly affect my council. That is a shame because the council was hit in last year's settlement, when the new earnings survey figures--plugged into the area cost adjustment--worked against us. This year, when the new earnings survey figures would have worked in our favour, the benefit was not allowed to flow to councils such as Kingston in outer London.

I am disappointed that the Government continue to persist with the ceiling approach, because when I led an all-party delegation from Kingston council to see the Minister for Local Government and the Regions she listened politely and asked the right questions; today, unfortunately, we find that she has not acted. It is interesting that in today's Evening Standard, Professor John Howson estimates that London needs another 9,000 teachers. That is especially relevant, because the part of the area cost adjustment that is not being fed through because of the ceiling relates to the higher salaries that councils such as Kingston are having to pay to ensure that there are teachers in our classrooms.

Given such huge teacher shortages, I am concerned that the Government are pursuing that policy. I raised the issue with the Chancellor at a meeting of the Select Committee

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on the Treasury. He acknowledged that London has a problem with teacher shortages, but that recognition does not appear to have fed through to the local government settlement, especially for outer London boroughs that are hit by the ceiling.

During the debate, the Minister has made several sedentary interventions. What I am about to say will please her. I welcome the fact that she did listen with regard to the homelessness issue and housing benefit. There is a point that perhaps should have been raised in the previous debate, although it is relevant to this one because it relates to "A" in the equation.

The Minister announced today that rent levels specified in the housing benefit subsidy regulations will be raised, so more housing benefit will be payable in areas where rents are higher. That will significantly help people on low incomes with housing difficulties. I see many such people in my surgery every week, so that measure is particularly welcome. In high-cost areas such as Kingston, the homeless and those in poor housing have been hit severely by the regulations, which I believe the present Government introduced as a left-over from the previous Government. This change makes it better. It certainly does not make it perfect, because Liberal Democrats would like the regulations to be abolished.

Although I welcome that change, I am concerned that this grant settlement does not help boroughs, such as mine, that are having problems with teacher shortages and with attracting teachers. Interestingly, the Kingston share of the £52 million grant is only £0.1 million. That is nowhere near its fair share. I wonder whether the criteria that have been used to share out the £52 million grant could be published, because I do not believe that they would stand up to proper scrutiny.

9.11 pm

Mr. David Kidney (Stafford): I look forward to the day when we no longer need to debate and vote on special grants--when we have a system for distributing the Government's central grant to local government that is transparent, easy to understand and, above all, fair. The Government showed the way forward by publishing a Green Paper last year, which some hon. Members have mentioned and to which I shall briefly refer.

Those who say that the Government acknowledge the unfairness of the previous system of distribution introduced by the Conservatives but have been slow to do something about it are wrong: the Government have made efforts to do something about the unfairness, injustice and disparities in distribution that that system created.

At first, the Government tried methodological changes each year. That is borne out by annexe B of the report, which says that special grants were introduced partly as a result of changes to the methodology for calculating standard spending assessments for the financial years 1997-98, 1998-99 and 1999-2000, among others. However, the Government found--the point was well illustrated in the previous debate by the right hon. Member for Skipton and Ripon (Mr. Curry), who mentioned a change that was made in, I believe, social services that disadvantaged his council--that making piecemeal changes, even with the best of intentions, had unintended consequences elsewhere in the system because of the complexity and lack of transparency. That attempt was abandoned.

31 Jan 2001 : Column 398

The Government made a second attempt to achieve fairness. They devised 21 more thoroughgoing options for change, and asked members of the Local Government Association whether they could reach a consensus on which option would be better than the current system. Sadly, they did not rise to the challenge. They could not agree, so that option, too, was ruled out.

Plan C was for the Government to suggest their own changes as a prelude to consultation, and they did so by publishing the Green Paper. The great interest in change among the public outside the House is shown by the fact that, as the Minister said, there have been 16,000 responses to the Green Paper--a tremendously high number. I look forward to hearing the Government's response when they have considered them all.

The elements in the Green Paper that I believe will do away with the need for special grants are, first, the introduction of a formal system of ceilings and floors, which would ensure that there were no great winners or losers in the distribution of central grant from one year to the next and would bring certainty and an ability to plan local government's finances.

Secondly, I look forward to the introduction of minimum entitlement for each pupil in education. I realise that that is too simplistic on its own. That is why the Green Paper refers to making adjustments for deprivation and for recruitment and retention. The key to those elements is preventing future Governments from dabbling in those adjustments for political reasons.

The Office for National Statistics will have an important role. It is already charged with developing ward-based statistics, which will help to establish factual deprivation figures. I know from my experience of serving on the Select Committee on the Treasury that the office is working to ensure that its figures on recruitment and retention are more accurate.

If the proposals in the Green Paper eventually form the new system, we will not need the special grants that we debate and vote on each year. We will then have a fairer system, and I will be able to look teachers and parents in the eye and say that we have a system that treats schoolchildren in Staffordshire as fairly as pupils in other parts of the country.

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