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Westminster Hall

Tuesday 27 February 2001

[Mrs. Sylvia Heal in the Chair]

Revenue Support Grant (Norfolk)

Motion made, and Question proposed, That the sitting be now adjourned.--[Mr. Mike Hall.]

9.30 am

Mr. Keith Simpson (Mid-Norfolk): I am pleased to be sitting here under your eagle eye this morning, Madam Deputy Speaker, and I am grateful to have the opportunity to discuss the important matter of the revenue support grant for Norfolk, and local government finance support for Norfolk in general. I welcome to the debate my hon. Friend the Member for North Norfolk (Mr. Prior) and my right hon. Friends the Members for South-West Norfolk (Mrs. Shephard) and for South Norfolk (Mr. MacGregor), as I do the hon. Members for North-West Norfolk (Dr. Turner) and for Norwich, North (Dr. Gibson), who is sitting where the Liberal Democrats usually sit. I do not know whether he is making a statement by so doing.

I also welcome to the debate the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Coventry, North-East (Mr. Ainsworth). I am loth to congratulate him on his promotion because, as a Whip myself, I prefer to think that he has been translated into another sphere. The military historian in me believes that he is in the position of a German general staff officer in about 1942, involved with planning operations and training, who finds himself translated to command a division in the Stalingrad pocket. The Department of the Environment, Transport and the Regions could be roughly compared with that.

My theme today, which I hope is shared by colleagues, is a fair deal for Norfolk. I say that against the background of the outbreak of foot and mouth disease. Fortunately, to date, we have not yet had such a case in Norfolk, but the constituencies of many colleagues have. Many people in the rural communities of Norfolk are terrified of the possible impact that the disease may have on their lives and on our economy. Norfolk is special to its Members of Parliament, not only because we represent constituencies there, but because it is an outstanding county. It is the second largest county in the United Kingdom. Its population is in excess of 700,000--a population that is concentrated heavily in the three major towns of Norwich, King's Lynn and Yarmouth, but one that is spread out over such an enormous county.

The county has an extensive coastline, which reminds me of the joke made by the late Professor Malcolm Bradbury. When he was lecturing at the university of East Anglia, he said that Norfolk was cut off on three sides by the sea and on the fourth side by Anglia Rail. One of our most famous sons, Horatio Nelson, used to talk about going into Norfolk and coming out of Norfolk, as though it was a separate country. At times,

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the people of Norfolk feel that they are apart from the rest of the United Kingdom. During the past four years, they have faced several severe constraints. Due partly to our geography, even those in the major towns are reliant on the use of motor vehicles.

I found out from the Library that the average availability of one or more cars in the United Kingdom is 66.6 per cent. In my constituency of mid-Norfolk, it is 83.1 per cent. That is not because people in mid-Norfolk have more money than others in the United Kingdom, but because cars in mid-Norfolk are a necessity, not a luxury. Therefore, anything to do with the cost of running a car has a major impact on individuals' finances and on how the county councils and district councils deliver their services. To enable people to move around Norfolk is an added cost that the major unitary authorities do not face.

Understanding local government finance is like understanding the Schleswig Holstein question in the 19th century. As hon. Members may know, the late Lord Palmerston said that only three men understood the Schleswig Holstein question; one had died, one was now mad and he, Lord Palmerston, had forgotten what the question was. If that is true in general, it is so specifically when considering the present Government and the way in which they have financed local government since 1997.

Our debate must be seen against a background of a Government who, I am sad to say--I note that the Minister is trying not to smile about this--have achieved a reputation for spin over substance, and a habit of announcing and re-announcing measures. That also applies to the revenue support grant and local government finance. The way in which the Government have organised local government finance has been detrimental to the shire counties, especially Norfolk. I remind the House that, as a direct consequence of the Government's changes in methodology introduced in 1997, the shire counties will have lost out to the sum of approximately £700 million. Norfolk must face part of that, which puts us at a disadvantage.

Since 1997, council tax in England has increased by three times the rate of inflation. This year, council tax payers in Norfolk will see an increase of 6.25 per cent., which is almost three times the rate of inflation. The Minister for Local Government and the Regions, the right hon. Member for North-West Durham (Ms Armstrong), estimated that the average band D council tax bill would rise by 5.1 per cent., yet Norfolk county council has been forced to agree to an increase of 6.25 per cent. Commenting on this year's local government finance settlement, the Minister said:

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If one examines the RSG allocation for Norfolk in the local government finance budget over the past four years, one sees that, for the year 1998-99, there was a decrease of 0.41 per cent. In 1990-2000 there was an increase of 3.53 per cent., and in the period 2000-01 there was a decrease of 3.48 per cent. This year, surprise, surprise, there is an increase of 9.78 per cent., although I do not suspect that that has anything to do with a general election. Until this year, Norfolk has been in deficit and that has had a major impact on council services. In addition, during the past four years we have received inadequate local government finance settlements, and the council tax payers of Norfolk have seen a reduction in the quality and extent of services that they receive from the county council, for which, ironically, they have to pay more.

Councillors in Norfolk have told me that one of the principal causes of the council tax rises is the impact of Government stealth taxes, such as higher fuel tax, higher landfill tax and new taxes on pension funds that are passed on to council tax payers. Increases in the cost of petro-carbons for Norfolk county council this year are DERV, 6 per cent.; petrol, 4 per cent.; gasoil, 11 per cent.; and kerosene, 29 per cent. I remind colleagues that, in a county such as Norfolk, with a population that is spread out, transport costs are crucial. Those additional costs are separate from any local government finance or settlement. All sorts of extra costs for consultation must also be added, relating to, for example, best value, community strategies, verification frameworks and performance indicators, all of which will cost the council large sums.

Although I approve of the management techniques and robustness introduced by the previous Conservative Governments and continued by this Government, many of us feel that many levels of government are now being managed to death and that there is no direct relation between management costs and output and quality of service. For example, Norfolk police authority is only too well aware that best practice costs it several hundred thousand pounds a year and ties up several valuable members of staff for what is ultimately no real increase in the deliveries not only that it would like but that people in Norfolk expect.

During the past few years, there has been an enormous increase in cuts or deferment of services in Norfolk. We have a £90 million-pound backlog in road maintenance. We have experienced severe cuts in social services, to which I shall return shortly; chaos in our schools, with children being bussed around the county; and badly thought through school reorganisation. We have had a muddle over the waste disposal strategy, and that strategy, along with the moneys allocated to it, will be a major issue in future. Library hours and the availability of books have been reduced.

I should like briefly to touch on an example from the past four years. A result of local government finance awards and council policy was the closure in 1998 of many youth centres throughout Norfolk. In my constituency of mid-Norfolk, the youth centre in the small market town of Aylsham, which has a population

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of about 4,000, was closed. Colleagues from Norfolk know only too well that, outside the major cities, there is not a lot for young people to do in the country. The closure of a youth centre, where young people congregate to get away from their parents, will probably result in their going elsewhere and trying to get into pubs, which invariably leads to trouble. The gap left by the youth centre that was closed is now being ably filled, at a cost, by a small community centre financed entirely by local churches and surviving from hand to mouth. It is used by not only young people but mothers, in the mornings, and pensioners, and I salute that. I realise that the Government and councils are under pressure for money, but I firmly believe that youth centres are a good way of investing in the future and ensuring that young people have an opportunity to do what they want without being tempted into casual violence and drugs.

The impact on the people of Norfolk is not entirely consequential on Government policy. I believe, as might be expected, that the problem has been compounded by eight years of a Labour-Liberal coalition running Norfolk county council. Obviously, the council has had to make decisions within budget, and we are now living with the consequences. We have seen a growth in bureaucracy, a borrowing of money from the reserves, and time and energy wasted on talk about visions and stakeholders rather than spent considering the quality of service that can be delivered.

The Government recognised that, this year, many county councils faced the prospect of a disastrous rise in council tax, and have attempted to come to those councils' rescue with extra resources. It may seem churlish, but I regard a lot of that money as funny money with strings attached, as do many local councils. We estimate that Norfolk county council should have levied a 10 per cent. increase in council tax this year, but it has levied only a 6.25 per cent. increase. I say "only", although that is three times the rate of inflation. The council has been able to do that largely because it has received extra money from the Government, but also due to some creative accounting in its budget. For example, money has been moved out of the highways reserves and cuts have been made in social services.

I come briefly to the impact made by the Government's failure properly to fund Norfolk, and to the effect on my constituents of the council's problems. The impact will be at its greatest in social services, on which there has been an estimated overspend of £2.7 million. The Government's area cost allowance criteria contain a bias against counties such as Norfolk, where sparsity of population creates problems. The Government have failed to take into account a steady increase in population, especially among the elderly. In my constituency, some 20.8 per cent. of the population is of pensionable age compared with 18.7 per cent. nationally. One might say that that is only a 2 per cent. difference, but on tight budgets such as Norfolk's that can make all the difference between just about getting along and failing to deliver.

Under the council's proposals for next year's budget, the social services budget will see increased charges and cuts. Charges for meals on wheels will rise from £1.80 to £2, the cost of transport to day centres will rise by approximately 50 per cent. and the cost of delivering occupational therapy equipment to people's homes will double. The level of day care is to be cut, and the number

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of people aged over 65 admitted to residential and nursing homes is being reduced by 150--so do not get old in Norfolk. Rex Humphrey, the chief executive of Age Concern in Norfolk, said:

It would be no exaggeration to say that we are approaching a crisis in residential care and nursing homes in Norfolk, as a consequence of the policies to which I referred and the 2 per cent. fee increase approved by Norfolk social services. Denise Denis, chairman of the Norfolk Independent Care Homes, said that the rise of 2 per cent. was minimal and that homes would be forced to make staff or maintenance cuts. That is placed on top of the Government's proposed legislation, which places an even greater financial burden on care homes.

As Members of Parliament, we are in favour of the highest possible standards for residential care homes, because elderly people demand the best. However, those who run care homes, in both the public and private sectors, are being driven to distraction by the increasing bureaucracy, which places further demands on such minutiae as the size of rooms, and other matters connected with the facilities.

I began by saying that my theme today was a fair deal for Norfolk. I hope that, by outlining the revenue grant support element of the local government finance settlement, I have shown that Norfolk has done poorly compared with other parts of England. Norfolk, along with other shire counties, is collectively £700 million worse off than in 1997. Council tax in Norfolk has risen by three times or more the rate of inflation to provide either stand-still services or cuts in services. That has been compounded by the way in which the council has taken decisions and examined priorities during the past eight years. I ask the Minister to re-examine the way in which the area cost allowance is calculated, taking into account the particular problems faced by a large rural county, such as Norfolk, with a dispersed population.

People in Norfolk often view London as foreign. In fact, they view Bury St. Edmunds as foreign, but they view London as foreign because our discussions and decisions do not relate to their experience. They think that they come fairly near the bottom of the list when the Government are developing policy. They seek a fairer deal for Norfolk. They do not necessarily want more money than everyone else, but they would like a fair deal in which some of the problems that I have been spelling out are considered.

Norfolk is a marvellous county and I am honoured to have represented Mid-Norfolk for the past four years. We want to do better for its people.

9.50 am

Dr. George Turner (North-West Norfolk): First, I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing this debate. I served on Norfolk county council for more than two decades and was chairman of its education committee prior to the 1997 election. I therefore especially welcome the opportunity to contribute to this morning's debate.

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The hon. Member for Mid-Norfolk has provided a mixture of facts and--as often happens in debates on local govt finance--highly partisan comment about support grant for Norfolk for this year and the preceding three or four years. I shall leave it to my hon. Friend the Minister to deal with much of what the hon. Gentleman had to say about this year's settlement. My hon. Friend already knows of my support for major reform of the standard spending assessment and rate support grant systems that we inherited.

Indeed, the Government have already gone some way to deliver a fairer deal for Norfolk and that should be acknowledged. I was especially pleased when the Government not only initiated research work, but recognised the need and delivered resources for rural policing, taking proper and better account of the sparcity problems. I was also pleased with the grant made available for my part of Norfolk, shared with cross-boundary policing in the fens. Of course, the bottle is only half full; more needs to be done. However, we know from the consultation that has been under way for some time that further reform is on the way. Given the history of dispute across party lines over local government finance, the Government are right to take the time to seek to maximise consensus on introducing a new system.

I have argued for many years--mainly under the previous Government--for a fairer deal for counties such as Norfolk; I shall continue to do so. However, I want to take a different tack from that of the hon. Member for Mid-Norfolk. He painted a picture based on recent RSG settlements that distorts the reality and would have the nation conclude that we should change the Government and, by implication, I suspect, return to the old regime under which I suffered.

An analogy with football suggests itself to me--I am not sure, Madam Deputy Speaker, whether you are a supporter, but I find that it helps when discussing financial issues with my constituents. As the season draws to a close, many fans will criticise their team's performance. Few managers or players approach perfection, and armchair critics have an especially clear concept of the ideal, but before calling for the manager to be sacked, most are fair minded and consider various questions. What problems and financial constraints did the management inherit? Is performance improving or deteriorating under the new management? What alternative management is on offer, and with what track record? I wonder whether many fans would turn with enthusiasm to a former member of the worst team in living memory; a man of maturing years but inclined to mimic the young--baseball hat and all--populist to a fault and with a self-confessed 14 pints a day drinking problem. That may not represent the ideal management.

I shall have to be selective this morning, even given the modestly greater time that may be available. I therefore turn to some other facts that were not mentioned by the hon. Member for Mid-Norfolk. In particular, we should consider the track record of the present management compared with the previous management. The fairest way of doing that is to ask some of those who are directly responsible for the data that I have used. I asked the financial director of the county council and the treasurer of the borough council in my constituency for a summary. I wanted to compare the four years of the budget set by this Government with the previous four

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years, which seemed a fair-minded approach. If one makes that comparison, the picture of what has been happening is very different from that painted by the hon. Gentleman.

Before doing that, I want to say that the attack made this morning on the merits of the present county councillors--and, by implication, the attack on King's Lynn and West Norfolk borough council in my constituency--was deplorable. There has been considerable improvement in management and the way in which budgets have been handled in Norfolk recently. The Eastern Daily Press reported on Friday 23 February that an assessment undertaken by Cranfield university school of management, Sunday Business, British Telecom and Management Today, listed Norfolk county council as one of the top 100 UK visionary organisations. It said:

Mr. David Prior (North Norfolk): Does the hon. Gentleman think that it is good practice to increase the council tax four times more than the basic state pension?

Dr. Turner : I shall come to the hon. Gentleman's point. To be fair, we should compare what has been happening with the track record of the previous Government on council tax and what pensioners received.

First, I want to refer to the information provided by the finance director of Norfolk county council on changes to budgets during the past four years. Local government finance is notoriously difficult. It is necessary to consider not only changes in the headline figures, but changes in underlying rules and changes in responsibilities. I asked for a summary of changes in the revenue budget. The figures this year are remarkably good, which has been commented on. The net figures show an increase in expenditure of £27 million. Hon.

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Members will not have noted from the speech of the hon. Member for Mid-Norfolk that that included a £5.7 million increase in expenditure for social services.

Mrs. Gillian Shephard (South-West Norfolk): Will the hon. Gentleman give way on that matter?

Dr. Turner : I am not taking interventions for the moment, because I want to put the figures on the record.

The figure for 2000-01 is plus £8 million, for 1999-2000 it was plus £9 million and for 1998-99 it was minus £7 million, giving a total for the four years of increased net growth to the council of plus £37 million. I also have the figures for the previous four years, determined by the capping regime, when local democracy was removed by the Conservative Administration. The net growth figure for 1997-98 was minus £11.8 million, for 1996-97 it was plus £4.2 million and for the previous two years it was minus £6.2 million and minus £2.1 million, giving a grand total for those four years of minus £15.9 million in the council's delivery of services. I repeat, that is minus £15.9 million for the last four years of the previous Administration, and plus £37 million in the first four years of this Administration.

I am the first to admit that the bottle remains half empty and that more needs to be done, but the bottle is filling: we are addressing people's needs in Norfolk. I especially welcome the dramatic increases in school investment. The figures are amazingly different from those under which I had to struggle when I was chair of education. The education capital allocations have risen from £4.7 million in 1996-97 to £27.8 million in 2000-01; we do not yet know the full figures for the coming year.

As chair of education, I faced a backlog of £40 million in much-needed work to be done on school buildings. Now, I go to schools and see work in progress, with further funding to come. Improvements are visible to anyone who visits the schools--there are new classrooms, improved decoration, and better staff facilities. Under this Government they have a rosy future.

I want to give right hon. and hon. Members the figures that relate to my borough council, King's Lynn and West Norfolk. The hon. Member for North Norfolk (Mr. Prior) intervened to ask about increases in council tax. Yes, his colleagues in my borough jump up and down, pointing to the 29 per cent. increase in band D council tax and hoping that people's memories are short, but they do not remind the electorate of the 55 per cent. increase in the four previous years. There was a 29 per cent. increase in the past four years under this Government and a net increase in the council's expenditure of about 7.5 per cent. However, there was a 55 per cent. increase in the last four years under the previous Administration, but a net decrease of 6.3 per cent. in the council's expenditure.

Not all is ideal in north-west Norfolk, or with the borough council's budget, but in the last four years of the previous Administration there was an increase of 7 per cent. in capital resourcing, which is most important in respect of the dilapidated housing provision in my constituency, compared with an increase of 79.6 per cent. in capital expenditure in the past four years under the present Govt. To pretend that that is not a dramatic improvement is to ignore the facts, which is what the hon. Member for Mid-Norfolk would have us do.

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Finally, I want to speak to an issue that is close to the heart of many of my constituents, the policing of crime. I had a meeting last week with the chief constable and the chairman of the police authority to look at what was really happening without the gloss put on it by the Opposition. The chief constable told me that the new money now available to the police authority would increase the number of front-line police officers from 1,400 to at least 1,475 by the end of the year. He explained that the run down in police numbers in Norfolk had been as a result of his policy, initiated ahead of the last election, to address the dramatic need for improved IT and back-up equipment. With the funding now available, not only can he and his chairman continue to invest in that equipment, but they can provide the extra police on the beat that people want to see.

In addition to the extra 75 police officers, the chief constable can free up a further 23 police officers by introducing civilians to do their work. That means there will be another 23 police officers on the beat at the sharp end of policing. He also has extra funding to provide two mobile police stations in my part of the county, each equipped with radio and communications systems. He tells me that he will be able to invest £250,000 into the vehicle fleet. He describes it as old, but I would describe some of the vehicles that I have seen as dilapidated.

The chief constable went on to explain further planned improvements in policing. They include better intelligence services and the potential use of helicopters for some chases, which are notoriously difficult in the fenland area because of the nature of the roads. There are clearly gains from the increases in the Government's support for policing in Norfolk and the changes in the council tax. Under the previous Administration there were far larger increases in council tax and a net decline in spending. Now, although there has been an increase in council tax, which is less than the rate that we inherited, there are also real improvements.

The local Conservatives would have us believe that the improvements to policing, schools and education are as nothing. They say that there is virtually nothing to show for the increases in taxes that they are paying. That implies that one could cut the council tax by 30 per cent. without doing any damage. They need to be open about that, certainly ahead of a general election. It is uncertain whether under the Tories there would be £23 million, £12 million or £6 million for my constituents. It depends on which month it is, whether it is a Tory tax promise or a Tory tax guarantee and on their current wriggling to pretend that they can both spend and cut at the same time. My constituents should beware. The Tories' pretence that there have been no improvements in services implies that cuts are possible. I know that they cannot make cuts without damaging the services.

In summary, returning to my football analogy, not all is perfect with the team and its management. There may be changes in the team, which may have to raise its performance. There are tasks to be completed. We may be in the middle of a league table and have yet to reach the top, but if we compare what is happening under the present management with what happened under the previous management, we can see that progress is being made. It will take time to complete that process. When the fans out there come to take their decision, they will realise that they need to stick with the present team for a little longer if they are to achieve their ambitions.

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10.10 am

Mr. John MacGregor (South Norfolk): I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on initiating the debate and on the admirable way in which he spoke. He covered so many points that I wanted to cover that I shall be fairly brief, although I want to re-emphasise some of them.

People in rural areas, including my constituency, are astonished that hon. Members in the main Chamber will spend today debating the Hunting Bill. That shows a ludicrous sense of priorities, an astonishing unawareness of what is happening in rural areas and a ludicrous lack of sensitivity. The issues being debated in this Chamber are the ones that concern people in rural areas. That feeling runs very deep and I shall return to it later.

The Government and the ruling parties on Norfolk county council--Labour and the Liberal Democrats--have achieved a combination of heavily increased council taxes. I say to the hon. Member for North-West Norfolk (Dr. Turner) that vision is all very well, but the facts and the impact on people on the ground are what matters. The heavily increased council taxes have a real impact, while we receive poorer services and there is a further running down of reserves.

I shall deal first with services. Just before Christmas, the leader of Norfolk county council approached us all, I believe, to protest strongly about the impact of Government decisions on this year's rate support grant settlement for Norfolk. We were asked to make representations, which we all did. The hon. Gentleman talked about making adjustments to the area cost adjustment and changes in the formula. However, the change in the formula that the Government have introduced has greatly disbenefited Norfolk. I understand that it is the main reason why we received £4.5 million less in this year's settlement than Norfolk county council had accepted. The Government introduced a change that greatly disadvantaged Norfolk. I just hope that we will not have more such changes.

The implications for services are serious. I shall pick out three services, the first of which is social services. As my hon. Friend the Member for Mid-Norfolk said, there is a deficit of more than £2 million in this year's social services budget. The implications for pensioners and other poorer people in my constituency are very serious.

I want to draw particular attention to the effect on residential care and nursing homes. We all know that private sector residential and nursing homes are facing serious difficulties through a combination of insufficient fee increases on the one hand and heavily increased costs on the other. I join my hon. Friend in commenting on the impact of the Government's changes in regulations for higher standards in residential homes. We all want higher standards, but we need to be practical and realistic.

I have seen nursing homes in my constituency, both in the public sector--financed by the local authority--and in the private sector, which face substantial increases in their capital costs. That will lead either to fewer places or to the closure of those homes for comparatively minor adjustments over the next few years to comply with improved standards. I have talked to the residents of rooms in those homes, who cannot see how a big

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increase in costs will greatly benefit them. I have protested about that before. It is important that the Government take on board the need for a sensible transition, because Norfolk risks a massive loss of places in care homes in both the private and public sectors in the next few years. There is a particular issue with Dennyholme care home in Diss, but the situation will be much more serious for private sector care homes.

In the Eastern Daily Press a few days ago, in response to protests from independent care homes, Joan Fowler, the portfolio holder for social inclusion and care in Norfolk county council, said:

I have some specific questions about highways and fire services. I congratulate the Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Coventry, North-East (Mr. Ainsworth) on his appointment. He is certainly moving into a heavily embattled sector. I acknowledge that he did not take part in this year's RSG settlement, but I shall put my questions to him because he is now responsible for defending it.

Norfolk has a considerable backlog of maintenance requirements for its highways. Norfolk is one of the largest counties and has a huge network of roads, yet our settlement for highways this year is 1.8 per cent. That is not only below the rate of inflation, but well below our neighbours' average of 4.5 per cent. and below the shire counties' average of 3.3 per cent. I simply do not understand it. I am told that one reason is the weighting given to heavy goods and the high gearing effect that that exerts. I fail to understand, however, why Norfolk, with its huge requirement for maintenance on highways and its substantial highways network, should receive an increase of only 1.8 per cent. this year. Will the Minister explain why in his reply?

Dr. George Turner : I wonder whether the right hon. Gentleman is ignoring the £19.2 million--almost two and a half times the allocation for previous years--for capital investment in Norfolk's highways? Should not that be taken into account when assessing the moneys available for improving roads in Norfolk?

Mr. MacGregor : The highways maintenance figure, which is important, shows only a 1.8 per cent. increase. That is why I am worried that the working out of the formula is substantially disadvantaging Norfolk.

I also want briefly--so that my right hon. and hon. Friends can join the debate--to mention the 2.8 per cent. increase allotted to fire services for a county whose rural spread imposes heavy demands. The shire counties' average increase is 4.8 per cent. and that of our neighbouring counties is 3.9 per cent. Once again, in view of Norfolk's huge requirements, I do not understand why our county should fare so badly.

The facts on council tax are clear, but the hon. Member for North-West Norfolk did not explain them correctly. Before the general election--apart from

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1995-96, which saw an 8.5 per cent. increase--all the increases in Norfolk's council tax were below 4 per cent. Subsequently, the increases have all been way above the level of inflation. It is worth spelling out the details. In 1998-99, the increase in band B council tax was 15.6 per cent.; in 1999-2000, it was 9.76 per cent.; in 2000-01 it was 6.25 per cent. and in 2001-02, it is projected to be 6.25 per cent.

Those are substantial cumulative increases, which take a great deal from pensioners who are reliant on the state pension or have just a little above it. When people move out of council tax rebate, it takes a great deal out of any net increase in incomes gained during the year. Pensioners may well protest further as a result of these increases. They complained during the past three years and I expect them to do so again. The county council has not properly dealt with a major concern that affects pensioners.

The wider impact on rural communities is another issue. We all know that farmers are facing a disastrous crisis with foot and mouth disease. In East Anglia--and particularly in my and neighbouring Norfolk constituencies--swine fever is an additional problem. Furthermore, we all know that farming incomes have declined significantly in the past four years. Yesterday, the Minister, in response to requests for help for beleaguered farmers through monetary compensation or other ways, said in the Chamber that no previous Government had given assistance on foot and mouth disease other than to those whose herds had to be slaughtered. That is true, but previously, particularly in regard to the outbreaks that have occurred during my time in the House, the general position of farmers was very much better. Unlike in the past, farmers have no spare capacity whatever to cope with the current crisis. The relevance of that significant fact to agriculture and all allied trades in Norfolk is often misunderstood: in terms of the national figures for the numbers employed in agriculture, we are much more dependent than other parts of the country on the income flowing in to such activities. Further council tax increases on such a scale, on top of those of the past three years, will be a further huge burden for many families.

My protest is that the Government appear to have removed £4.5 million from Norfolk as a result of some of their formula changes, with particular impact on social services. Like other rural areas, but more than most, Norfolk has suffered at the hands of the Government in the past four years--which is why we are having the debate today, for which I thank my hon. Friend. I hope that the Government will take note of it.

10.21 am

Mrs. Gillian Shephard (South-West Norfolk): I am grateful to be called in the debate, which I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) for having initiated, because the issues raised obviously touch on the lives of people in Norfolk. He gave an admirably clear account of how the Government and a Lib-Lab controlled county council are, between them, failing the people of Norfolk.

I congratulate the Minister on his position and I believe that he will bring good experience and a steady hand to a difficult task. I would like him to answer a question that is being asked in my constituency: are the

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Government treating urban areas favourably in terms of the revenue support grant to their local authorities? There is a strong suspicion that what happened in the first couple of years of the Government's term of office has happened again this year--rural areas have lost out.

I shall concentrate on the effects of the cuts that my hon. Friend so eloquently described and, like my right hon. Friend the Member for South Norfolk (Mr. MacGregor), on the care of the elderly and the vulnerable. Ministers like to speak of the continuum of care provided by health and social services, particularly in regard to bed blocking and hospital care.

My right hon. and hon. Friends, and the hon. Member for North-West Norfolk (Dr. Turner), will know that the new Norfolk and Norwich hospital is being completed in Norwich and has been hailed by Ministers and others as the means to end bed blocking. It is also an excuse to close several smaller community hospitals such as the Wayland hospital in my constituency. The Eastern Daily Press reported on 16 February that the centre is giving no funds for the additional revenue costs of the new hospital. The chief executive of Norfolk health authority said:

Against that sad saga must be set the cuts in Norfolk's social services. One would have thought that, with the seamless and joined-up government that we are now said to enjoy, a situation of the sort that I have outlined would not--indeed, could not--be combined with the cuts in social services that elderly and vulnerable people in Norfolk are having to face this year. Yet, sadly, that is the position.

My right hon. Friend the Member for South Norfolk quoted the portfolio holder for social inclusion and care on Norfolk county council, who said that there is no cash to spare. She claimed that because 351 beds had been closed last year in Norfolk care homes, money would not be available to increase the number of beds in the residential sector to provide more support for people in their homes. At the same time, of course, she is increasing charges for meals on wheels, for home visits from occupational therapists and, even more disastrous, for day care.

At one and the same time, the elderly and vulnerable in Norfolk face the prospect of a new hospital that cannot be opened because the money is not available, a reduction in the number of beds in the residential sector, an increase in the charges that are designed to keep them in their own homes and an increase in council tax for the privilege. I would call that social inclusion. In effect, Norfolk social services department is passing on to the elderly the funding cuts that were imposed on Norfolk people by the Government. The hon. Member for North-West Norfolk asks us to approve the barrage of statistics that he produced; but I am concerned with the experience of people in my constituency, not with a recital of statistics.

Dr. George Turner : Will the right hon. Lady give way?

Mrs. Shephard : Not at the moment.

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Like many other areas in Britain, Norfolk has an increasing number of elderly and vulnerable people. About 25 per cent. of my constituents are over retirement age. As my right hon. Friend the Member for South Norfolk pointed out, the social services department is having to fund a possible overspend of £2.7 million by cutting the level of day care. What does that mean? Who deals with day care? A vast army of volunteers give their own time to transport elderly and vulnerable people to day-care centres. The impact on them of increases in fuel costs has already been described. The number of people aged 65 and over being admitted to residential and nursing homes will be cut by 150 and, as I said, those people will face increased charges. It is extraordinary.

The leader of the council said that the council would have to make "tough choices". That is fine for her; her choices are made on paper. The choices that face the families of elderly and vulnerable people are also tough. If their relatives cannot be admitted to care homes--and as we have heard, 150 fewer places will be funded this year--they face tough choices in trying to make up the shortfall, and the anxiety of wondering whether it would be possible to cover the increased charges. Their choices are as tough as those facing Liberal Democrat and Labour councillors in Norfolk. The leader of the council was quoted in the Eastern Daily Press on 15 February as having commented that

The problem that we are considering is not confined to Norfolk. The National Care Homes Association will be lobbying Parliament on Monday. It is concerned about the combined effect of a squeeze on public funds, the national minimum wage, the working time directive, pay increases for nurses and the proposed national standards for care homes. While each of those is justifiable, the outcome last year was the loss of 351 beds in the residential sector in Norfolk; less nursing care in the residential sector, because homes could not afford to employ nurses; less choice for elderly people and their relatives; more travelling for those people, with the closure of homes; and less employment in residential homes.

The National Care Homes Association has posed an interesting question. In Norfolk in 1999 the fee for care was £227 a week. In 2000, the Department of Social Security awarded each person in a residential care home sponsored by social services an increase of £5 a week, which was rightly trumpeted by Ministers as a way of helping the elderly and vulnerable. However, the association points out that the contract price in Norfolk for 2000 remained £227 a week. Where did the money go? Norfolk county council should answer that question.

The current state of affairs in Norfolk is a cause of fear among elderly and vulnerable people and their relatives. Elderly people wonder what will happen to them if they cannot enter a residential home, and how their relatives will cope with caring for them. They wonder how the money will be found to support them at home. Above all, elderly people want to avoid feeling

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that they are a burden, but the factors that we have heard about this morning will combine inevitably to engender that feeling in their hearts.

Mrs. Marie Farrelly, the co-proprietor of the Feltwell Lodge nursing and residential home, wrote to me on 15 February. She said:

10.34 am

Mr. David Prior (North Norfolk): I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on securing this important debate. There is a danger when one speaks last in a debate such as this that everything has been said but not everyone has said it. I should like to make some extra points.

We hear a lot from Norfolk county council about visions, strategies, long-term plans and best value, but we and others in Norfolk will judge the council on results, not on promises for the long term. People in Norfolk, are interested in how much council tax they are paying and what services they receive in return. During the past four years, council tax has risen by about 40 per cent., which compares with a rise of about 10 per cent. in the basic state pension and 13 per cent. in inflation. So there has been a massive increase in council tax. What have we got for it? The roads maintenance backlog now runs at £90 million. We have heard about pressures on the social services budget and about how vulnerable old people are in Norfolk. Many schools in North Norfolk and elsewhere still have mobile classrooms, and public transport has almost collapsed in many areas. Few people in Norfolk today could put their hand on their heart and say that services have improved during the past four years; on the contrary, for many of us, services have considerably worsened while council tax has increased.

I shall dwell on only two aspects of county council activity. The first is residential homes. A number of traditional residential homes in North Norfolk in places such as Sheringham and Cromer, which have for many years provided wonderful care for older people, now face huge cost increases deriving from future proposals and from employment costs--in particular, the need to pay full holiday entitlement to part-time carers in those homes. There will be a collapse in the number of beds provided in private sector residential homes in Norfolk, which is of real concern when the resources made available for looking after people at home are also under pressure. As my right hon. Friends the Members for South Norfolk (Mr. MacGregor) and for South-West Norfolk (Mrs. Shephard) have mentioned, many old people are extremely worried.

However, that matter has already been covered; I want to focus on young people. My hon. Friend the Member for Mid-Norfolk said, "Don't be old in

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Norfolk." He could also have said, "Don't be young in Norfolk". During the past four years, many youth and community centres have closed, and the few youth centres left--for example, one in Hickling in my constituency--are hanging on by a thread. What has replaced them? The answer is, very little. I can give examples of voluntary groups in North Norfolk that, despite everything, have hung on, but they do so by a thread. My right hon. Friend the Member for South-West Norfolk probably knows the Carpenters Arms in North Walsham, supported by the Methodists, which has to beg, borrow and steal a few hundred pounds every week to keep the project open. The Holt youth project is trying to raise money from the East of England Development Agency and the lottery--spending more time trying to raise money through hugely complicated and difficult routes than it is looking after and providing facilities for young people. Another example is the Fakenham sports centre. I can give the Minister hundreds of examples of people who are trying to provide activities for young people, but who are doing so in an extremely arid environment.

It is one thing to provide facilities for young people, but they must also be able to get to them, and there are problems with the availability of public transport in rural Norfolk. There has been a significant reduction in the number of bus services in North Norfolk and no replacement for them through a more highly developed community transport system. As my hon. Friend the Member for Mid-Norfolk said, for many people the car is a necessity, not a luxury, yet about 25 per cent. of families in Norfolk do not have a car. They face serious deprivation.

There is a general feeling that the Government have understood the deprivation faced by many people who live in big towns, but that they have not come to terms with how many people in rural areas have to live. That is sad. I am particularly sorry that the countryside march on 18 March will not now take place. That would have brought home to the Government how fed up and frustrated those who live in the countryside are.

My final point concerns policing. The lack of local policemen on the streets is probably the biggest single worry for many people living in the market towns and seaside resorts of Norfolk.

Dr. Ian Gibson (Norwich, North): During the past two days, the Eastern Daily Press stated that there will be 75 new police officers in Norfolk, many of whom will be located in rural areas. The hon. Gentleman seems to be denying that move in the right direction.

Mr. Prior : The Government are making up for lost time. The hon. Gentleman made a cheap point. He knows that there has been a significant reduction in the number of police officers on our streets over the past four years. Of course, I welcome any improvement, as I do the extra police officers who have now been promised, but the increase is small. The people of Norfolk want more police officers who live in the local community to be on our streets, not just catching criminals, but preventing crime from happening in the first place. The past four years of Liberal Democrat and Labour-controlled councils have shown how easy it is to spend money and to receive little in return.

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10.41 am

Mr. Nigel Waterson (Eastbourne): I am pleased to have the opportunity to contribute to the debate. I join other hon. Members in congratulating my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on securing it. He has made good use of such a timely opportunity. Others who represent Norfolk constituencies have made excellent contributions to our discussion. It is significant that the Liberal Democrat party has made no contribution to the debate, despite its complicity in some matters that have concerned Norfolk.

My hon. Friend described a serious state of affairs. As he reminded us, Norfolk is the second largest county in the United Kingdom. It has an extensive coastline. It has all the problems that are associated with large distances, sparsity, rural transport and so on. He was right to pinpoint the crucial change in SSA methodology when the Government came into office. That has resulted in £700 million being diverted away from shire counties such as Norfolk. The net result is an increase in council tax of more than 6 per cent., three times the rate of inflation. It was 9.8 per cent. last year and it is not as though that is balanced by any increase in local services. The opposite is the case.

We heard a depressing litany of cuts in services throughout the country. My hon. Friend described in detail some of the other stealth taxes that have affected the council. In many ways, council tax has now become a stealth tax, affecting as it does particularly the elderly and the most vulnerable in Norfolk. My hon. Friend referred to the backlog in road maintenance, which amounts to about £90 million for the whole of the county. He spoke about problems in schools and libraries, the closure of youth centres, real reductions in care and social services, the crisis facing care homes--a problem that is replicated throughout the country, such as in my own constituency--and higher charges for services.

My right hon. Friend the Member for South Norfolk (Mr. MacGregor) referred to the big jump in council tax, cuts in services, the running down of reserves and how he, along with my right hon. and hon. Friends, had been asked by the leader of the Lib-Lab pact in Norfolk to make representations to Government about the poor deal that Norfolk has received, the £2 million deficit in social services and the significant increase in council tax rises since the Government came to power. He spoke knowledgeably about the combined effect of those and other factors on farming in a community that depends heavily on that industry.

My right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) said that rural areas had been losing out, as proved by the figures. She referred to problems with the local NHS, cuts in social services for the elderly and most vulnerable, and increased charges. She said that politicians have tough choices to make, but that individuals and families face even tougher choices, as a result of which people suffer real fear. That situation can be summed up as joined-up incompetence as opposed to joined-up government.

My hon. Friend the Member for North Norfolk (Mr. Prior) also referred to worsening services, focusing in particular on the problems with care homes--not

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only cuts in funding and references to homes but problems caused by "Fit for the future", and other regulations, which are apparent to the banks as the financial supporters of the homes. He mentioned the effect on the young of closing youth centres. The situation affects people across the spectrum--the young, the old and everyone in between.

The hon. Member for North-West Norfolk (Dr. Turner), who spoke from the Government Back Benches, proved graphically that any analogy could be taken too far, in talking about the capping regime under previous Governments having removed local democracy. I will turn to this Government's attitude to local democracy in a moment. With respect, I thought that many of his remarks were intemperate. His final, feeble conclusion was that not all is perfect in Norfolk.

We are discussing a wider set of issues that affect other places apart from Norfolk. The inexorable rise in the proportion of specific grants means that the money made available to Norfolk is often spent on the basis of Ministers' priorities rather than those of local communities. The Government panicked over the impact of its settlement on many local authorities this year. The Times talked about "crisis talks" between the Deputy Prime Minister and the Chancellor, which resulted in an emergency package of £100 million being diverted from the neighbourhood renewal fund, as well as extra bits of money for social services and education. Some of those bits of money are actually recycled or reannounced cash--in the customary style of this Government.

Across the country, a significant difference exists between living in a Conservative-controlled authority area and those dominated by other parties. Conservative councils still have the lowest council taxes; in the coming year, a typical band D household will pay £724 under an average Conservative council, compared with £124 more under a Labour-controlled council, a figure not dissimilar for Liberal Democrat-controlled councils. Norfolk, of course, suffers from the double whammy of a Lib-Lab pact.

Shire councils such as Norfolk have lost out by up to £700 million under the Government, who make a virtue of their so-called freeze on SSA methodology on the grounds that it delivers stability. However, if one is treated unfairly at the beginning of the process, one is treated just as unfairly at the end and during the course of it. The policy cements the unfairnesses that the Government imposed in the SSA settlement when they came to power. We have heard of floors and ceilings, but the Government have tried to tinker on the margins.

When we strip away the rhetoric, there is an element of cross-party consensus, although it seems to have been lost on the hon. Member for North-West Norfolk. My right hon. and hon. Friends and the Lib-Lab pact that control Norfolk all take the view that the county has been treated unfairly. That is true across Norfolk. Clearly, the current administration in Norfolk feels that it has been treated badly. The Government have treated Norfolk shamefully, and there is now a £4.5 million black hole in Norfolk's finances thanks to their approach. My hon. Friend the Member for Mid-Norfolk asked for a fair deal for Norfolk. Everyone in Norfolk seems to agree that the one thing that Norfolk does not have is a fair deal. I am happy to endorse the call for a fair deal for Norfolk.

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10.50 am

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth) : I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing this debate. I thank him and other hon. Members for welcoming me to my new position, even if, as he suggested, it is like moving from the staff college to the Stalingrad front. His analogy fails to recognise that while von Paulus was up against the Red Army, backed up by material from the British empire and United States of America, we are up against the modern Conservative party, if that is not a contradiction in terms. It may be a little different. One never knows.

The national spending review in 2000 provided good news for local authorities, with continued increases in grant. The first year of the review set the baseline for the coming financial year, within which we have been able to increase Government grant by £3 billion. In the four settlements since we took office, we have been able to increase the amount of Government grant given to local authorities by £8 billion in total. That is a real terms increase of 14 per cent. compared with a 7 per cent. cut in the four years preceding the 1997-98 settlement. Our priorities, of course, are education and personal social services. As a result, provision for education spending will increase to £1.9 billion next year, which is an 8.1 per cent. increase, and social services will receive an extra £576 million, which is a 6.2 per cent. increase.

There can be no doubt that levels of investment have greatly improved since 1997-98. There is general agreement that the settlement provides welcome grant increases for local authorities. The hon. Member for Mid-Norfolk complained about spin, but was very selective in the figures that he gave for Norfolk. He chose to use those for the revenue support grant settlement rather than those for the total grant settlement. He knows well that that is not the whole picture.

The hon. Gentleman should be pleased to note that in 2001-02, under the settlement, Norfolk county council will receive a 4.2 per cent. increase in general grant, which amounts to £16 million. That is a good increase, which is well above the current rate of inflation.

The hon. Gentleman will also be pleased to note that, on top of that, Norfolk will receive a 26.8 per cent. increase in ring-fenced grants, which is an additional £7.786 million. When those amounts are added together, Norfolk will receive a total increase in Government grant for 2001-02 of £23.867 million or 5.8 per cent.

Mrs. Shephard : I am of course impressed by the Minister's figures. Will he explain how such marvellous news has apparently escaped the Labour leader of Norfolk county council? Why has council tax increased by three times inflation?

Mr. Ainsworth : I shall try to deal with that point. I shall also, in the time available, try to cover all the issues raised by hon. Members. Before I do so, I shall finish setting out the facts. In terms of the total SSA, Norfolk has received an increase of 4.9 per cent., which is in line with the national average increase. Norfolk's

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education SSA has increased by 5.1 per cent. and its personal services SSA has increased by 5 per cent. The right hon. Lady may wish to note that all those increases are well above the rate of inflation. In the past two years, Norfolk has also received good settlements for its SSA increase: 6.2 per cent. in 1999-2000 and 5.3 per cent. in 2000-01. In the four years since we took office, Norfolk received an average SSA increase of 4.5 per cent. each year, compared with an average annual increase of 2.1 per cent. in the four years prior to that. No one would suggest that inflation has got worse in the latter four years; in fact, it has got considerably better.

My hon. Friend the Member for North-West Norfolk (Dr. Turner) did a good job of explaining the inheritance that Norfolk county council has had to deal with and the priorities that it is trying to implement. As with local government the length and breadth of the country, it is trying its best to juggle its priorities, meet modern needs, move services in the direction of need and catch up with backlogs such as that which my hon. Friend mentioned in education services. My hon. Friend made apparent that backlog and the real problems that the council faces.

The situation in Norfolk will not be all roses--no one suggests that--but it is not as the hon. Member for Mid-Norfolk suggested with his partial citing of the figures. There have been bigger increases in central Government support for Norfolk under this Government than there were under the ancien regime that the hon. Gentleman supported, and he should recognise that fact.

Mr. Keith Simpson : The hon. citizen--I am sorry, the hon. Gentleman; I got that in--has not yet replied to the point made by my right hon. Friend the Member for South-West Norfolk. Given what he has just said, how does he explain the rise of 6.25 per cent. in council tax and the vehement protests of the leader of the Labour-Liberal Democrat coalition that the grant is not enough?

Mr. Ainsworth : I hope that the hon. Gentleman recognises that I am trying, in a relatively short time, to answer the points raised in the debate. I have been asked many questions.

The right hon. Member for South Norfolk (Mr. MacGregor) asked me about the highways and fire calculations--two elements of grant in which Norfolk appears to be well below both its neighbouring authorities and the national average. All I can tell the right hon. Gentleman is that there has been no change in the method of calculating SSAs. We have tried to use the most up-to-date data, so Norfolk's lower than average SSA increases must mean that Norfolk's figures have fallen compared with the national average. The figures have surprised the right hon. Gentleman; if they have surprised the council and it wants to raise the issue because it believes that there is an anomaly, the Department is prepared to consider the matter, but there has been no change in the formula used.

The right hon. Member for South-West Norfolk (Mrs. Shephard) asked whether there had been a bias in favour of urban areas under this Government. That is not the case; there have been no changes in methodology, as she knows. Indeed, since the 1998-99 settlement, the increases for shire areas have been 4.4 per cent. compared to 4.2 per cent. for London and other

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metropolitan areas, so there has been no bias whatever against the shire areas. Hon. Members know that there have been changes in the area cost adjustment. We have done no more than previous Governments. We have updated the data regarding area cost adjustment. I have not yet heard that it is the position of the Conservative party that we should not have done so. It would be strange if that were its position, because that is not what the Conservatives did when they were in office. Equally, they know that we are due to publish a Green Paper to examine local government finance and these issues will, hopefully, be dealt with at that time.

Mr. Barry Jones (in the Chair) : Order. We must now move on to our second debate.

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