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1.29 pm

Mr. John Randall (Uxbridge): I start by registering an interest as a council tax payer in the London borough of Hillingdon. I am also a director of my family business, which pays substantial business rates in the borough.

Hillingdon is, by and large, a pleasant place to live, and I value the quality of life there. It is a diverse borough, ranging from Ruislip and Northwood in the north to West Drayton, Yiewsley and Hayes and Harlington. It encompasses many different communities, and I sometimes think that the powers in government do not understand the nature of the borough.

I apologise to the Minister. Her officials asked my office for details of what I planned to discuss today, and I did not get back to them, not because I was being awkward, although that might be a good reason sometimes, but because pressure of work in the usual channels kept me too busy.

The Minister will be pleased to know that some of the matters that I raise will not be within the competence of her office, so she will be able to bat them away relatively easily. I hope, however, that she will pass my comments to the appropriate Departments.

Despite the smell of an election in the air, there is an all-party approach in Hillingdon to the matters that I want to raise. All three Members of Parliament for the borough--my hon. Friend the hon. Member for Ruislip-Northwood (Mr. Wilkinson) the hon. Member for Hayes and Harlington (Mr. McDonnell) and I--are at one on these matters. The apparent inability of Governments to fund local authorities correctly is not necessarily a new phenomenon. Similar issues arose under Conservative Governments, certainly in respect of the standard spending assessment. However, other factors affect us and I shall touch on four subjects: the problem of insufficient Government funding for unaccompanied asylum-seeking children in Hillingdon; education in the borough; major repairs allowance; and the contentious matter of the ceiling on our SSA.

On the matter of unaccompanied asylum-seeking children, hon. Members will be aware that Heathrow is in the borough of Hillingdon, which gives it more problems in that respect than many other areas. A recent assessment by the director of social services showed that Hillingdon council was providing a social service for the 11th largest population of looked-after children, yet received the 10th lowest SSA and the 11th lowest quality protection grant to enable it to meet its statutory duties in that work. The mechanism used to calculate SSA takes no account of unaccompanied asylum-seeking children, and the quality protection grant is based on the same SSA formula. That compromises the local authority's ability to deliver an effective service and places an unnecessarily great financial burden on the council.

Hillingdon has a relatively high number of looked after children: it is in the top 50 per cent. of boroughs if unaccompanied asylum-seeking children are included. If those children are not included, however, it falls within the lowest 50 per cent. of boroughs. Hillingdon has the worst ratio of SSA per looked after child if

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unaccompanied asylum-seeking children are included, and the second worst ratio if they are not. If the grant for unaccompanied asylum-seeking children is included, Hillingdon still has the worst ratio in London.

I will give the Minister some figures for comparison. Hounslow, for example, which is a neighbouring borough, has 257 looked-after children, including five unaccompanied asylum-seeking children. It receives an SSA of £12.3 million and a quality protection grant of £2 million. Hillingdon, on the other hand, has 384 looked-after children, including 145 unaccompanied asylum-seeking children--that is 140 more than in Hounslow--and receives an SSA of £9.5 million and a quality protection grant of £1.6 million. The quality protection grant is applied to all looked-after children equally by law, but Hillingdon receives a lower grant in spite of having more looked-after children.

We have not been inactive within the borough or in Parliament. We have been in touch with the Department of Health, which has not been completely unhelpful. It has tried to solve some of the problems, recognising that some extra costs around care leaving were not met by last year's grant. Unfortunately, that is about as far as the Department's help goes. Although a seminar on the subject was announced, I was disappointed that no one from the Department was able to meet a delegation from the London borough of Hillingdon. The letter stated:

With regard to Hillingdon's education budget, we have been disadvantaged by the £2 million shortfall that resulted from the ceiling. A letter from the chair of education to the Secretary of State for Education and Employment emphasises the borough's disappointment that, despite pursuing the Government's objectives in putting education at the forefront, out of a budget of £52 million, our LEA would receive only £100,000, which is the lowest level of grant awarded. That happened despite the issues raised by the chair of education and the Labour lead member for education.

The letter goes on to say that the funding gap between Hillingdon's SSA increase and the actual rise in pupil numbers means that the borough might be unable to accept all of its SSA and that, even if it could, it would

The borough is still regarded as not having the same problems as neighbouring boroughs although, in actual fact, our vacancy rates are higher and our potential

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recruits--not to mention existing teachers--are being pulled away. We are not being treated fairly in comparison with neighbouring boroughs. In the words of the director of education,

I have written to the Minister about the major repairs allowance in the hope that we would receive increased resources, but I have not yet received a response to my letter. As for the introduction of a ceiling on the London borough of Hillingdon's SSA, it lost £2 million of its cash settlement. That came like a bolt from the blue, and has caused great problems for people not only in my constituency, but within the borough. We are about £3 million short of Government funding. That estimate is not based on a wish list. That money is due to us. Furthermore, each person in Hillingdon will have to pay 23 per cent. more than last year, and that is just to fund the Greater London Authority. I cannot blame the Minister for the Mayor's decision, although it was her Department that set it up in the first place.

My constituents find it ironic that we are paying more, yet seeing fewer police and fire engines. An interesting comment was made at a recent council meeting. A senior Labour councillor, an ex-leader of the authority, said:

The Government have managed by stealth to increase taxes on my fellow residents and have tried to put the blame on local councillors. That forces local councillors of all parties to take unpopular measures. In Hillingdon, we are not quite as gullible as that. We realise that a lack of central Government funding is causing us many problems.

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1.44 pm

The Minister for Local Government and the Regions (Ms Hilary Armstrong) : The speech of the hon. Member for Uxbridge (Mr. Randall) was interesting. I wonder what he might have said had he been a Member during the previous Administration, when Hillingdon received substantially less Government support than it receives now.

None of us pretends that the distribution of local government finance is an exact science. We recognise the issues in Hillingdon, which is why it received maximum funding this year. I suspect that were the hon. Gentleman to visit my authority, or indeed yours, Mr. Stevenson, he would find a different position, with equally strong arguments about need.

The manner of distribution is not perfect, as we have admitted, and that is why we are reviewing local government finance. We have published a local government finance Green Paper and later this year we will publish a White Paper which will begin to reconsider the distribution of money.

Mr. Randall : I recognise that everyone fights their own corner, and I hope that I would fight mine regardless of which Government were in power, because that is what I was sent here to do. The right hon. Lady says that we were fully funded, but I understand that the £2 million that was taken away as part of the ceiling means that we were not.

Ms Armstrong : What I said was that Hillingdon received the maximum funding available this year, which is true. I shall explain the rationale behind the ceiling. The ceiling is rejected only if the local government distribution system is considered perfect. As we do not believe that it is, we made adjustments around it. I am aware, however, that the authority has experienced some highs and some lows in the past year, and I am sure that those involved will have been delighted to learn yesterday that the Government have withdrawn the special measures that were introduced following a poor social services inspectorate report. I congratulate the authority on its efforts to improve the service. I assure the hon. Gentleman that we want to ensure that councils have the funding necessary to enable them to improve their services in that way.

Since taking office we have provided authorities with significant increases in grant, which has meant an increase during the past four years of 14 per cent. in real terms. That compares starkly with the 7 per cent. real terms cut in the previous four years to 1997-98.

We have given priority to education and social services. Next year, provision for education spending will increase by £1.9 billion. Social services spending will increase by 8.1 per cent, which will mean an extra £576 million. We will therefore have provided an extra £6.4 billion for education and £2 billion for social services since we took office.

Hillingdon has benefited more than most from that extra money. As the hon. Gentleman said, Government grant is distributed to local authorities through the system of standard spending assessments. In the four years since we took office, Hillingdon's SSA has increased each year by 4.8 per cent. on average. Most other authorities have received much lower increases.

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Compared with the previous four years, the council's average yearly increase under the Government makes it 1.6 per cent. a year better off. That is not because the council fared worse than other authorities in that time; indeed, it did relatively well. Its average yearly increase was 3.2 per cent., when for comparable outer-London boroughs it was only 1.3 per cent.

I must put the hon. Gentleman's comments in context. This year, the council received a grant increase of more than £10.1 million, an increase of 6.5 per cent., and the council is one of the main gainers from next year's settlement. The authority has received an increase in provision for spending on education and social services of £9 million and £2.5 million respectively. Although priority has been given to such provisions, funding for spending on other services has increased by more than £2 million.

In addition to that money, the Government are significantly increasing the money that they are providing to local government by way of grants for special purposes. The main ring-fenced education and social services grants that Hillingdon will receive next year have increased by about £2 million. That is an increase of almost 20 per cent. and that figure does not include grants for asylum seekers, which are yet to be announced.

The hon. Gentleman mentioned unaccompanied asylum-seeking children. The authority was eligible for higher weekly grant rates during 2000-01, although I understand that it was late in submitting the application for the money. The Minister of State, Department of Health, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), none the less expedited the application and the authority was able to claim over £7.2 million. It does not have a shortfall between eligible costs and the grant claimed and, according to the grant claim, Hillingdon supported an average of 387 children during the year, of whom about three quarters were 16 and 17-year-olds.

With regard to the asylum-seeking adults and families grant, Hillingdon has been paid almost £4.9 million for the first six months of the year, and a payment on account of the same sum for the second six months of the year. I appreciate the work that is being done, especially in London boroughs with asylum seekers and unaccompanied children, and I recognise the pressures on Hillingdon. However, we have consistently increased the money that is available. The average grant for the first six months allowed Hillingdon to claim £140 per week for each single adult and £300 for each family. However, it will now be able to claim £350 for each family per week. The Government are doing what they can to assist, in difficult circumstances. During our Administration, the amount given for such purposes has significantly increased.

The hon. Gentleman referred to education, and I understand that every authority wishes to do what it can to raise standards. I am confident that, with good management, Hillingdon will continue to do that. He specifically referred to teacher recruitment and retention, and I understand his concerns. We are aware of the problem, and my right hon. Friend the Secretary of State for Education and Employment is examining issues specific to Hillingdon. However, we have already taken action to tackle the problems of teacher recruitment and retention in London. Next year's

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proposals for the teachers' pay award include a pay increase of twice the rate of inflation for newly qualified teachers, and an increase of 30 per cent. for each of the London weighting allowances.

Mr. Randall : Will the Minister give way?

Ms Armstrong : I am more than happy to give way, but I am not confident that I shall be able to finish my speech.

Mr. Randall : The point about the teachers' pay settlement is that there are insufficient funds for it. It is easy for the Government to say what they will pay the teachers, but they have not provided the funds for the education authority to do so. Therefore, the settlement takes money from its budget.

Ms Armstrong : That is a matter for debate. No Government have ever fully funded a pay settlement on their own. We did give a generous education settlement, and Hillingdon benefited from that. My right hon. Friend the Secretary of State allocated more money to the settlement to address authorities' concerns about teachers' pay, and Hillingdon received an additional £100,000, after its funding was assessed in relation to its needs. We have introduced a new recruitment and retention allowance of £5,000, and we have proposed to remove all restrictions on the right to offer it. We also plan to allow employers to offer incentives in kind, such as subsidised housing.

The hon. Gentleman mentioned the major repairs allowance. He wrote to my Department about the matter, and I understand that he received a reply from my hon. Friend the Member for Sunderland, South (Mr. Mullin), who was then an Under-Secretary at my Department but is now at the Department for International Development. I am not aware of the hon. Gentleman's subsequent letter. I apologise for that, and I will ensure that my colleagues respond to it rapidly.

It is understandable that hon. Members of all political persuasions want more money to be allocated to their local authorities, but they should recognise that we are investing much more each year in housing. In 1997, local authorities received £926 million in housing capital resource allocation, whereas the budget for 2003-04 will be £2.634 billion, and some of that money is MRA, which must be used to repair social housing.

The hon. Gentleman cannot have it both ways by asserting that taxes should not be raised but that there should be additional public investment. We are determined to maintain the right balance between those priorities. In the past, there was significant underinvestment in housing, which is now presenting us with enormous problems. That is why we are seeking annually to increase investment.

The hon. Gentleman spoke about floors and ceilings, and he mentioned that we imposed a ceiling on Hillingdon. In the current year, there were significant changes in data. They are difficult to pin down, but one of their consequences is that some areas of great need whose population has fallen are experiencing difficulties in meeting their commitments. Those areas will lose significant sums if there are a couple fewer pupils in some classes, but no schools will be closed. That is why

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we believed that it was necessary to have a floor, but we also considered that it was justifiable to introduce a ceiling. Hillingdon was identified as one of the councils that would not receive a grant increase of more than 6.5 per cent. because of the ceiling, so Ministers agreed to meet its representatives.

We heard a range of views during our consultations. There was broad agreement about the concept of a floor, but not about that of a ceiling, particularly from those authorities that missed out because of it. However, we believe that a 6.5 per cent. increase in general grant should be sufficient for the authorities that were affected

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by the ceiling, even after allowing for the fact that they must cater for growing populations. In each case, the increases will be topped by substantial increases in ring-fenced grant, and I have stated that Hillingdon will therefore receive an increase of 20 per cent.

There are always difficult decisions to take, but I believe that any organisation that is guaranteed a 6.5 per cent increase ought to be able to manage its budget in the following year. I believe that Hillingdon will be able to do that, and I hope that it will employ the money that it receives in the most effective ways. If--

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