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House of Commons

Tuesday 23 October 2001

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Regional Government

1. Rosemary McKenna (Cumbernauld and Kilsyth): What recent representations he has received on regional government. [5567]

The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers): My ministerial colleagues and I have received a number of representations on this issue.

Rosemary McKenna: The Secretary of State will be aware of the success of the Scottish Parliament and the Welsh Assembly in delivering local solutions to local problems. The case in point in Scotland—how foot and mouth was handled—is clear. Does my right hon. Friend agree that the next logical step is elected regional government in England?

Mr. Byers: My hon. Friend makes an important point about the success of devolution through the Scottish Parliament and the Welsh Assembly. A number of powers have been devolved to regional level because we have had an active regional policy in England since 1997. The difficulty and the real problem that we must now face is that decisions are being taken regionally with no democratic accountability. There is a democratic deficit in the regions of England. [Hon. Members: "Rubbish."] That does not meet with the approval of Conservative Members. We know their views on the regions. They neglected them for 18 years and did nothing about them. The Labour party in government has begun the process of devolving power to the regions, and in the new year we will produce a White Paper that will show how we can deliver on that commitment.

Mr. Graham Brady (Altrincham and Sale, West): Does the Secretary of State not understand that it is the function of Members of Parliament from the regions to ensure democratic accountability for decisions that are taken in the regions? Will he accept that, given the

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derisory turnout in referendums in London and Wales, it would be an appalling and absurd waste of money to embark on referendums in the English regions?

Mr. Byers: The hon. Gentleman may want to deny people their voice, but if the people of the English regions want an elected assembly we should provide them with the opportunity to vote on that. If they choose not to have a regional assembly, that will be their decision. The important point is that decisions are currently being taken regionally in England by unelected bodies. Conservative Members are not involved in those decisions. We need to ensure that there is an element of democratic accountability. We believe that the English regions could be a powerhouse for the future. We want to ensure that they have the democratic accountability to deliver those policies.

Mr. David Clelland (Tyne Bridge): Will my right hon. Friend confirm that the Government have not ruled out the possibility of one or more of the English regions having an elected assembly by the end of this Parliament?

Mr. Byers: I can confirm that progress is being made on the White Paper that the Deputy Prime Minister and I will publish in the new year. Regional elected assemblies could be voted on by the time of the next general election, depending on when it is called. We are making progress. I share my hon. Friend's desire for effective regionally elected bodies, and we are putting in place the measures that will see that in action.

Mr. A. J. Beith (Berwick-upon-Tweed): In that case, how seriously should we take the Deputy Prime Minister's suggestion that that policy may not be delivered in the second term of a Labour Government, and may, heaven forbid, require a third term? What possible reason could there be for not giving the people of regions such as the north-east the opportunity to decide whether to have a regional assembly within the lifetime of this Parliament?

Mr. Byers: A third-term Labour Government will need to address many pressing issues, and we look forward to that. As the Deputy Prime Minister said clearly in his speech on Saturday, one of them will be the delivery of a constitutional settlement. That does not prevent progress from being made during this second term in English regions such as the north-east, which perhaps have a greater desire for a regional assembly than other parts of England. They can make progress more quickly, and I certainly want that to happen.

Mr. George Howarth (Knowsley, North and Sefton, East): May I urge my right hon. Friend to proceed with his policy on this matter with some caution? I do not detect a strong desire from the electorate in the north-west of England for yet another elected tier, which, in my view, does not have a clearly defined role in our political system.

Mr. Byers: My hon. Friend touches on two or three issues that will have an important bearing on how we carry forward the debate about elected regional bodies. The White Paper must say what the powers, the responsibilities and the functions of a regional assembly

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will be, and how we can ensure that it has popular support in individual regions in England. If we do not address those issues, people will not vote for the establishment of regional assemblies. That is why there needs to be clarity and precision. People need to know exactly what they are voting for when we put the issue before them.

Mr. Malcolm Moss (North-East Cambridgeshire): When the right hon. Member for Blackburn (Mr. Straw) was shadow Secretary of State for the Environment, he promised in 1997 that regional assemblies would go ahead only if independent auditors certified that no overall increase in public spending would ensue. Do the Government stand by that pre-election manifesto pledge, or are they determined to bury our shire counties through vindictive political dogma?

Mr. Byers: I stand by the 2001 Labour party manifesto. [Interruption.] Unlike the Conservatives, who set policies based on dogma in stone and never change them, we are prepared to listen to people's views. We want to act on the demand in some regions for elected assemblies. However, we have said that they will be introduced in areas of predominantly unitary authorities. We will thus overcome the problem that an additional tier of government would cause, and thereby ensure that public expenditure implications are limited.

Standard Spending Assessments

2. Mr. Michael Foster (Worcester): What plans he has to reform the standard spending assessment. [5568]

The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers): We shall reform the current system to create a fair and transparent mechanism that enables councils to meet the needs of their communities. As we announced in the House on 20 July, those changes will be introduced in April 2003.

Mr. Foster: I look forward to a new funding mechanism, especially for education, that no longer disadvantages the children of Worcestershire. However, one more year of the old formula remains. Will my right hon. Friend consider some form of interim measure to help Worcestershire schools to close the funding gap?

Mr. Byers: My hon. Friend is right to point out the unfairness in the current system; that is why it needs to change. We must acknowledge that unfairness exists. I have examined the figures for Worcestershire, other counties and metropolitan districts, and it is clear that a family of local authorities has been disadvantaged through the operation of the current formula. Effective change must therefore occur.

I am not sure that I can give my hon. Friend much comfort about the year ahead, but I am prepared to meet him and other colleagues to ascertain whether any interim measures can be put in place. Nowadays, a lot of money,

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especially for schools, goes directly to individual schools. Perhaps we could overcome some of the difficulties by using such mechanisms.

Sir Michael Spicer (West Worcestershire): As the Secretary of State implies, the real issue is the detail. When will he publish the details of the proposed new formula?

Mr. Byers: As the hon. Gentleman knows, many discussions are taking place with local government about the details and criteria for establishing a new formula. I hope that we shall be able to say something about it, but that will not happen until the new year. We aim to consult widely and introduce changes that will take effect by April 2003.

The current system of standard spending assessments has been in place for a decade or more. We must take our time to make sure that we get the changes right. I want the settlement for April 2003 to be open and transparent and to be seen to be fair. If it takes a few more months to achieve that, I hope that the hon. Gentleman will agree that that is time well spent because the system will be far fairer than at present.

Mr. Peter Pike (Burnley): Does my right hon. Friend accept that many people in local government believe that we have tended to overlook the fact that when the Tories introduced the poll tax and then the council tax, they simultaneously switched the percentage of funding from local government and national Government so that local government paid the larger portion? Does he therefore accept that if we change SSAs—previously grant-related expenditure assessments—the system will not be fairer or more acceptable unless we acknowledge that, in many parts of the country, we need to fund a larger share of local government expenditure at national level?

Mr. Byers: My hon. Friend is right that, as matters stand, approximately 25 per cent. on average of a local council's revenue is raised through council tax, and some 75 per cent. comes from central Government. That balance shifted dramatically because of the decision that was made when the poll tax was abolished. We intend to deal with the question of the balance of funding in a local Government White Paper, which will be published before the end of the year. It will thus be addressed before the changes are brought in through the standard spending assessment system.

My hon. Friend was right to point out that this is one part of an overall picture. We shall be looking at the matter as a whole to ensure that when we talk about fair funding for local councils we take account of balance as well as the formula.

Mr. Don Foster (Bath): The Secretary of State has stressed the importance of removing perverse incentives in the way in which central Government fund local services. What plans has he to reform the fire service component of the SSA, so that the welcome reductions in hoax calls announced on Friday lead to a reduction in the budgets for our fire services? Does he not consider it nonsensical that the fire authorities that have worked

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hardest to reduce the number of hoax calls will be rewarded not with a boost in their budgets, but with a budget cut?

Mr. Byers: The hon. Gentleman has drawn attention to one of the many issues that we are addressing, and has done so with his usual accuracy. This is clearly a criterion that militates against what we want: we are penalising success, and that should have no part to play in the standard spending assessment regime. When the details of our proposals are out for consultation, the hon. Gentleman will see that this is one of the things that we intend to change.

Ms Joan Walley (Stoke-on-Trent, North): I hear what my right hon. Friend has said, but we were promised a reform in 1998. It is true that my right hon. Friend must get it right, but many parts of the country—particularly unitary authorities such as Stoke-on-Trent—suffer from major deprivation, and we are concerned about the funding gap that we shall experience between now and 2003. Will my right hon. Friend look again at the contingency fund that he talks about, and will he appreciate that, if the answer is to be matching funds, we do not have matching funds in Stoke-on-Trent, and we would want to be included in any meeting between him and unitary authorities?

Mr. Byers: I am acutely aware of the specific problems affecting Stoke-on-Trent, because my hon. Friend has drawn them to my attention more than once. She is, however, right to refer to the particular difficulties experienced by a number of the new unitary authorities in particular. We shall need to address that as part of the fundamental review.

I understand the concern that people feel. A review was promised in 1998, and progress has still not been made. I can tell my hon. Friend, however, that the review will go ahead, and will be in force in time for the April 2003 settlement. I believe that that will enable us to establish a fair system. In the interim, there are now ways in which money can get into local authorities over and above the SSA formula. Perhaps we should be looking at those if we wish to alleviate the problems faced by individual authorities.

Mr. Geoffrey Clifton-Brown (Cotswold): The Secretary of State has admitted from the Dispatch Box today that the current system of distribution of the revenue support grant is unfair. Is he aware that, during the past four years of Labour government, whereas the current system has taken £450 million away from London, it has taken £700 million away from the shire counties? That has caused council taxes to rise by four times the rate of inflation—or 40 per cent., in the case of my authority. How does that square with the right hon. Gentleman's 1997 manifesto pledge:

When will he take realistic steps to end the unfairness?

Mr. Byers: First, I extend a warm welcome to the hon. Gentleman as he takes up his new responsibilities. I hope that it will not be too out of order for me to express the

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view that many Members on both sides of the House regret that he could not stick to his original portfolio. [Laughter.] Actually, I was making a serious point.

When the hon. Gentleman has a chance to look at the figures, he will see that we have, in fact, put in more money by way of the local government settlement. As for council tax increases, they are a matter for local determination. The important point is that, through the ballot box, local people can make their decisions about who they want to hold office locally. That is the best way: that is local democracy. Central Government are providing the resources, but the rest is for local determination.

Mrs. Anne Campbell (Cambridge): I welcome the extra money that has been given to education under this Government compared with under the Conservative Government, but can my right hon. Friend ensure that when a new funding system is introduced, the damping mechanism will not continue to disadvantage authorities such as Cambridgeshire, which suffer under the current system?

Mr. Byers: My hon. Friend makes an important point. For reasons often of good motive, procedures are introduced that, over time, have adverse consequences for individual authorities. I am conscious of authorities such as Cambridgeshire, which have been affected because of the damping arrangements that have been put in place. Certainly, when we consider the new arrangements, which will begin in April 2003, that is one issue that we shall want to examine properly.

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