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Mr. Adrian Sanders (Torbay): Will not a 7.4 per cent. increase overall mean above 7.4 per cent. for some authorities, but significantly below for others? Will not local authorities such as mine, whose acute social needs are not recognised by the standard spending assessment, again find it difficult to make ends meet? They may again be forced to raise council tax above the rate of inflation, because the unfair SSA system disadvantages communities such as mine and, in particular, unitary authorities.

If the Secretary of State reads the social service performance league table, he will find at the bottom a disproportionate number of unitary authorities and seaside resort unitary authorities. There is something wrong with the grant, not the performance of those local authorities.

Mr. Byers: The hon. Gentleman makes a good case for changing the formula; it is one reason why we shall do so. Indeed, he gives the example of pressures on seaside towns. Such areas perhaps have more pensioners in their population, which puts increased demands on local authority services. That is one reason why I hope that we can devise a formula based on the needs of a particular local authority. The current system has little, if anything, to do with the needs of a local authority area, so if we can move to such a changed system, we shall achieve real benefits. I understand the pressures to which he refers and I believe that we can accommodate them, certainly by April 2003.

Helen Jackson (Sheffield, Hillsborough): Does my right hon. Friend accept that there is considerable relief in Sheffield that the debilitating cycle of cuts, cuts, cuts in local government public services is coming to an end and being reversed? Will he take steps to ensure that those increases go into public services, and not for the wrong priorities of some councils—for example, the recent 30 per cent. pay increase for the chief executive and senior executives in Sheffield, offered by the Liberal Democrat council?

Mr. Byers: Sheffield is to receive a £16 million increase as a result of the settlement I have announced today. The priorities are for each local authority to determine, but the important point, as I said in my statement, is that local government is an important tier of democratic government. It is for Sheffield's council tax payers to judge whether they are getting a good deal from their Liberal Democrat-controlled council. No doubt they

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will reflect on their chief executive's pay increase and they also know that a Labour central Government have allocated an extra £16 million to Sheffield, so they will no doubt ask their Liberal Democrat-controlled local council, "What benefit are you giving us as a result of Labour's £16 million increase?"

Mr. Andrew Lansley (South Cambridgeshire): Does the Secretary of State recall that, days before the 1997 general election, the Prime Minister promised reform of the area cost adjustment for the 1998 financial year? That means that this is the fifth local government finance settlement in which reform has not been included.

Does the Secretary of State also recall that, last year, Cambridgeshire, which is badly affected by the area cost adjustment, lost out again because of the application of floors and ceilings and the re-evaluation of data for the area cost adjustment? Is any such penalty being paid by Cambridgeshire in this settlement, and will he commit himself to thoroughgoing reform of the area cost adjustment, including recognition of relative costs in SSA changes?

Mr. Byers: I think the hon. Gentleman will concede that this year's 5.2 per cent. grant increase is good for Cambridgeshire. He will also be pleased to know—he tried to make a point about this—that the authority will receive the increase in full: there will be no scaling back to pay for the minimum level.

As for the area cost adjustment, according to my recollection the Prime Minister said in 1997 that we would begin the process of reviewing it, although the hon. Gentleman may correct me. In any event, changes are now to be introduced. I look forward to being here in a year's time to build bridges, to produce the local government settlement and to ensure that the new system is fair and just. It may even benefit Cambridgeshire.

Mr. Neil Turner (Wigan): I welcome the 4.3 per cent.—£8 million—increase for Wigan, but I note that Westminster has been given a £13 million increase, raising its grant to £204.7 million. As Westminster's population is about two thirds the size of Wigan's, does this not emphasise the need for a radical overhaul of the whole SSA system to allow authorities such as mine a proper share of the cake—the very generous increase that my right hon. Friend has provided this year?

Mr. Byers: I am pleased to learn that Wigan will welcome the extra £8 million. I think it is a good settlement.

Westminster will receive a 7 per cent. increase, owing to the way in which the formula works. Real pressures affect authorities such as Westminster, as my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) will know—her constituency includes part of the Westminster local authority area—and those pressures must be reflected in the needs assessment.

When we embark on the introduction of a new formula it will not be easy to reach a consensus, but I think we should at least try to do so.

Miss Anne McIntosh (Vale of York): Which part of the revenue support grant is intended to cover the expense

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incurred as a result of last year's floods in the Vale of York? There were extensive floods in Rawcliffe, Thirsk and other parts of the area.

Does the Secretary of State intend the new formula to plug an existing gap? Will the budget anticipate, for the first time, the movement of people who have reached retirement age to counties such as North Yorkshire? At present, no expenditure projection is made to take those elderly people into account.

Mr. Byers: The Department for Environment, Food and Rural Affairs has already made an allocation to deal with the financial consequences of last year's floods.

The hon. Lady mentioned elderly people who move to a different local authority area. I am more than happy to consider how we can accommodate that situation in the time lag between the count taken to identify those who have moved—elderly people, or perhaps school pupils—and the influence on the final allocation, but the Office for National Statistics is often involved, and must be given plenty of time to ensure that the figures are accurate. We cannot afford to announce a settlement and then, a week or two later, find that the figures must be reviewed, inaccurate figures having been used owing to the pressure of time. I want to get the figures right before we make the settlement.

Paddy Tipping (Sherwood): A 5.4 per cent. increase for a shire country such as Nottinghamshire represents an improvement, but a new system will be in place in 2003–04. My right hon. Friend described it as "transparent, fair and just". One way of judging whether it meets that standard will be to observe, in 2003–04, whether Nottinghamshire's schools get the same sort of deal as those in Herefordshire and Hertfordshire. Should we not be moving towards a fair funding formula for schoolchildren?

Mr. Byers: I am sure that my right hon. Friend the Secretary of State for Education and Skills has heard my hon. Friend's comments—[Interruption.] She heard them before she left—she is doing something about them already.

Nottinghamshire not only will receive more than £20 million extra because of today's settlement, but will be able to keep all the increase because this year we are not operating the policy of scaling back. If we had not changed that policy, more than £650,000 would have been removed from the allocation. There are significant benefits from that change, and there is a real-terms improvement in funding for Nottinghamshire.

My hon. Friend would undoubtedly say that the Government will have to take into account in the new local authority funding formula the pressures on schools, care for the elderly, services for children and many other factors that particularly affect shire counties. Although this is the final year of the current regime, I like to think that within the constraints under which we have been operating, and with the additional money that I have been able to find, we have been able to produce a fair settlement that will lead to real improvements. Nevertheless, I still believe that we can do much better. The real challenge is to ensure that, in next year's settlement, we meet the needs of Nottinghamshire and other councils.

Mr. Steve Webb (Northavon): The Secretary of State may be aware that South Gloucestershire unitary authority

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is at the bottom of the league table on education SSA funding per pupil, and I assume that nothing in his statement will lift us from that position. My constituents are very keen to move to any new system, on the basis that we can go in only one direction. Will he therefore comment on the arrangements for the transition between this year's settlement and that for next year? Specifically, will there be damping? I appreciate that there might be damping to avoid big losses for the losers, but will there be damping on gains, or will authorities receive them immediately?

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