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Mr. Raynsford: My hon. Friend makes a very fair point about the importance of local government focusing on delivering services to people in need. Certainly, the whole purpose of our performance assessment and management framework is to put real pressure on local authorities to deliver services and not spend money on items of lesser priority. When that performance management and assessment system is introduced, I hope that my hon. Friend finds that it has a desirable effect. We are conscious that the settlement gives an increase for social services, but we are clearly aware of the pressures, as I said. We will keep the matter under review.

As hon. Members will recall, 2002–03 is the last year in which we will use the system of standard spending assessments. I have already said something about the changes that we intend to make in the calculations for future years.

A number of fire authorities, and honourable Members, have made representations about the continued use of the fire calls indicator in the SSA formula this year. We recognise that it is a perverse incentive, which penalises authorities that do effective fire prevention work, and it will not be part of the new grant formula. However, to be fair to all authorities, we cannot make exceptions here or there to the decision that we rule out changes in the methodology. That decision also covers the suggestion that we use data on fire calls differently by averaging over a longer period.

On 4 December, my right hon. Friend the Secretary of State announced our intention that, for 2002–03, all authorities would receive a grant increase at least matching inflation. That increase, and other comparisons that I shall make, are on a like-for-like basis.

In line with the Government's priorities, authorities with education and social services responsibilities will receive at least 4 per cent.—up from 3.2 per cent. last year. I can confirm today that we will put some £52 million of new money into revenue support grant, so that—as was not the case in 2001–02—no authority in this group below the ceiling will have its increase reduced to pay for the floor.

It became clear in consultation that the fully adjusted basis that we had used to make like-for-like comparisons from one year to the next was not regarded as fair by shire district councils. That was because the main adjustment was in respect of education, a service that shire districts do not, of course, provide.

As my right hon. Friend the Secretary of State told the House on 18 December, we therefore agreed to introduce an alternative baseline for 2001–02 that, in effect, only adjusts for transfers of service for which shire districts are responsible. In order to guarantee a minimum 2.3 per cent. increase for all shire districts, on a like-for-like basis,

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we will give each district whichever increase is the greater for it: 2.3 per cent. on the original baseline, or 2.3 per cent. on the alternative. The grant allocations now proposed for shire districts take full account of that guarantee.

Following the close of consultation, we have decided to extend that guarantee to police and fire authorities. Together with my right hon. Friend the Secretary of State for the Home Department, we have agreed to put extra resources into the settlement to fund that guarantee, without imposing an unduly high scaling factor on grant increases for authorities above the floor.

As a result of representations made in consultation, we have also decided to change the way in which adjustments to the base year were made for the transfer of regulation and inspection functions from social services departments to the new National Care Standards Commission. The adjustments do not now take account of new money transferred from SSAs to the commission. That will give authorities at the floor or ceiling a higher base position, and thus higher cash increases. Again, we have ensured that other authorities do not lose as a result. Taking those initiatives together, the Government have put some £73 million of new money into the settlement to support the cost of floor increases for all authorities.

I confirm that I intend to promote capital investment by excepting from the floor and ceiling limits grant increases that result from new capital allocations. I also confirm that, where grant increases for authorities that are neither at the floor or the ceiling are scaled back to help pay for the floor, this will only apply to that part of the grant increase above the floor. That should help solve the problem that was characterised last year as

Mr. Steve Webb (Northavon): According to some measures, such as primary SSA, my authority of South Gloucestershire is at the bottom, so we hope that any new formula will move us in the right direction. However, our nightmare is that the new formula will be more generous but that it will be phased in through tight ceilings over many years. My constituents are angry and feel a sense of injustice after years of unfair funding, and their fear is that that unfairness will continue for years. Can the Minister offer my constituents any assurance that the new system, where it addresses long-standing injustices, will not be phased in so slowly that those injustices effectively persist?

Mr. Raynsford: I hope that the hon. Gentleman will welcome the fact that we have been able to give Gloucestershire an increase this year of 6.9 per cent.

Mr. Webb: That is not correct.

Mr. Raynsford: I was referring to the county of Gloucestershire. However, if the hon. Gentleman is referring to the district council—

Mr. Webb: The unitary council.

Mr. Raynsford: I am sorry, I meant the hon. Gentleman's unitary council. I shall refer to that unitary

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council separately, when I can find the right page. The hon. Gentleman will know what a nightmare it is constantly to be looking for the respective figures for individual authorities. However, I assure the hon. Gentleman that we recognise that the new formula will cause there to be both gainers and losers. I made that clear in response to an earlier intervention. It would be only fair, therefore, to continue the floors and ceilings framework, as that will prevent local authorities—especially those facing potentially large losses—from facing excessive changes as well. It would be quite unreasonable for authorities in that position to have to deal with both matters at one fell swoop. That is why we want to ensure the continuation of a floor and ceiling framework. I think that most people would regard that as fair.

Mr. David Kidney (Stafford): My right hon. Friend the Minister does not get many bouquets at the Dispatch Box, but he deserves to be congratulated on these refinements to the floor and ceiling framework. After all, the concept was introduced for the first time only this time last year.

However, will my right hon. Friend say what proportion of this year's distribution of revenue support grant will be held back by Departments for ring-fenced grant? Have central and local government agreed a target for a smaller proportion in future years?

Mr. Raynsford: My hon. Friend offered some kind words to begin with, then threw a dart. We recognise that there is real concern in local government about the increase in ring fencing. There are good reasons for ring fencing in certain circumstances, when there are no other means of ensuring that certain outcomes—hugely important, and regarded as national priorities—can be delivered. However, we believe that circumstances have now reached a point where it is necessary to rein back on ring fencing. We made clear our commitment to do that in the White Paper. In the course of the coming spending review, we will obviously be looking to reach agreement with our colleagues in other Departments on an appropriate framework for the future. That framework will ensure that, although the benefits of ring fencing are not lost, local authorities will be able to expect to benefit from the greater flexibility that will arise when a greater proportion of grant is available through general grant, rather than ring-fenced grant.

Mr. Don Foster (Bath): Would it not be helpful if the Minister answered the question asked by the hon. Member for Stafford (Mr. Kidney)? I suggest that his answer might be that the proportion of total Government grant going to local councils that is ring-fenced has increased from 5 per cent., when the Government came to power, to nearly 15 per cent. today.

Mr. Raynsford: I do not want to quibble with the hon. Gentleman, but I think that he exaggerates slightly; the figure is probably nearer 14 per cent. However, I will not hold that against him.

I have flicked through my papers and can reassure the hon. Member for Northavon (Mr. Webb) that the increase for South Gloucestershire, which I am sure that he will welcome, is 6.7 per cent., almost exactly the same as for the county of Gloucestershire, which has 6.9 per cent.

Ms Drown: I represent an authority that hopes to gain by the new formula, and refer my right hon. Friend to

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next year's settlement. Is he aware of the frustration of some of the lowest funded authorities, such as Swindon, which face more challenges than many other authorities in terms of raising standards in education and social services? However, an unfair formula distribution is further exacerbated in that Swindon's increase has been less than the average. We are looking at some difficult choices locally, and I would be grateful for my right hon. Friend's assurance that he will continue to work with the council to ensure that valued services, particularly in education and social services, will be preserved as the council goes through a difficult round of decision making.

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