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15 Oct 2002 : Column 271—continued

Mr. Desmond Swayne (New Forest, West) rose—

Mr. Raynsford: But the consequences are not pre-determined; they will be decided by full, careful and thorough evaluation of all the evidence and of the logic and force of the arguments. That is perhaps an unfortunate moment to give way to the hon. Gentleman.

Mr. Swayne: The Minister is most kind. What estimate have the Government made of the likely increase in total Government expenditure that will be consequent upon redistributing grant to local authorities, which will then spend their additional allocation, which will have to be replaced by additional council taxes from those who lose that grant? What will the total increase in public expenditure be?

Mr. Raynsford: If the hon. Gentleman had been following what I said earlier, he would know that I have made it clear that there is a substantial further increase implicit in the spending review, which will ensure a good increase for local government in the settlement. If he will bear with me, I will come to guarantees for all councils.

Richard Younger-Ross (Teignbridge): I thank the Minister for giving way on that point. I am very concerned. He talked about fairness and said that all the formulae have been looked at and there has been no pre-determination. The south-west could lose out by #152 million under the formula. It currently has an SSA of #876 per head, compared with an average of #995. I cannot see how any fairness or justice under any formula could end up with the south-west losing out at all.

Mr. Raynsford: If the hon. Gentleman had borne with me for a moment, he would have avoided making a rather foolish allegation that there will be losses, when we have on so many occasions made it quite clear that no authority will suffer a loss. I shall come to that in a moment.

Mr. David Watts (St. Helens, North) rose—

Mr. Raynsford: I shall give way to my hon. Friend and then I shall try to make some progress, because I know that many Back Benchers want to speak.

Mr. Watts: Will the Minister assure many of us that not only will the system not seek to shift money from one area to another but that it will not seek to maintain the present position? Many of us believe that the present position is unfair.

Mr. Raynsford: As my hon. Friend will have heard from what I have said, we are committed to significant changes in the formulae, which will have distributional consequences.

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One of the original goals of the review was to try to simplify and streamline the mass of complications that surround the system. This has proved one of the most difficult of the big questions that we have had to resolve. Local government has consistently said that it favours transparency, but not at the expense of oversimplification. There are benefits in achieving greater simplicity, not least in terms of the people affected having a chance of understanding the system, but simplicity leads inexorably to rough justice and, if taken too far, undermines confidence that the system takes full account of the appropriate indicators.

Although no decisions have yet been taken, we recognise that the desire for a radically simpler system will need to be balanced against concerns that that would lead to unfairness. Having said that, we believe that it is possible to create a clearer and more consistent framework with the new formulae based around four principal components. There should be a basic allocation for each recipient of the service, such as the number of elderly people receiving care from social services or each mile of road requiring maintenance. On top of that, there should be three top-ups respectively for deprivation, pay costs and other costs, such as the additional costs of delivering services in sparsely populated areas.

We have discussed the issue with local government and others, and there has been general support for that framework. Of course that does not mean that there is agreement about the weighting given to each component. Indeed, some of the fiercest arguments have raged over those issues. One authority will say that deprivation should be made more important; another will say that pay costs are what matter most, while others will focus on the per head allocation or sparsity.

I have no doubt that those arguments will continue to rage during the weeks ahead. However, there has been another very important strand to the representations that local government has made to us: the calls for increased predictability and stability in the system. We have gone some way towards that in recent years with the introduction of floors and ceilings to limit year-on-year grant changes. That has been generally welcomed, although, of course, views tend to differ depending on whether an authority expects to be in the floor or the ceiling zone. As that can change from year to year, consistency is not always evident in the representations that we receive on this subject. However, we recognise that the review has inevitably created additional uncertainty, in particular with worries about authorities facing a cut in funding.

Dr. Howard Stoate (Dartford): Will my right hon. Friend give way?

Mr. Raynsford: I ask my hon. Friend to bear with me a moment.

That is why I have given a clear guarantee—I repeat it now—that, regardless of the answers that the new formulae produce, no authority will face a cut in grant next year on a like-for-like basis. For the avoidance of doubt, I should say that that does not include inflation, but it will cushion authorities against the immediate impact not just of the new formulae but of other changes, such as the new population figures from the

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2001 census. Of course, when announcing the floors for next year, we certainly hope to do better than that simple no-cash-loss guarantee, but we cannot go further on the general grant at this point because we do not yet have the final data or know what distribution the formulae will give.

If we were to set a high floor now, we would risk having to reduce it later if it turned out to be unaffordable. Alternatively, we would risk having to set a ceiling only just above, or equal to, the level of the floor. The latter would make nonsense of the whole review; the former would have a dire impact on authorities' budget planning processes. So I hope that hon. Members will understand why we are giving a clear guarantee of no losses. We will go further, but we cannot yet announce the floor and ceilings.

Mr. Geoffrey Clifton-Brown (Cotswold): The right hon. Gentleman has confirmed that the no-cut guarantee is only in cash terms, not in real terms. Can he give a similar guarantee—if that is what it will be—for the other two years in the plan period? Will the same guarantee apply next year and the year after?

Mr. Raynsford: The hon. Gentleman ought to remember that I answered that question when he asked it at yesterday's seminar, so rather than detain the House now—[Interruption.] I am sorry that he seems to have a bout of amnesia and cannot remember the answer.

Sir Patrick Cormack (South Staffordshire): On a point of order, Mr. Deputy Speaker. This is clearly the sort of debate in which we all benefit from many interventions and the Minister answering questions clearly and unhurriedly. The Leader of the House promised—while you were in the Chair, sir—that this debate will be continued another day, so would it not be sensible for the Minister to take as long as he wants and as many interventions as he wishes? Several of his colleagues are nodding as I speak. We could just hear the Minister's speech tonight and have a chance to intervene, as the debate will continue another day.

Mr. Deputy Speaker: That is not a matter on which the occupant of the Chair can advise.

Mr. Michael Portillo (Kensington and Chelsea): On a point of order, Mr. Deputy Speaker. Is it in order for a Minister to withhold information from the House on the basis that he gave the information yesterday in a seminar, which was not part of the official proceedings of the House?

Mr. Deputy Speaker: Order. The Chair is not responsible for the answers that Ministers give from the Front Bench.

Mr. Raynsford: May I say in the nicest possible way to the right hon. Member for Kensington and Chelsea (Mr. Portillo) that as he, too, was present at the seminar, he might have spared the time of the House by speaking personally to his hon. Friend?

Michael Fabricant : This is ridiculous. I, and other Members, may not have been present at the seminar for

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perfectly legitimate reasons. The House was not recalled until today. It is completely improper for a Minister to say that some people in the House might have heard an answer at an informal seminar, while other Members such as me could not be present, as the House was not in Session. The Minister is being asked a question on the Floor of the House. Will he now answer it?

Mr. Deputy Speaker: Order. I assume that that is a point of order to the Chair. All that I would say to the hon. Gentleman is that I am sure that hon. Members—and not least the hon. Gentleman—have means of prising information from Ministers.

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